[DRAFT #2 - WILL SUBMIT 15-DEC] ISDS Ban

[Deropia]

Finished reading the document in front of him, Jason removes his glasses with a sigh.

"So, I'll tell you why I can't get behind this. There are some instances where "encouraging legal persons to seek redress through the local court system" is not gonna happen at all. Like in cases where local law either doesn't offer protections, provides for sovereign or crown immunity where even if by some miracle the investor gets a judgement against the Crown it will be largely unenforceable, or worse yet there is a distinct lack of judicial independence in the state where the investment was made and the presiding judge or justice dismisses your case or rules against you because of pressure or instructions from their government. In my honest opinion, a blanket ban might just end up doing more harm than good. If anything, regulation and legislation would do the trick."

[Wallenburg]

This proposal is nonsensical. "Fundamental sapient rights" are better protected by protecting them, not prohibiting this or that treaty mechanism.

[Comfed]

It seems very strange to me that this is worded in a negative way. Wouldn’t it make more sense to word this in a positive way, granting whatever right that the ISDS would prohibit?

[Simone Republic]

On the contrary. The ISDS system provides a defence for corporations wishing to expand into new markets, and provides states with a method of reassuring potential investers that their property and profits won't simply be stolen. Consider the system like an insurance system for corporations wishing to expand: in order to make investments in particular states, these corporations require certain reassurances that their investment will not be lost in the event of regime change, public protest etc. Without this assurance, the corporation would not invest in the states in question.
If the WA takes the incredibly short-sighted step of banning this highly useful system, states recovering from conflict, less developed states and states that have formerly been ostracised by the international community will not be able to offer potential investers any reassurances, as by their nature these tribunals are used when the domestic courts have failed to remedy the issues that the corporation has faced. The end result is that corporations, who owe a duty to their shareholders not to make risky decisions, will not invest in states which they do not feel confident that their investments will be safe in. The losers here are the very people this proposal is aiming to help namely the less developed states.

Finished reading the document in front of him, Jason removes his glasses with a sigh.

"So, I'll tell you why I can't get behind this. There are some instances where "encouraging legal persons to seek redress through the local court system" is not gonna happen at all. Like in cases where local law either doesn't offer protections, provides for sovereign or crown immunity where even if by some miracle the investor gets a judgement against the Crown it will be largely unenforceable, or worse yet there is a distinct lack of judicial independence in the state where the investment was made and the presiding judge or justice dismisses your case or rules against you because of pressure or instructions from their government. In my honest opinion, a blanket ban might just end up doing more harm than good. If anything, regulation and legislation would do the trick."

CoraSpia and Deropia puts it more succintly than the long rebuttal I gave on the TNP forums. Deropia in particular summarized it better on the TNP version. That said, I would like to enter into the record an edited version of the vastly inferior opinion that I wrote to rebut your arguments:

This resolution DIRECTLY HURTS the borrowers (such as poorer countries) that this resolution purports to help. All of the UN reports quoted on your comments above need to be faced against the entire UNCITRAL web site at uncitral.un.org which explains the purpose of ISDS (as defined here).

In a nutshell, in my opinion:

(1) ISDS mechanisms (to use the terminology of the resolution) protect investors that may otherwise not consider at all (or would have to charge higher interest rates) in investing in emerging markets with weaker legal protection and this resolution deprives the emerging markets of this opportunity.

(2) The use of binding arbitration significantly reduces legal costs for all parties concerned. There are some abuses about the use of binding arbitration (especially in employment in the US, to pick an example in real life) but that does not detract from the ability of ISDS mechanisms and independent arbitrations (if genuinely conducted fairly) to reduce borrowing costs for emerging markets and companies based in emerging markets.

In my view, ISDS mechanisms have benefited billions of people worldwide indirectly through lower cost of funding. In my view, This resolution seeks to allow tyrannical governments of jurisdictions with no independent judiciary to manipulate judgments in their favour, entrench corruption, and make developing countries indirectly significantly poorer by making borrowing more expensive for small businesses and individuals in these countries. I believe a pension fund in a rich country that loses the protection ISDS will not litigate a local court - it will simply invest elsewhere.

In my view, this would have the (I assume unintended) attempt to rob the small business owner in a poorly governed country of funds he may need to run his business, or a young student looking to borrow money at reasonable rates to study, by indirectly raising funding costs for all of them, if not starving them of foreign investors' funds outright. I don't think this resolution has been thought through clearly, and could end up being the most staggering example of robbing the poor to support tyranny that I have seen to date in my years in NationStates, in my opinion.

[Tinhampton]

It seems very strange to me that this is worded in a negative way. Wouldn’t it make more sense to word this in a positive way, granting whatever right that the ISDS would prohibit?

That would constitute a blocker of the entire Civil Rights and Social Justice categories.

Still working on this.???

I've been too busy in recent days to clarify that this proposal is now in [QUORUM], but this was Proposal-A-Go-Go two days ago. Campaign telegram presented below in full:

Greetings, Delegate. Please approve my proposed ISDS Ban.

ISDS is a dangerous and biased system of shadow courts where companies can sue member states for seeking to protect universal sapient rights over their own profit.

If you agree that governments should never be forced to surrender public welfare for corporate greed in an unaccountable and unfair way, please approve the ISDS Ban.

Thank you,
The Self-Administrative City of Tinhampton

AS OF 1815 BST ON THURSDAY: Approvals: 82 out of 63 needed (Tinhampton, Enlais, The Scottish Republic, Minskiev, Calamari Lands, Toonela, Orca and Narwhal, Albrook, Aynia Moreaux, Fachumonn, Herd, Treadwellia, Titanfall References, Vnuk, Und Norancess, His Excellency, Holy Katissa, New Amoni, Chantayak, I am the High Ground, Yaxopsville, The Second Indian Union, Xukong, Sedgistan, Politis, Farindallia, Verlos, Anoutbhat, Heromerland, The Candy Of Bottles, Lundia Nokor, Purgatoria Secundus, Vipathe, Araznan, Yokashai Israel, Aarrakynn, Republic of Dixie, Natit Vakkazi, China SCR, Eggtowne, Skon land, Macedale, Lunarossa, Philadelippines, North Cromch, Sacadeez, Nagistan, Tzarkonian, Baccalieu, The Distanic Confederacy, LSMB, Kater Cas, Provinces of Nusantara, Severstan, Solariia, The Finntopian Empire, Chairman Cities, Timmy City, Codiaslands, Peoples Republic of People, Zombiedolphins, Pamant Grau, Onionist Randosia, Battadia, Greznia, Libonesia, Willtechia, Tevaris, Glorious Wakanda, The Isles of Bermuda, Greater Vietnam, Loews, Calnodia, Friskalandia, Jaffalonia, Pogaria, Candensia, The Royal Scottish Highlands, The Anarchist Federation of Spain, Josephtan, Robevo, Zantovia)

[Imperium Anglorum]

"So, I'll tell you why I can't get behind this. There are some instances where "encouraging legal persons to seek redress through the local court system" is not gonna happen at all. Like in cases where local law either doesn't offer protections, provides for sovereign or crown immunity where even if by some miracle the investor gets a judgement against the Crown it will be largely unenforceable, or worse yet there is a distinct lack of judicial independence in the state where the investment was made and the presiding judge or justice dismisses your case or rules against you because of pressure or instructions from their government. In my honest opinion, a blanket ban might just end up doing more harm than good. If anything, regulation and legislation would do the trick."

This proposal is nonsensical. "Fundamental sapient rights" are better protected by protecting them, not prohibiting this or that treaty mechanism.

C Marcius Blythe. We concur with these assessments. While it may be the case that we don't use investor dispute settlement treaties like those described (instead preferring that our investors bring cases of expropriation before our courts which will issue judgements with extraterritorial effect to be enforced by our fleet), we can imagine that nations not willing to stand up for their own interests or not able to sufficiently deter mass thievery would be interested in ensuring that their citizens would be well-treated and also to find impartial adjudicators rather than the cursory and reputational assessments offered by many poorly-administered nations, especially those outside of World Assembly jurisdiction.

[Sinaloan]

For, because i belive that some government still need help

[West Barack and East Obama]

Dr Justin Obama, Deputy Minister of Foreign Affairs: While we would definitely engage in selling off human rights, why not just ban that instead of this? This seems like a repeal waiting to happen.

[Hannasea]

"This is the stupidest proposal the WA has ever considered."

Daniella Russel, MA PhD
Representing the office of:
Ambassador Brittany Hepburn
Semi-Permanent Representative to the World Assembly

[Wallenburg]

"This is the stupidest proposal the WA has ever considered."

"Do not exaggerate, Madam Russel, you have been here since before I took over from Comrade Trevanyika. Necessarily, you have seen first-hand the true extent of the absurdity that this body is capable of. This proposal does not even find itself among the ten thousand stupidest proposals the World Assembly has considered."

[Desmosthenes and Burke]

"This is the stupidest proposal the WA has ever considered."

"Do not exaggerate, Madam Russel, you have been here since before I took over from Comrade Trevanyika. Necessarily, you have seen first-hand the true extent of the absurdity that this body is capable of. This proposal does not even find itself among the ten thousand stupidest proposals the World Assembly has considered."

"While accurate, that is not a high bar, ambassador. In fact, that bar is so low, that we believe Dis Pater has had to place a caution sign about tripping over it while boarding Lord Charun's ferry. For the proposal at hand, unequivocally opposed. ISDS mechanisms remain a useful tool for allowing investment to flow into states that, for whatever reason, do not have adequate judicial systems with appropriate respect for the rule of law, property rights, and sound market-based economic policies without resorting to the extreme barbarism proposed by the Anglican delegate."

[Imperium Anglorum]

"Do not exaggerate, Madam Russel, you have been here since before I took over from Comrade Trevanyika. Necessarily, you have seen first-hand the true extent of the absurdity that this body is capable of. This proposal does not even find itself among the ten thousand stupidest proposals the World Assembly has considered."

"While accurate, that is not a high bar, ambassador. In fact, that bar is so low, that we believe Dis Pater has had to place a caution sign about tripping over it while boarding Lord Charun's ferry. For the proposal at hand, unequivocally opposed. ISDS mechanisms remain a useful tool for allowing investment to flow into states that, for whatever reason, do not have adequate judicial systems with appropriate respect for the rule of law, property rights, and sound market-based economic policies without resorting to the extreme barbarism proposed by the Anglican delegate."

C Marcius Blythe. Legitimate states have the right to resort to self-help in an anarchic state system.

[Alistia]

OOC: Can you re-explain the whole thing in simple terms that don't use unexplained jargon?

Nations can sign free trade agreements with other nations.

Those free trade agreements sometimes contain provisions for a special type of court to be created.

In these special courts, companies can sue member states because those member states have passed laws that harm their corporate interests (such as plain packaging on cigarettes). Member states cannot sue companies, however.

If companies win their cases in these special courts, they can require compensation from member states. This is compensation for lost corporate profits, not because the laws they passed somehow violate international/UN/WA law.

These special courts are unnecessarily one-sided and should therefore be banned by the World Assembly.

Forgive me If my understanding of this is wrong, but I don't get why this is needed.

If these special courts are so big of a problem, then why did the hypothetical nation state enter into the free trade agreement in the first place?
If the nation had a problem with the hypothetical provision "for a special type of court to be created -- (in which) Member states cannot sue companies", then the said nation shouldn't have agreed to enter this agreement in the first place. Its not like they were forced to enter into the FTA.

This also seems to go from the presumption that EVERY SINGLE 'special court' in existence forbids the hypothetical member state to sue the company, and I don't see why this is the case. Is it not possible for a special court to be created that does allow the member state to sue corporations involved? If all members of the FTA agree to this I would think it is possible.

[Barfleur]

Nations can sign free trade agreements with other nations.

Those free trade agreements sometimes contain provisions for a special type of court to be created.

In these special courts, companies can sue member states because those member states have passed laws that harm their corporate interests (such as plain packaging on cigarettes). Member states cannot sue companies, however.

If companies win their cases in these special courts, they can require compensation from member states. This is compensation for lost corporate profits, not because the laws they passed somehow violate international/UN/WA law.

These special courts are unnecessarily one-sided and should therefore be banned by the World Assembly.

Forgive me If my understanding of this is wrong, but I don't get why this is needed.

If these special courts are so big of a problem, then why did the hypothetical nation state enter into the free trade agreement in the first place?
If the nation had a problem with the hypothetical provision "for a special type of court to be created -- (in which) Member states cannot sue companies", then the said nation shouldn't have agreed to enter this agreement in the first place. Its not like they were forced to enter into the FTA.

This also seems to go from the presumption that EVERY SINGLE 'special court' in existence forbids the hypothetical member state to sue the company, and I don't see why this is the case. Is it not possible for a special court to be created that does allow the member state to sue corporations involved? If all members of the FTA agree to this I would think it is possible.

"Ambassador, it is possible for a head of state (or other government official, for that matter) to cause their nation to become a party to an ISDS where the nation as a whole is plainly harmed, but the official is either bribed by the benefiting party or is interested financially in the company that can be expected to profit from the ISDS. In that case, even a tiny minority can force their nation to sign and ratify an ISDS and thus siphon away money from that nation's taxpayers to a corporation which has a good track record of employing politicians."

[WayNeacTia]

More meaningless drivel…

[Alistia]

Forgive me If my understanding of this is wrong, but I don't get why this is needed.

If these special courts are so big of a problem, then why did the hypothetical nation state enter into the free trade agreement in the first place?
If the nation had a problem with the hypothetical provision "for a special type of court to be created -- (in which) Member states cannot sue companies", then the said nation shouldn't have agreed to enter this agreement in the first place. Its not like they were forced to enter into the FTA.

This also seems to go from the presumption that EVERY SINGLE 'special court' in existence forbids the hypothetical member state to sue the company, and I don't see why this is the case. Is it not possible for a special court to be created that does allow the member state to sue corporations involved? If all members of the FTA agree to this I would think it is possible.

"Ambassador, it is possible for a head of state (or other government official, for that matter) to cause their nation to become a party to an ISDS where the nation as a whole is plainly harmed, but the official is either bribed by the benefiting party or is interested financially in the company that can be expected to profit from the ISDS. In that case, even a tiny minority can force their nation to sign and ratify an ISDS and thus siphon away money from that nation's taxpayers to a corporation which has a good track record of employing politicians."

In this case a resolution targeting corruption would seem to be more appropriate and fitting to tackle the issue.

[Tinhampton]

This proposal was marked illegal at 0222 BST today (for trying to regulate outside WA jurisdiction?) and fell out of queue immediately after update started at 0500 BST, despite having approximately 114 approvals out of the 64 required

[The Forest of Aeneas]

This proposal was marked illegal at 0222 BST today (for trying to regulate outside WA jurisdiction?) and fell out of queue immediately after update started at 0500 BST, despite having approximately 114 approvals out of the 64 required

So is 'all' not interpreted to mean 'only within WA jurisdiction' now?

[Sierra Lyricalia]

This proposal was marked illegal at 0222 BST today (for trying to regulate outside WA jurisdiction?) and fell out of queue immediately after update started at 0500 BST, despite having approximately 114 approvals out of the 64 required

So is 'all' not interpreted to mean 'only within WA jurisdiction' now?

There was some disagreement on that point, but the majority thought it was clear cut enough not to require a formal discussion. Since the proposal mandated "all... mechanisms... be disbanded," without acting solely on member states (e.g. "all member states party to treaties containing ISDS mechanisms must abrogate or renegotiate..."), that is sufficient to trip the mandate on non-member states trigger.

[Wallenburg]

So is 'all' not interpreted to mean 'only within WA jurisdiction' now?

There was some disagreement on that point, but the majority thought it was clear cut enough not to require a formal discussion. Since the proposal mandated "all... mechanisms... be disbanded," without acting solely on member states (e.g. "all member states party to treaties containing ISDS mechanisms must abrogate or renegotiate..."), that is sufficient to trip the mandate on non-member states trigger.

This seems to be a major departure from the standard that resolutions obviously only apply to member states, and that if they can be interpreted as to only apply to member states then they are legal.

[Imperium Anglorum]

The proposal says "an 'FTA' as a bilateral or multilateral free trade agreement that includes at least one member state" and the following definitions that depend on it, the definition of an ISDS mechanism follows to mean something akin to "those ISDS mechanisms that are part of free trade agreements that include at least one member state". This is the source of the meta-gaming problem when coupled with the ISDS disbandment clause, in my view. (Obviously, this is not a ruling.)

I'll outline a three step evaluation for this sort of metagaming. (I'll call it extrajurisdictional metagaming.)

1. If there is no distinction between member nations and non-member nations raised in the proposal, beyond blind invocation of "member nations", the proposal is read as if it said "member nations".
   
   
2. If there is a distinction between member nations and non-member nations, then does there exist an explicit effect on non-members? If there is no such effect, it's fine.
   
   
3. If there is an explicit effect on non-members, does it assert WA jurisdiction over them or does it take action through WA nations and institutions only? If the latter, it is fine.

This fact pattern fits into the logic like so. There is a distinction between member nations and non-member nations. The phrase "at least one member state" countenances the possibility that there might be an FTA between a member nation and a non-member nation. There is an explicit effect on non-members by "requir[ing] that all ISDS mechanisms currently in operation be disbanded". That effect is not exercised through WA nations or institutions only. There is therefore extrajurisdictional metagaming.

The WA can require member nations to abrogate treaties with non-members, withdraw from such treaties, or stop giving effect to those such treaties (or parts thereof) in member nations. It can even require member nations to renegotiate those treaties without certain provisions. But it cannot assert those treaties themselves are or be changed without that intermediation.

That's what this proposal does in "requires that all ISDS mechanisms currently in operation be disbanded". What it would do, on plain reading, is say that a FTA between A, B, C, and D, where only A is a WA member, must have its ISDS mechanism disbanded. Doing so extends WA jurisdiction to non-members B, C, and D. And the reading that "ISDS mechanisms" applies only to those ISDS mechanisms within or between member nations is precluded by the definition's reliance, in a(iii) [recte 1(c)], on the definition given for FTA in a(i) [recte 1(a)]. Definition clauses have to be followed. See, eg, Scalia & Garner, Reading Law, 225 et seq (2012). This is also why, for example, I wrote GA 531 s 1(b) to refer to "customs area refers to a general customs area entirely subject to World Assembly law", rather than saying that they are customs areas that include one or more WA members.

The extent of this is also only in that section. Section b [recte 2] would have the effect of preventing WA members from joining any FTA, even if it has non-members, which has an ISDS mechanism. If "all ISDS mechanisms" were stated without relying the definition in section a(i) [recte 1(a)], it would be taken to mean "all ISDS mechanisms within the jurisdiction of the World Assembly". But because it relies on this definition for FTA, the text overrides that presumption.

---

Fixing the issue is relatively easy. One could have member nations push for abrogation of such mechanisms in non-member agreements. Or require withdrawal of members from such agreements. Or have every member nation nullify the effect of those mechanisms within its jurisdiction (setting up lots of international incidents, but that is an aside and not relevant for the metagaming question).

The simplest is withdrawal. Even if you assume that some FTA has some "eternity or bust" clause in it, doing so is not regulating the FTA or extending jurisdiction over non-members because the effect of breaking that clause is channelled only through member nations.

[Tinhampton]

Cheers, IA. Changes have been made and I'm looking at a February 14th start.

Ending ISDS: I'm Lovin' It

[Second Sovereignty]

OOC:
The opposition to this is mostly neoliberal nonsense, and can thus be safely ignored. It is not 'tyranny' to prioritize the interests of one's own people over the interests of foreign multinational corporations, and any 'investors' who require the assurance that they will never see any legal recourse for their gross abuse and excess, are simply not worth having. It's almost like the vaunted 'free trade' regime is wildly unbalanced in favor of the economically powerful blocs that espouse such policy; who'd've thunk?

I would recommend including more robust arguments against ISDS systems, such as them being a method of overriding the democratic will of the people and permanently enslaving governments to predatory agreements, but that's up to you.

[Simone Republic]

Cheers, IA. Changes have been made and I'm looking at a February 14th start.

Ending ISDS: I'm Lovin' It

Hell No.
Hell No.
Hell No.

In my view, This resolution seeks to allow tyrannical governments of jurisdictions with no independent judiciary to manipulate judgments in their favour, entrench corruption, and make developing countries indirectly significantly poorer by making borrowing more expensive for small businesses and individuals in these countries.

In my view, this would have the (I assume unintended) attempt to rob the small business owner in a poorly governed country of funds he may need to run his business, or a young student looking to borrow money at reasonable rates to study, by indirectly raising funding costs for all of them, if not starving them of foreign investors' funds outright. I don't think this resolution has been thought through clearly, and could end up being the most staggering example of robbing the poor to support tyranny that I have seen to date in my years in NationStates, in my opinion.

[Second Sovereignty]

Hell No.
Hell No.
Hell No.

In my view, This resolution seeks to allow tyrannical governments of jurisdictions with no independent judiciary to manipulate judgments in their favour, entrench corruption, and make developing countries indirectly significantly poorer by making borrowing more expensive for small businesses and individuals in these countries.

In my view, this would have the (I assume unintended) attempt to rob the small business owner in a poorly governed country of funds he may need to run his business, or a young student looking to borrow money at reasonable rates to study, by indirectly raising funding costs for all of them, if not starving them of foreign investors' funds outright. I don't think this resolution has been thought through clearly, and could end up being the most staggering example of robbing the poor to support tyranny that I have seen to date in my years in NationStates, in my opinion.

OOC:
Repeating nonsense does not make it less nonsense; mysteriously, the kind of massive corporations which 'need' ISD mechanisms are the sources of corruption in reality, not the victim of it. This hand-wringing about 'tyranny' and 'robbing the poor' is unfounded, unrealistic, and morally empty. Do try and remember, not being beholden to the economic interests of a handful of economically powerful states is, despite what said states might like you to believe, much less of an indicator of bad-ness or whatever measure they're trying to sell you on this time.