India Seeks To Renegotiate 47 Investment Treaties Because Of Their Corporate Sovereignty Clauses

from the leading-the-way dept

Mon, Jun 6th 2016 11:23pm — Glyn Moody

Corporate sovereignty has become a big issue as a result of its inclusion in TPP and TAFTA/TTIP, but it's present in hundreds of other trade and investment treaties.The heated discussion of investor-state dispute settlement (ISDS) chapters in those negotiations has led some countries to realize that corporate sovereignty could prove very costly to them one day. As we've written, both South Africa and Bolivia have decided to dismantle the ISDS provisions by renegotiating treaties, and according to a new report in The Economic Times, India has decided to do the same on a large scale:

India has written to 47 countries to nullify the existing bilateral investment agreements and ink fresh treaties that will make it mandatory for foreign investors to exhaust local judicial remedies before seeking arbitration.

Forcing foreign investors to use domestic courts is designed to stop them circumventing Indian's laws by going outside the system to arbitration tribunals. Among the 47 treaties that India wants to renegotiate are relatively new ones, as well as others that can be cancelled quite easily. The Economic Times provides some information on the growing magnitude of India's ISDS problem: The government amended the text after being dragged into international arbitration by as many as 17 companies or individuals including Deutsche Telekom of Germany, Vodafone International Holdings BV, Sistema of Russia, Children's Investment Fund and TCI Cyprus Holdings. India even lost an international arbitration case involving White Industries of Australia.
This is a very sensible move by the Indian government, and a great signal to other countries exposed to the threat of costly corporate sovereignty claims in the future. It will be interesting to see who is next now that India has helped legitimize further the idea of renegotiating these deals.

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Filed Under: corporate sovereignty, india, international trade, isds, renegotiate, trade agreements

19 Comments

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Anomalous Cowherd, 6 Jun 2016 @ 11:47pm

Corporate sovereignty needs to die in a toxic waste fire that it started after illegally dumping the toxic waste into its own pants and getting cheated on by its girlfriend with an older, uglier dude who bought up all its debt from its creditors and called it at 3 AM every morning demanding payment.
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Coyne Tibbets (profile), 7 Jun 2016 @ 12:48am

And now, the inevitable backlash to corporate sovereignty. Quick, companies, hit those ISDS tribunals to show India the error of its thinking.
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Wietze Brandsma (profile), 7 Jun 2016 @ 12:52am

2014: Indonesia to terminate more than 60 bilateral investment treaties
In 2014 Indonesia was planning to terminate all 67 bilateral investment treaties with such ISDS provisions.
Source: Financial Times
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Anonymous Coward, 7 Jun 2016 @ 1:33am

Well, one things for sure, the people who bought this law are either saying

"Just what we wanted"

Or

"Oh shit"

(Well, ONE of those two)
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Anonymous Coward, 7 Jun 2016 @ 1:38am

So if corporate sovereignty is thrown out, would that mean that if they're on the ball just about every foreign investor in India could put forward a case for perceived loss of perceived loss of profits due to the loss of corporate sovereignty?
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Anonymous Coward, 7 Jun 2016 @ 1:57am

Re:
Which would put in rather stark relief the original intent of these clauses, wouldn't it?
I mean, I get why you'd want some guarantee that the state isn't just going to turn around and say "Nah, we've changed our minds, so now here are a bunch of changes to laws specific to your field of business". But the usual stories are anything but that. And besides, if you're a state negotiating with a company, why not just include these things on that actual contract, on a case by case basis? Why have a blanket clause?
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Anonymous Coward, 7 Jun 2016 @ 1:59am

Re:
If they're sovereign, can we invade them?! In the "make them squeal" fashion!
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Anonymous Coward, 7 Jun 2016 @ 2:15am

out of curiosity, which country instigated the 'Corporate Sovereignty'? if i hazard a guess at the USA, would i be far wrong? i doubt not!!
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Anonymous Coward, 7 Jun 2016 @ 2:39am

Corporate isds is like nuclear weapons ,
it does no one any good except certain big companys
and its an extra cost or tax on countrys and taxpayers .
Its also an attack on countrys ability to make laws to protect their own citizens ,
See australian laws on cigarette plain packaging on cigarettes for one example .
Big corporations can avoid most tax,s already
now they want to sue countrys for
possible lost profits .
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Anonymous Coward, 7 Jun 2016 @ 7:23am

Perhaps it's just me being old fashioned ...
I thought that investing included risk. One can lose one's investment. National takeover is only one of many risks. IMHO, a lesser risk than manipulation by greedy corporate executives and lawyers.

The creatures at the top of the corporate heap received the big bucks because they were supposed to manage risk better than their subordinates. If they screwed up big enough, they moved on.

Exactly when did becoming a corporate CxO and/or lawyer become a "too big to fail" executive entitlement? If I were a conspiracy theorist, I'd speculate that there is a conspiracy among corporate CxO's and lawyers to cover each other at the expense of everyone else.

Good on India!
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nerd bert (profile), 7 Jun 2016 @ 7:45am

Re: Perhaps it's just me being old fashioned ...
Very true, but you're missing the point of ISDS clauses. They are there to serve to lessen the risk of the business environment changing under the corporation. As such, it helps to up the mobility of capital between countries. It's a "feature" for the moneyed elites to be able to shift capital across boarders with minimal risk.

Now, it's a valid question of whether such mobility is a plus or minus for the countries involved. The rise up is heady, but the fall is terrible. In the case of Brazil right now, for example, it's definitely a minus as cash is flooding out of that country and tanking the economy even more now that commodities have crashed. But the mobility of capital was a god-send to them in the commodities-fueled boom of 8 years ago that allowed them to create enormous new social programs for the poor that cannot now be unfunded without serious, serious social disruption.
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Anonymous Coward, 7 Jun 2016 @ 9:07am

Re: Re:
Do they have a flag?
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Anonymous Coward, 7 Jun 2016 @ 9:09am

Re:
Ooh, now there's an idea - Government ISDS where governments can sue for possible loss of taxes! =)
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Adrian Cochrane (profile), 7 Jun 2016 @ 2:17pm

Who'll be next?
That's certainly the big question, but I'll tell you who won't be next.

Ofcourse the US won't, they've been pushing these "deals" and are in the pockets of the corporations. And it won't be New Zealand, at least until the election next year, as John Key considers this "good economics".

Anyone else want to chip in?
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PRMan (profile), 7 Jun 2016 @ 2:39pm

Re: 2014: Indonesia to terminate more than 60 bilateral investment treaties
Don't bother with this link because of the FT paywall.
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beltorak (profile), 7 Jun 2016 @ 3:13pm

Am i missing something
I'm not quite so sure this is as good as it sounds. Unless there's a provision to block a corp from availing itself of a tribunal after the national courts have weighed in on the matter, all this does is tax the citizens twice when the corp exhausts the court system then takes the matter to the tribunal. If you deny the ability to avail itself of a tribunal after a court has adjudicated the matter then you have the original problem that corp sovereignty was meant to address. Even if you limit the corp's option of availing itself of the tribunal to cases where the national supreme court refused to acknowledge the merit of the corp's argument, well, there are many good reasons for things to turn out that way. I dont see any way to make an extra-juducial remittence process viable under all circumstance. All such systems are too easy to for one player or the other to game.

Corps just need to nut the fuck up and take the risks inherent in being subject to the laws of the land. You don't like the laws? You dont trust the government? Dont fucking go there.
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Wendy Cockcroft, 8 Jun 2016 @ 7:23am

Re: Re: 2014: Indonesia to terminate more than 60 bilateral investment treaties
The information may also be hosted elsewhere but this is encouraging. :)

I bet the "Them's the rules" crowd is crying into their skinny lattes.
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Anonymous Coward, 8 Jun 2016 @ 7:51am

Re: Perhaps it's just me being old fashioned ...
I thought that investing included risk. One can lose one's investment.

But it does carry a risk! Unless, of course you're Too Big To Fail™.

If the U.S. government did it's job properly and never allowed for massive mergers to take place in the first place we wouldn't be in this mess.

Hell, going back further, if the U.S. government hadn't helped prop up these behemoths with stimulus packages in the first place (1964, 1971, 1975, 1981, 2001 and 2009) they would have split up naturally.
Thousands losing their jobs back then versus millions losing their jobs right now.
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Anonymous Coward, 8 Jun 2016 @ 7:59am

Re: Am i missing something
I see Corporate Sovereignty as bringing equality between Corporations and traditional criminals.

Traditional criminals could until now take people hostage or murder them to force social, political and legal change.

With the help of Corporate Sovereignty Corporations can now take economies hostage or destroy them to force social, political and legal change as well.

Now all criminals are truly equal!
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