Jean Blaylock, campaigns and policy manager at Global Justice Now, has been active in trade and food campaigning for over 15 years. She spoke to Global Justice Cambridge by Zoom on 21 October. This summary of the talk is by Clare Sansom.
Corporate Courts and the Climate
Jean began by saying that ‘corporate courts’ is a short term for ISDS – the investor-state dispute settlements through which corporations (from another country) can sue governments and other entities for taking action that would threaten their investments and future profits. These courts are fundamentally corrupt and outside the normal legal systems and GJN has been campaigning against them for some time.
She illustrated this point with a couple of examples: a famous early one of a tobacco company suing the Australian government for its decision to legislate for plain-paper packaging on cigarettes, and a later, climate-related one in which the US oil and gas company Lone Pine is suing the Canadian government over a fracking moratorium in Quebec. Fracking had become very unpopular in Quebec, and active anti-fracking groups persuaded the government to introduce first a review of the practice and then the moratorium. Lone Pine is suing for the profits that they would have taken out of this project if fracking had gone ahead. Similarly, the British oil company Rockhopper is suing the government of Italy over a ban on offshore drilling near the Italian coast, and two companies are suing the Dutch government over their phase-out of coal power. This action started in 2015, the year that the Dutch signed up to the Paris agreement. Activists challenged this and it eventually reached the Supreme Court, which held the government to its promises under that agreement. The companies have now threatened to sue for billions if the coal phase-out goes ahead.
More information about these case studies and others can be found at https://www.globaljustice.org.uk/our-campaigns/trade/corporate-courts/isds-case-studies/.
This last example shows that it can be possible for governments and activists to win ISDS cases, but there is another problem even when they do: the regulatory chilling effect. The Australian regulation on plain paper cigarette packages came out of the WHO, and several other countries were only a little behind the Australians when the company sued. This led to other countries putting their plans on hold, and they were only reinstated when the Australian government won the case on a technicality. There have been other occasions since when an ISDS case against one country has caused others to pause similar actions. The poorer and more vulnerable a country is, the more likely they are to pause desperately needed climate action because another country – perhaps in the rich world – is being sued. On the climate issue, the COP system has been designed to keep pushing for more ambitious climate action, but the corporate courts are pushing back strongly in the other direction. If we are to get the climate action that we need, we must get rid of them.
The UK is involved in a number of treaties that have corporate courts built into them, and this number is only increasing since Brexit. In particular:
- ISDS is written into the Energy Charter Treaty, which allows fossil fuel companies to sue any of its 50 member states (including the UK)
- The UK is planning to write it into several of the post-Brexit trade deals that it is pursuing (although so far, at least, it has been kept out of the Australia deal)
GJN is pushing for the UK to exit the Energy Charter Treaty and to keep ISDS out of any deals it signs.
Globally, however, there has been something of a recent trend against ISDS. Some South American countries, including Brazil, have never signed up to corporate courts and even the US is thinking of dropping some. Several European countries and the EU itself are thinking of leaving the Energy Charter Treaty. Global Justice Now is hoping to persuade the UK government to do the same.
Questions
Is there a specific reason why these countries are dropping out of the corporate court system?
Jean described the history of the system in terms of a ‘wave’; corporate courts were first set up in the 60s and 70s but very rarely used then. The number of cases only began to increase significantly in the late 90s and early 2000s, and it is only recently that countries have begun to have second thoughts about them.
What’s the history of the Energy Charter Treaty?
Jean said that this treaty was set up after the collapse of the USSR to protect companies that wanted to access Soviet oil. We knew about climate change then, but it wasn’t really on the agenda, and the idea of protecting fossil fuel interests was quite popular with the public then, but things are very different now. Most of the countries that are signed up are EU members, and if the EU and the UK were to leave the treaty would probably become unviable.
Countries that leave the Energy Charter Treaty still have financial liabilities to it. Will these departures really be enough to neuter it?
Jean pointed out that these liabilities are ‘only’ for 20 years, and that countries that leave could choose not to pursue them. If (for example) the EU, the UK and Norway were to leave there would not be enough left to press for significant penalties.
How much progress are GJN (and others) making in persuading Parliamentarians not to back corporate courts?
Jean replied that the Labour Party is opposed to them and the Lib Dems and the SNP are critical. The Lords are persuadable, largely because they have noted the need for a level playing field and some backbench Tories have expressed concerns. The Government, unsurprisingly, is not yet convinced but even they are beginning to realise that corporate courts are unpopular. The Brexiteer need for ‘independence’ might even work in our favour, and they might be persuaded that it is better to sacrifice ISDS than to risk a whole trade deal.
Has the issue been debated recently?
Jean said that it was discussed during debates on the Trade Bill. We didn’t win what we wanted to on that one, but at least the issue is in the open. It has also been discussed in some All-Party Parliamentary Groups and in Westminster Hall debates; both these are often more thoughtful and less partisan than the main Commons debates. Government representatives frequently respond to criticism by saying that business needs it, but many businesses have disagreed.
What’s the record of countries successfully defending their actions in ISDS cases?
Jean said that so far governments appear to have won more cases than corporations, but this is skewed by the fact that many cases are settled out of court (with large payments to the corporations). Looking at the cases that come to judgement, the tally is more like 60:40 in favour of corporations, and some of the 40% were only won after concessions. Countries also need to pay high fees to skilled lawyers in order to win.
Does this not skew the system against poor countries?
Jean agreed.
Are any campaign techniques particularly useful against corporate courts?
Jean said that there is a lot to be said for just keeping going: the dogged action against the last iteration of this problem worked in the end. Where possible, left-wing governments can be powerful allies.
How can we campaign in the UK, with a very right-wing government?
Jean said that even the UK government knows that corporate courts are controversial and will be unpopular once they are understood. We need to get the issue discussed in the mainstream media and we can also work with our international allies (e.g. in other European countries against the Energy Charter Treaty).
If fossil fuel companies can defend themselves by claiming that if they lose money, they will have to make people redundant, can we not link our campaign to the idea of a ‘just transition’ to sustainable jobs in clean energy?
Jean said that there is a question mark over whether the money won by companies under ISDS actually ends up in investment and jobs. This is the hedge fund economy, not the ‘real’ economy.
As there were no further questions, Aidan thanked Jean again and said that she had given us exactly the information we will need if we are to raise questions around corporate courts during our actions linked to COP26.
