Founder Of Fan-Subtitle Site 'Undertexter' Loses Copyright Infringement Appeal

from the sinnesjuk dept

Just a quick update on the current craziness going on in the Swedish court system. In the middle of 2017, we wrote about the Swedish authorities raiding the offices of Undertexter, a site that provides fan-created subtitles of movies. Many people were confused by this, but the film industry has long branded fan-made subtitles as contributors to piracy, allowing people in foreign countries to download films and append the subtitles to watch them, rather than buying the localized version. The industry also argues that these subtitles are themselves copyright infringement, as they essentially reproduce the film's script in another language.

Founder Eugen Archy was convicted of copyright infringement. Ever the fighter, he appealed, but now we learn that Archy has lost his appeal as well.

On appeal, Archy agreed that he was the person behind Undertexter but disputed that the subtitle files uploaded to his site infringed on the plaintiffs’ copyrights, arguing they were creative works in their own right.

While to an extent that may have been the case, the Court found that the translations themselves depended on the rights connected to the original work, which were entirely held by the relevant copyright holders. While paraphrasing and parody might be allowed, pure translations are completely covered by the rights in the original and cannot be seen as new and independent works, the Court found.

The Svea Hovrätt also found that Archy acted intentionally, noting that in addition to administering the site and doing some translating work himself, it was “inconceivable” that he did not know that the subtitles made available related to copyrighted dialog found in movies.

Now, the good news is that losing this appeal only results in his original conviction and punishment of probation and a $26,000 fine. All told, that isn't the craziest punishment we've seen for copyright infringement. Those caveats aside, let's all remember that Undertexter gave away the fan-translations it hosted. The site didn't sell them. They were offered for free. And for the crime of providing free translations in markets that are often underserved by Hollywood, he now has a copyright infringement conviction on his record and a five-figure bill to pay.

Filed Under: copyright, fan subtitles, fans, subtitles, sweden
Companies: undertexter

With Court Ruling, Fan Subtitles Officially Copyright Infringement In Sweden

from the sadface dept

Several years ago, in an unfortunate display of police bending the knee to the copyright industries, Swedish law enforcement raided the offices of Undertexter, a site chiefly dedicated to fan translations for subtitles of films. While these fan translations have been handcuffed to film piracy -- mostly through the messaging efforts of film and television content producers -- the raid registered as an extreme escalation in the battle on subtitles. Most folks have a hard time understanding why such action was taken, with most fan translations only being useful due to the content makers underserving parts of the earth that speak a variety of languages. These fan translations mostly open up those markets for makers of movies and television who have otherwise chosen not to translate their work into the relevant languages.

For its part, Undertexter vowed to fight the legal action, proclaiming its work non-infringing by virtue of serving up mere dialog translations.

Undertexter.se has had a police raid this morning (July 9) and servers and computers have been seized, and therefore, the site is down. We who work on the site don't consider an interpretation of dialog to be something illegal, especially not when sharing it for free. Henrik Pontén [the copyright industry's primary henchman in Sweden], who is behind the raid, disagrees. Sorry Hollywood, this was the totally wrong card to play. We will never surrender. [...] We must do everything in our power to stop these anti-pirates. [...]

Well, the fight is now over and, unfortunately, the man behind Undertexter has been convicted of copyright infringement.

The Attunda District Court sentenced the now 32-year-old operator to probation. In addition, he has to pay 217,000 Swedish Kroner ($27,000), which will be taken from the advertising and donation revenues he collected through the site.

While there were millions of subtitles available on Undertexter, only 74 movies were referenced by the prosecution. These were carefully selected to ensure a strong case it seems, as many of the titles weren’t commercially available in Sweden at the time.

During the trial, the defense had argued that the fan-made subtitles are not infringing since movies are made up of video and sound, with subtitles being an extra. However, the court disagreed with this line of reasoning, the verdict shows.

What ultimately happened here is that Undertexter had translations for a few films available legitimately in Sweden and the prosecution proceeded to essentially pretend like those films were the whole story. The reality is that sites like Undertexter are primarily useful because those legitimate options, including the relevant language translations, are not available. Sites like this are used by many who buy movies and television and then apply the fan-subs afterwards. Customers who would, in other words, not be able to be customers if not for the fan-subs. The piracy portion of these subtitles is incidental to the mission, in other words, but the copyright industries in Sweden claimed that piracy was really the whole point.

On the other hand, one wonders exactly how much Swedish tax money was spent to bring a guy who ran a subtitle site to the tune of probation and $27,000? Is this really the best use of everyone's time?

Filed Under: copyright, fans, subtitles, sweden
Companies: undertexter

Inside Another Internet Troll Factory: This Time In Sweden, But With Russian Connections

from the it's-all-about-size dept

Well before fake news became a thing, Karl was reporting on the fascinating details that have emerged about Russia's Internet troll factories that relentlessly pump out fake posts on an extraordinary scale. More recently, the Russian Defense Minister Sergei Shoigu revealed that the country's military has created a force specifically tasked with waging information warfare. We may know about Russia's domestic activities in this area, but what about online propaganda teams active in other countries? One data point towards answering that question is provided by an article on a site called the Disinformation Review, which describes itself as follows:

the latest cases of news articles carrying key examples of how pro-Kremlin disinformation finds its way in international media, as well as news and analysis on the topic. The review focuses on key messages carried in international media which have been identified as providing a partial, distorted or false view or interpretation and/or spreading key pro-Kremlin messaging.

It does not necessarily imply however that the outlet concerned is linked to the Kremlin or pro-Kremlin, or that it has intentionally sought to disinform. The Review is a compilation of cases from the East StratCom Task Force's wide network of contributors and therefore cannot be considered an official EU position.

That is, the Disinformation Review draws on information provided by the EU-funded East StratCom Task Force, and is part of the EU's response to what it sees as growing Russian propaganda directed against the European Union and its member states. A recent post on the site delves into another troll factory, but this time in Sweden. It reports on an article originally published by the Swedish daily Eskilstuna Kuriren:

we read that Swedish trolls primarily target journalists; that they develop and use scripts for their telephone conversations; and that the trolls are paid 1,000 SEK (110 EUR [about $110]) when their recorded telephone conversations obtains enough 'likes' in social media. We read that the trolls work with manuals that instruct them to edit the recordings to make them as "entertaining" as possible. We also read that the people behind the troll factory belong to Swedish racist and extreme right wing organisations.

But it's not only extreme right-wing viewpoints that the Swedish Internet troll factory supports:

The agenda of the political movement affiliated with the trolls is, according to the investigation, "xenophobia and Islamophobia", combined with promotion of commentators who "support Russia after the occupation of the Crimea and the Russian-backed civil war in Ukraine".

Despite that intriguing fact, the Swedish newspaper report was unable to establish who was funding the propaganda efforts. However, it does provide some interesting information about what makes a successful Internet troll factory:

Eskilstuna Kuriren ends their piece by asking that question to Jack Werner, co-founder of the popular Swedish fact-checker Viralgranskaren. According to Werner, the organisation is possibly limited in size, but a central part of its strategy is to make itself look very big: "The aim of propaganda is to respond to light so as to make the shadow it casts is as large as possible. If you really want to give the impression that your side is the largest, most dedicated and most passionate, it requires more work, for example, you will need to spend days and nights writing comments in the internet."

The article quotes figures from an earlier investigation into right-wing propaganda sites, which found that just 183 individual writers accounted for 366,291 comments out of a total of half a million, which works out as 2,000 comments per person on average. Perhaps that high volume could be turned against the Internet troll factories.

Since it is very hard for people to write so many comments so quickly without using similar phrases, sites might check new posts against old ones to eliminate those that are likely to be from a few writers churning them out to order. The technology already exists, and is widely used to spot academic plagiarism, for example. Cloud computing platforms would allow this approach to be applied routinely at a reasonable cost, and there would be scope for new third-party services to flag up re-used content across multiple sites. Google's parent company, Alphabet, is already working on software in this area. Maybe the time has come to apply a little more intelligence and computational firepower to tackling the growing threat that intentionally misleading and inflammatory posts by Internet trolls represent not just to online discourse, but far beyond.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: internet trolls, russia, sweden, trolls

Swedish Court: News Site Embedding A YouTube Video Guilty Of Copyright Infringement

from the ugh dept

Nearly a decade ago, just as YouTube was really getting popular, we questioned whether or not it would be considered infringement to merely embed a YouTube video if the content in that video were unauthorized. As we noted at the time, it seemed like a crazy idea that this should be considered infringing, given that embedding is just sticking a simple line of code on a website. No content ever actually is hosted or lives on that website. You're just telling a browser to go find content from the original YouTube source. For the most part, US courts have agreed that embedding is not infringing. And we'd thought that the EU had come to the same conclusion -- however that ruling was a bit vague, in that it focused on the embedding of authorized content, not unauthorized content.

Last month, however, there was the troubling EU Court of Justice ruling that found that mere links could be deemed direct infringement, especially if they were posted on a for-profit site. The ruling, somewhat dangerously, argued that any for-profit site that posted links should have the burden of checking to make sure the content they link to is not infringing, and it's fine to assume that they had the requisite knowledge when they link (this is, of course, crazy). And now we're seeing the reverberations of such a silly ruling.

Over in Sweden a court has taken that decision to say that a newspaper embedding an unauthorized YouTube video is infringing on the copyright in the video. Here are the details of the case, as summarized by the always excellent IP Kitten blog:

In 2012 the claimant (Rebecka Jonsson) filmed a bungee jumping session gone wrong in Africa.

Someone (not Ms Jonsson) uploaded the video on YouTube. On 9 January 2012 the YouTube video was embedded on the L'Avenir website run by the defendant, in the context of an article describing the incident.

The claimant had neither authorised the publication of the video on YouTube, nor its embedding in the L’Avenir article.

In her action before the Attunda District Court, Ms Jonsson claimed that L’Avenir had infringed copyright in her video by both embedding it on its website and publishing a frozen still of the video. She sought damages for EUR 1931 against the defendant, as well as award of litigation costs.

The court, looking at that bad ruling at the Court of Justice basically said, welp, L'Avenir is for profit, so it's infringing:

According to the court, it was “obvious” that L’Avenir had published the link to the claimant’s YouTube video with the intention of pursuing a profit [yet the court did not really explain what evidence supported the conclusion that in this case the defendant had a profit-making intention]. According to the court, L’Avenir had not been able to demonstrate that it had no knowledge of the unlicensed character of the video embedded on its website. Hence, L’Avenir was found to have infringed the claimant’s copyright by linking to the YouTube video without Ms Jonsson’s permission.

IP Kitten also notes that the court was supposed to then consider if L'Avenir was protected by various exceptions -- such as for news reporting -- but did not do so. This should be pretty troubling for all sorts of news sites online, who regularly embed videos or link to content without having the ability to determine whether or not they are infringing. This will make some fairly basic aspects of reporting online a huge liability risk. Linking to the wrong site or embedding the wrong video now puts you at risk of copyright infringement claims in the EU -- which is crazy. Copyright law is really broken.

Filed Under: cjeu, copyright, embedding, eu, for profit, rebecka jonsson, reporting, sweden
Companies: l'avenir, youtube

For The Gander: Bahnhof Sends Copyright Troll Spridningskollen A Trademark Violation Settlement Letter

from the turning-the-tables dept

We were just talking about Bahnhof, the Swedish ISP with a reputation for protecting its customers privacy, and its script-flipping battle with a copyright troll called Spridningskollen. At issue is that Bahnhof has for some time operated a website, Spridningskollen.org, and has applied for a trademark registration for it more recently. The copyright troll is new in town, so to speak, and Bahnhoff is relying on common law trademark rights while its application goes through the process, but that isn't keeping the ISP from continuing to give Spridningskollen a taste of its own medicine.

In a move laced with irony, Bahnhof has sent Spridningskollen a settlement letter on the basis of its trademark infringement.

Previously they accused Spridningskollen of trademark infringement and this week they followed up this threat with a more concrete warning. Giving the “trolls” a taste of their own medicine, Bahnhof sent them an invoice for the exact amount they also ask from accused pirates, to settle the alleged trademark infringement.

“You’re infringing our trademark ‘Spridningskollen.’ Bahnhof filed for the trademark on 2016-08-31, with the launch of the website Spridningskollen.org,” the settlement invoice reads.

Now, Spridningskollen will almost certainly not take Bahnhof up on its offer, but that isn't really the point. The point is that a copyright troll that wraps itself in the flag of anti-piracy, but which actually simply looks to bully settlement money out of the public, couldn't be bothered to come up with a name for itself that wasn't already in use and has now been served with the exact sort of settlement letter it itself wants to send to others. It's response to the letter is going to look bad either way. Bowing to its demands will be a public acknowledgement that the "anti-piracy" group violated another group's intellectual property. Not a good look. Fighting back against the letter, as it surely will, casts doubt on the legitimacy of its own threat-settlement letters and provides the public with a role-model example for what to do if they receive such a settlement notice.

It's a checkmate move, in other words. That Bahnhoff is asking for the exact amount that Spridningskollen plans to ask for in its own letters simply layers on a bit of snark to all of this. Which makes Bahnhoff an early favorite for the ISP doing the most to protect its customers from copyright bullies while entertaining the rest of us.

Filed Under: copyright, copyright troll, settlement letter, sweden, trademark, trolling
Companies: bahnhof, spridningskollen

When ISPs Become Anti-Troll Advocates: Bahnhof Turns The IP Tables On A Copyright Troll

from the good-guys dept

Copyright trolls still plague the world, unfortunately. While many are the group and individuals that advocate against this form of legal extortion, nearly always built upon shaky evidence at best, too silent have been the ISPs that copyright trolls utilize to send out their settlement letters. For whatever reason, ISPs en masse have decided that it isn't prudent to advocate for their clients. But not all ISPs behave this way. In Sweden, ISP Bahnhof, which we have written about previously for its client-friendly practices, is fighting back against one copyright troll on behalf of its customers in the best way possible: by turning the intellectual property tables back upon them.

Sweden has recently become something of a target for copyright trolls, with Spridningskollen leading the charge. This group, the name of which translates into English as "Distribution Check," uses data gathered by anti-piracy groups to send out the typical threat letters and settlement requests to people who have IP addresses accused of infringing on copyrighted material. A spokesman for Spridningskollen, Gordon Odenbark, insisted that his group's work was necessary for both providing revenue to rights holders and, more importantly, to deter the general public from violating the intellectual property rights of others.

There's just one problem: Bahnhof has a valid trademark for the term "spridningskollen."

“Bahnhof was the first to apply for the Spridningskollen trademark rights at the Swedish Patent and Registration Office,” the ISP announced.

Earlier this year Bahnhof was the first ISP to warn the public about the looming flood of settlement requests. To help the public understand the severity of the issue the ISP launched the site Spridningskollen.org, which they say maps the “spread of extortion letters” from copyright holders.

It's somewhat poetic that a consumer-friendly ISP started a website and got a trademark on a term that a copyright troll then chose to adopt as its name. Bahnhof appears to have started this website in April or so of this year, while the copyright troll's operations appear to have started more recently, which means that this isn't a case of Bahnhof squatting. Instead, it appears that the copyright troll, so concerned in appearance with piracy, didn't bother to do its homework in the trademark arena. And Bahnhof, seeing an opportunity to strike back legitimately in its customers' interests, isn't going to let this chance go by quietly.

Now that the anti-piracy group has ‘stolen’ their name, Bahnhof plans to take action over the apparent trademark infringement.

“It is surprising that those who claim to defend intellectual property rights don’t track it better themselves. It says a lot about the quality level of their so-called initiative,” Bahnhof CEO Jon Karlung says.

The ISP is demanding that the website of the anti-piracy group, Spridningskollen.se, is shut down.

“Our lawyers are looking into it. We see the many different ways that interfere with their operation. Extortion letters are unethical, anachronistic and counter-productive,” Karlung says.

The rest of the world needs ISPs like this to assist in the stamping out of disease-fire that is copyright trolls. One can only hope that Sweden will successfully export the concept of an ISP that actually looks out for its customers.

Filed Under: copyright, copyright trolls, isps, sweden, trademark
Companies: banhoff, spridningskollen

Sweden Considers Making DNA Donated Purely For Medical Research Available To Police And Insurance Companies

from the so-what-if-we-promised-we-wouldn't? dept

When it comes to biometrics, you really can't beat DNA. You can always erase your fingerprints, or wear contact lenses to fool iris scanners, but there's no way of changing all your DNA enough to make it unrecognizable (even with the new CRISPR technique). Couple that with the fact that we are shedding DNA everywhere we go -- leaving tell-tale markers on everything we touch -- and you have the perfect surveillance mechanism. That's why earlier UK plans to give police access to medical databases are problematic, to say nothing of Kuwait's mandatory DNA database for all citizens, residents and visitors. Now Rick Falkvinge has written a post about troubling moves in Sweden:

Since 1975, Sweden has taken a DNA sample from all newborns for medical research purposes, and asked parents’ consent to do so for this research purpose. This means that over time, Sweden has built the world's most comprehensive DNA database over everybody under 43 years of age. But now, politicians are considering opening up this research-only DNA database to law enforcement and private insurance companies.

As Falkvinge points out, this is not just a betrayal of a trust, it is totally counterproductive:

This is, of course, an outrageous and audacious breach of contract with the parents who were promised the sample would be used only for the good of humanity in terms of medical research. The instant there's a mere suspicion that this will be used against the sampled newborn in the future -- as is the case now -- instead of being used for the good of humanity as a whole, people won't provide the DNA database with more samples, or at least not enough samples to provide researchable coverage.

The risk that Sweden might proceed down this road is also a reminder that once such huge databases are created, it is almost inevitable that one day someone will come along and say: "since we have this information, surely nobody could object to it being used to catch terrorists/pedophiles/rapists etc. etc." And as the news from Sweden shows, initial promises that such sensitive data will only be used for research are worthless, since they can always be revoked later on, and there is no easy way of removing the data once it is on the database.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: dna, information, insurance, law enforcement, medical research, police, privacy, sharing, sweden

Swedish Court: Wikipedia Hosting Photos Of Public Artwork Is Copyright Infringement For Some Reason

from the art-thou-crazy? dept

Wikimedia has, of course, a somewhat tortured history when it comes to copyright and artwork that appears on Wikipedia. Whether it's political logos, German museum art, and this goddamned monkey, Wikipedia often finds itself targeted over uploaded photos of artwork and copyright claims that too often appear to be either baseless or at cross-purposes with the world of art more generally. When you mix all of this up with a strange sense of entitlement by those who produce public art over how that art is photographed, the result is a Swedish court declaring that Wikipedia has violated copyright by hosting pictures of public Swedish statues.

The controversial judgement is a victory for the Visual Copyright Society in Sweden (Bildupphovsrätt i Sverige - BUS), which sued Wikimedia at Stockholm District Court for publishing photos of Swedish public sculptures and other public artworks without first getting permission from the artists.

“We are naturally very disappointed,” Wikimedia's Swedish operations manager Anna Troberg told The Local after the supreme court gave its guidance to the district court. “We view this as an anachronistic and restrictive interpretation of copyright laws. It also runs counter to recommendations from the European Court of Human Rights.”

It also blatantly strains the boundries of common sense. The statues in this case are presented in Sweden in public, by my reading were commissioned as public works by artists who were paid for their efforts with taxpayer dollars, and the images for which were uploaded to Wikipedia by individual administrators for Wikipedia articles. The Swedish court appears to have twisted itself into a pretzel in order to generate this ruling.

In its judgement the supreme court affirmed that Swedish copyright law does permit members of the public to take pictures of public artworks. But, the court said, “it is different when it’s a database where artworks are made available to the public to an unlimited extent without copyright-holders receiving any remuneration. A database of this kind can be deemed to have a commercial value that is not inconsiderable,” the supreme court said in a statement. “The court rules that the copyright-holders have the right to absorb this value. It is not relevant whether or not Wikimedia has a commercial aim.”

Just so everyone is clear, the court is saying that artists should receive compensation for the public art for which they've already been paid, so long as we're talking about pictures of that public art being stored in a database, as opposed to a person simply snapping a picture.

But where is the line between individuals taking pictures and creating "a database"? How does it suddenly become copyright infringement for a non-profit entity like Wikipedia to host these images on its servers, but it's not if you or I do so? Wikipedia has said that it will be consulting with its legal team to talk next steps, with the focus being on how to change the nature of the debate to zero in on how outdated the law and this ruling are, but when was it ever acceptable for taxpayer-funded art to be controlled by private interests?

Filed Under: copyright, public domain, sweden, wikipedia

Topsite Operator, Who Admitted To Operating Servers With Tons Of Pirated Movies, Gets Off With Just Probation

from the compare-that-to-the-pirate-bay dept

TorrentFreak reports on a somewhat unexpected end to a criminal case against an (oddly unnamed) 50-year-old Swedish man who was accused of and admitted to running the servers for the topsite known as Devil. As anti-piracy folks always like to remind us, topsites "sit at the top of the piracy pyramid" in the warez scene, as that's where pirated content is usually first leaked, before making its way out to the wider internet. In this case, investigators seized the actual servers with 250 terabytes of content and arrested the guy who ran all the servers out of his home. Slam dunk case, right? So that's the odd part: He ended up receiving just probation and some community service.

Given the scale of the case it was expected that punishments would be equally harsh but things did not play out that way.

Despite admitting that he operated servers at his home and in central Stockholm and the court acknowledging that rightsholders had suffered great damage, the man has just been sentenced to probation and 160 hours of community service.

The article admits that the guy may still face civil trials which could come with huge damages, but it's instructive to look at the results of the criminal case here and compare it to another case.

Remember, this is the same country that sued four guys who were no longer associated with The Pirate Bay -- which hosted no infringing content and was more of a search engine -- and not only found them guilty, but gave them jail sentences and millions of dollars in fines.

That seems... weird. The case against this topsite operator seems like exactly the kind of case that's actually a slam dunk. It's not going against a third party or intermediary. It's going against the people actually doing the infringing. One can question whether it's a worthwhile business strategy, but the legal strategy against this guy seems to make perfect sense -- as compared to the weird nonsensical legal strategy against The Pirate Bay -- which, again, hosted no infringing content and only acted as a search engine.

So why the different results?

If you've ever watched the documentary about the trial, TPB AFK, it quickly becomes clear that a big part of the trial against the four people loosely associated with the site was more about the fact that they didn't "respect the system." The situation with Peter Sunde is particularly striking. He had really, really strong legal arguments for why he was innocent. Beyond the fact that the site didn't host any infringing content, his role was as a spokesperson for the site, and he had little to do with the site's actual operations. But -- and this is the important part -- he recognized the whole trial was a joke and treated it as such, making fun of the proceedings and of the lawyers and judges for not understanding very basic things about how the internet worked.

To some extent, you could argue that he and the others were convicted for being smartasses in responding to the "very serious" lawsuit from a bunch of lawyers who clearly didn't understand the technological issues at play.

However, in this case -- involving an actual infringer where it was quite clear that he was, in fact, breaking the law -- things were different. This guy cooperated and treated "the system" with the deference it thinks it deserves:

According to Mitti.se, two key elements appear to have kept the man’s punishment down. Firstly, he cooperated with police in the investigation. Secondly – and this is a feature in many file-sharing prosecutions – the case simply dragged on for too long

The Pirate Bay case dragged on for quite a long time as well. Yet it still ended with huge fines and jail time. It's hard to look at the results of the two cases as anything other than the tax one pays for actually calling out a ridiculous system for being ridiculous, rather than sucking up to the system whose own credibility is called into question.

I'm a big supporter in the idea of an impartial judicial system with due process, and especially the idea that the judicial system is "blind" to all but the facts before it. But we all know that's an ideal that is too frequently not met. The widely different results in these two cases further highlights that divide. Play along with the system and get a slap on the wrist -- even if your actual activities clearly violate the law. Don't play along and mock the system, get a huge sentence -- even if your actions don't actually violate the law. In the end, all that seems to matter is the "proper respect" for a system whose own actions shows it deserves none.

Filed Under: copyright, crime, devil, prosecution, sweden, topsite
Companies: the pirate bay

European Commission Discovers The Hard Way That Corporate Sovereignty Provisions And EU Laws Are Incompatible

from the we-did-warn-you dept

The US government and European Commission insist that the inclusion of a corporate sovereignty chapter in the TAFTA/TTIP treaty will not in any way diminish the ability of nations to pass laws as they wish. A fascinating case involving an investment in Romania shows why that's just not true. It concerns a state aid scheme instituted by Romania to attract investments in the country, which offered tax breaks or refunds of customs duties on raw materials. The scheme was supposed to remain in place for 10 years. But as part of Romania's accession to the EU, it was required to cancel this scheme, which was regarded by the European Commission as providing unfair state aid. So, obediently, Romania abolished the scheme in 2005, some years earlier than it had promised.

That didn't go down too well with investors. Two of them were able to use the investor-state dispute settlement (ISDS) clauses of a bilateral treaty between Sweden and Romania to sue the latter. Here's what happened next, as described in the European Commission's press release:

An arbitral award of December 2013 found that by revoking an investment incentive scheme in 2005, four years prior to its scheduled expiry in 2009, Romania had infringed a bilateral investment treaty between Romania and Sweden. The arbitral tribunal ordered Romania to compensate the claimants, two investors with Swedish citizenship, for not having benefitted in full from the scheme.

Just part of the price of joining the European Union, you might think. But the European Commission is unhappy that compensation has been paid:

By paying the compensation awarded to the claimants, Romania actually grants them advantages equivalent to those provided for by the abolished aid scheme. The Commission has therefore concluded that this compensation amounts to incompatible state aid and has to be paid back by the beneficiaries.

That is, both the original state aid and the subsequent compensation for not providing that aid for the full term of the agreement are regarded as forbidden under EU law. So the European Commission is ordering Romania somehow to pull back from the Swedish investors the compensation awarded by the ISDS tribunal. Leaving aside the difficulty of doing so, even if Romania manages that, it will then be in breach of the corporate sovereignty tribunal ruling, which could leave it open to further legal action, and further awards against it. On the other hand, if it doesn't rescind the compensation, it will be fined by the European Commission.

This provides a perfect demonstration of how corporate sovereignty provisions in treaties take away the ability of national governments to act freely. Moreover, in this particular case, whatever Romania chooses to do, its people will suffer financially.

Follow me @glynmoody on Twitter or identi.ca, and +glynmoody on Google+

Filed Under: corporate sovereignty, eu, eu commission, isds, romania, sweden, tafta, ttip