Eli Lilly Raises Stakes: Says Canada Now Owes It $500 Million For Not Granting A Patent It Wanted

from the too-much-is-never-enough dept

A few months ago we wrote about the extraordinary -- and worrying -- case of Eli Lilly suing Canada after the latter had refused to grant a pharma patent. Eli Lilly's contention was that by failing to grant its patent (even if it didn't meet the criteria for a patent in Canada), Canada had "expropriated" Eli Lilly's property -- and that it should be paid $100 million as "compensation".

But it seems that the company has had second thoughts. Not that its action was outrageous, and that it ought quietly to retract its suit in the hope that people might just forget about this display of presumption; instead, it has decided it was far too generous in asking for only $100 million, as this Globe and Mail story explains:

U.S. pharmaceutical giant Eli Lilly and Co. has escalated a challenge it launched last year against Canada's patent rules under the North American free-trade agreement, and is now demanding $500-million in compensation after the company lost its Canadian patents on two drugs.

Indianapolis-based Lilly has expanded the NAFTA case over the loss of its patent for Strattera, a drug used to treat attention deficit hyperactivity disorder, to also include Canada's invalidation of the company's patent for Zyprexa, which is used to treat schizophrenia.

This shows that the initial action was no one-off, and that if Eli Lilly's action succeeds, we can expect it and many other companies to avail themselves of this method of extracting money from the public purse, as provided for under NAFTA's investor-state dispute settlement (ISDS) clauses.

What's troubling is that similar ISDS schemes are being negotiated for both TPP and TAFTA/TTIP. That will give corporations even more opportunities to sue nations for supposed "expropriation", and to challenge perfectly legitimate local laws that dare to stand in the way of bigger profits.

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

Filed Under: canada, investor state disputes, patents
Companies: eli lilly

Latin American Countries Band Together To Fight Growing Problem Of Investor-State Disputes

from the US/EU-take-note dept

As Techdirt has observed, investor-state dispute resolution (ISDR) is turning into a major weapon that corporations can deploy against nations in order to claim damages for some alleged loss of future profits as a result of government action -- for example, stricter health or environmental regulations. Last year alone, 62 new investment arbitration cases were initiated against nations, and a record award of $1.77 billion was made against Ecuador.

Given that fact, it is perhaps not so surprising to see that country leading a new alliance of nations affected by ISDR and aiming to fight back:

Leaders of several Latin American countries have set up a new coalition to coordinate actions to face the growing number of international legal suits being taken against governments by transnational companies.

A ministerial meeting of 12 countries held in Guayaquil, Ecuador, decided on several joint actions to counter the threat posed by these law suits, which have claimed millions or even billions of dollars from governments.

"No more should small countries face law suits from big companies by themselves," said Ecuador's Foreign Minister Ricardo Patino, at a media conference after the meeting which he chaired. "We have now decided to deal with the challenges posed by these transnational companies in a coordinated way."

As well as holding a conference on the subject, and creating an observatory to monitor cases, the countries agreed to set up a new regional arbitration center for settling investment disputes. This is designed to address one of the biggest problems with the current ISDR mechanism:

The proposed centre is to provide an alternative to existing international tribunals which are seen as biased in favour of investors' interests.

The tribunals, such as ICSID (based at the World Bank in Washington), have also been accused of being mired in conflict of interest situations. Only a few arbitrators hear a majority of cases, with many of them also appearing as lawyers for companies in other cases, and some being board members of transnational companies.

The above article goes on to explain that there have been around 500 ISDR cases so far, with a high number involving Latin American countries: Argentina, Ecuador, Venezuela and Mexico have each had 20 to 30 ISDR actions brought against them.

A background note explaining the reason for the meeting said that arbitration proceedings and claims by European and US multinational companies against a growing number of states of the South have dramatically increased.

These costly litigations, the majority of which were decided in favour of the investors, not only affect the States’ fiscal situation but pose a serious challenge to their national jurisdiction and sovereignty, and compromise on-going development plans in Latin America and other regions.

This problem originated in the 1990s when bilateral investment treaties were signed by developing countries in the expectation of attracting foreign investments, but the negative consequences of such commitments have now become evident, said the note.

In other words, what seemed like a fairly minor issue when signing up to the investment treaties many years ago has since grown into a serious threat to many countries' finances and even sovereignty. That's something that both the US and EU would do well to remember when negotiating the TAFTA/TTIP agreement, which seems certain to discuss the possible inclusion of ISDR measures suffering from exactly the same problem.

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

Filed Under: ecuador, investor state dispute resolution, investor state disputes, isdr, latin america, tpp

People Begin To Wake Up To Massive Dangers Of Investor-State Dispute Resolution

from the this-is-the-big-one dept

Techdirt has been writing about investor-state dispute resolution (ISDR) mechanisms in international trade treaties like TPP and TAFTA/TTIP for two main reasons. First, because of the scale involved: ISDR allows companies to sue entire countries for huge sums, alleging loss of future profits. And secondly, because few seem aware of this growing threat to the national sovereignty of many countries around the world. That finally seems to be changing, with a number of articles warning about the dangers of ISDR appearing recently.

For example, here's a report from the Transnational Institute looking at ISDR in the proposed free trade agreement between the EU and Canada (CETA):

This briefing highlights the public debate around fracking; the interests of Canadian oil and gas companies in shale gas reserves in Europe; and the impacts an investment protection clause in the proposed CETA could have on governments’ ability to regulate or ban fracking. It examines the case study of the company Lone Pine Resources Inc. versus Canada, which, using a similar clause is challenging a fracking moratorium and suing the Canadian government for compensation, and warns this could be the state of things to come in Europe. It recommends that the investor-state dispute settlement mechanism should not be included in CETA.

An article on the Huffington Post site considers ISDR in TPP:

That agreement aims to secure a binding agreement among signatory countries for "trade" rules that would trump national laws in a wide range of areas, including rights to protect the health of the public. It could require countries to rescind national regulations, even laws that protect public health, in the face of claims that they restrict trade.

An important post from Corporate Europe Observatory points out (as Techdirt did) that the leaked European Commission mandate for TAFTA/TTIP explicitly includes ISDR:

Leaked draft versions of the EU negotiating mandate for a far-reaching free trade agreement with the US -- to be approved at next week's trade minister meeting (14 June) -- reveal the European Commission's plans to enshrine more powers for corporations in the deal. The proposal follows a persistent campaign by industry lobby groups and law firms to empower large companies to challenge regulations both at home and abroad if they affect their profits. As a result, EU member states could soon find domestic laws to protect the public interest challenged in secretive, offshore tribunals where national laws have no weight and politicians no powers to intervene.

It goes on to give an excellent summary of how ISDR has already been used to sue governments around the world, and discusses the case of Chevron, and its single-minded efforts to get ISDR into TAFTA/TTIP:

Chevron is currently engaged in a controversial legal battle with Ecuador. The company initiated arbitration to avoid paying US$18 billion to clean up oil-drilling-related contamination in the Amazonian rainforest, as ordered by Ecuadorian courts. The case has been lambasted as "egregious misuse" of investment arbitration to evade justice. No wonder Chevron dedicated its complete contribution to the US government's TTIP consultation to investment protection, "one of our most important issues globally" as they put it.

Finally, a new 24-page report from The Democracy Center (available in English and Spanish), entitled "Unfair, Unsustainable, and Under the Radar," offers perhaps the most approachable introduction to this subject:

We look at how the international investment rules system is being used to punish El Salvador for blocking poisonous gold mining, against Germany for stopping nuclear power, and to attack public health regulations for the tobacco industry in Uruguay. And we flag the next target for the system: government ability to regulate 'fracking'.

Unfortunately, wide knowledge of this system and how it works doesn't really exist beyond a small collection of lawyers and advocates. Published in May 2013 this report explains what seems to many a highly technical issue for a non-technical audience, and in so doing aims to help put a much wider public spotlight on this corporate power grab while there is still time to fight it.

Let's hope so: some of the world's most powerful corporations have realized that ISDR allows them to override national laws by invoking a newly-invented right to expected future profits, and are pushing hard to enshrine that "right" in all the main trade agreements -- TPP, CETA and now TAFTA/TTIP. If they succeed, it will undoubtedly become a standard part of every new FTA thereafter, and practically impossible to eradicate in the future.

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

Filed Under: investor state disputes, public awareness, tafta, tpp