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

[Tinhampton]

This proposal has been filed to the General Assembly Social Justice Board.
NOTE 3: I know, right? Am I seriously going to have this one drop out of queue a THIRD time? Roll on December 15th 2023!
NOTE 2: at 1909 GMT on the 15th of February 2023, the second iteration of this proposal reached quorum with Dabberwocky's approval, the 62nd all told.
NOTE: The first iteration of this proposal had the 63 approvals required for quorum when I woke up at around 2130 BST on the 20th of April 2022... but I don't remember how exactly!

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Character count: 1,953
Word count: 303

ICly by Kevin Mitchell, third-in-line to the post of Delegate-Ambassador.
OOC: See also A/70/285, A/HRC/30/44, A/HRC/33/40 and the ISDS Platform FAQ. Also, I have absolutely nothing better to do right now now that McDonalds closes at 8pm. Will submit this as soon as I get McDonalds... whenever that is, anyway. (I actually submitted this a few dozen Big Macs later)

ISDS Ban
A resolution to reduce income inequality and increase basic welfare.

Category: Social Justice

Strength: Significant

Proposed by: Tinhampton

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Recognising that many free trade agreements contain investor-state dispute settlement (ISDS) mechanisms, which often promise fair and impartial mediation of disputes between member states and corporations - often large and foreign - that invest in them,

Concerned, however, that the main practical effect of ISDS mechanisms is - in any event - to provide a convenient cover for such corporations to effectively gain control over member states' own resources (whether natural or financial) in venues with little accountability, even less transparency, and internal oversight often only by corporate lawyers rather than neutral adjudicators, and

Believing that fundamental sapient rights should not be literally or metaphorically sold to the highest bidder, especially not via ISDS...

The General Assembly hereby:

1. defines, for the purposes of this resolution:
   
   1. an "FTA" as a bilateral or multilateral free trade agreement that includes at least one member state,
   2. "regular courts" as domestic courts and any court organised by the World Assembly which is permitted by resolution to hear cases against member states, and
   3. an "ISDS mechanism" as any mechanism included in an FTA which has the effect of allowing any legal person to file suit against any party to that FTA outside of regular courts, but which does not allow any other entity to file such suit, nor allows any state party to that FTA to file suit against any legal person outside of regular courts,
2. forbids the establishment of future ISDS mechanisms,
3. requires member states to withdraw from all of the FTAs they are party to that contain ISDS mechanisms (although this resolution does not forbid member states from subsequently renegotiating those FTAs as to not contain ISDS mechanisms, or indeed seeking to do so), and
4. strongly urges legal persons who believe that their rights have been violated to seek redress in regular courts.

Whereas fundamental sapient rights should not be literally or metaphorically sold to the highest bidder, the General Assembly hereby:

1. defines, for the purposes of this resolution:
   
   1. an "FTA" as a bilateral or multilateral free trade agreement that includes at least one member state,
   2. "regular courts" as domestic courts and any court of the World Assembly Judiciary Committee, and
   3. an "investor-state dispute settlement mechanism," henceforth an ISDS mechanism, as any mechanism included in an FTA which has the effect of allowing any legal person to file suit against any party to that FTA outside of regular courts, but which does not allow any other entity to file such suit, nor allows any state party to that FTA to file suit against any legal person outside of regular courts,
2. forbids the establishment of future ISDS mechanisms,
3. requires that all ISDS mechanisms currently in operation be disbanded, and
4. strongly urges legal persons who believe that their rights have been violated to seek redress in regular courts.

[WayNeacTia]

"No. It is just more meaningless regulation. Nations are capable of making some decision by themselves, without hand holding."

Wayne

[Tinhampton]

Mitchell: Are you arguing that nations should be making suboptimal decisions? Member states cannot sue corporations in ISDS Court Imitation Product; corporations, however, are more than welcome to sue member states. I have been very clear during what little time we've had debating this process that justice should be a two-way street.

[WayNeacTia]

Mitchell: Are you arguing that nations should be making suboptimal decisions? Member states cannot sue corporations in ISDS Court Imitation Product; corporations, however, are more than welcome to sue member states. I have been very clear during what little time we've had debating this process that justice should be a two-way street.

"I've made my position very clear. It is just meaningless regulation."

Wayne

[Araraukar]

OOC: I'm going by the rule of thumb that if a proposal's language is nonsense to me, it's nonsense to my nation too (I know gnomes can translate words, but they can't translate when concepts don't exist, like the recent apostate thing - apostate has no accurate translation in Finnish/Araraukarian), so no support on jargon babble nonsense.

Also, why should nations not be allowed to sue corporations? Just makes no sense.

[Tinhampton]

OOC: [...] Also, why should nations not be allowed to sue corporations?

Definition updated, in particular to clarify that only foreign investors - not domestic investors - are allowed to "sue" states in most if not all real-world ISDS mechanisms. It is because ISDS mechanisms lead to "nations not be[ing] allowed to sue corporations" that I seek to prevent their use in free trade agreements involving WA member states.

Thus, "any legal person" in Article a(ii) does not necessarily mean literally any legal person anywhere in the world without exceptions/conditions; it means any legal person who is allowed by the FTA to bring "suit" against a state in an ISDS mechanism. Those legal persons who are not so allowed (such as non-TNCs) may remain so disallowed without member states or TNCs being able to claim that their ISDS mechanisms are not, in fact, ISDS mechanisms (which would therefore escape this proposal's Articles b and c ).

[CoraSpia]

"The Haven firmly believes that nations are capable of deciding on the provisions in their own international treaties themselves. Furthermore, without ISDS a nation without a proper understanding of property rights may attempt to steal the property of an investor: ISDS ensure that corruption in the domestic government and courts does not lead to unfair treatment of international investors. We will not be able to support this proposal and doubt that drafting changes will be sufficient to change our view.

[The Hazar Amisnery]

"If some country accuses me of ripping them off, I should have the right to march over there and settle the dispute. I'm not going to the WA"
-Tim Shokolad, Trade Minister

OOC: The UN didn't ban ISDS, they made rules about it. Why do we have to outright ban it? https://uncitral.un.org/en/texts/arbitr ... ansparency

[Tinhampton]

OOC: The UN didn't ban ISDS, they made rules about it. Why do we have to outright ban it? https://uncitral.un.org/en/texts/arbitr ... ansparency

If you actually read the links in my OP, you would find out that the UNHRC's (emeritus) Independent Expert on the promotion of a democratic and equitable international order has called for the abolition of ISDS on multiple occasions in his capacity as such.

The UN has not banned conversion therapy, either. However, my resolution "End Conversion Therapy" was in large part inspired by another official report by another Independent Expert (and a campaign by several LGBTQ+ advocacy groups to ban conversion therapy in the United Kingdom, which has taken no action as of yet).

The WA would be able to do almost nothing if it could only do things that the Arrellyooenn could do.

[Tinhampton]

It's been five days. Any other concerns?

[Araraukar]

It's been five days. Any other concerns?

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

[Tinhampton]

It's been five days. Any other concerns?

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.

[CoraSpia]

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.

The premise is objectively wrong though. These courts require qualified arbitrators which both sides have the opportunity to select and to challenge. They are created with the consent of both nations.

The function of these courts is to protect the rights of foreign investers who have had their property expropriated or who have suffered discrimination in corrupt or authoritarian states. In fact with the ridiculous police powers doctrine which prevented the investers in the case you have referred to (regarding plain packaging on cigarettes), I would argue that these courts give far too much weight to the interests of host countries.

[Tinhampton]

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.

The premise is objectively wrong though. These courts require qualified arbitrators which both sides have the opportunity to select and to challenge. They are created with the consent of both nations.

The function of these courts is to protect the rights of foreign investers who have had their property expropriated or who have suffered discrimination in corrupt or authoritarian states. In fact with the ridiculous police powers doctrine which prevented the investers in the case you have referred to (regarding plain packaging on cigarettes), I would argue that these courts give far too much weight to the interests of host countries.

In my OP, I link to a UN report called A/70/285. In that report, the author talks about Philip Morris filing ISDS suits against Uruguay - one of the most prosperous countries in South America - and Australia for having the cheek to impose common-sense regulations on tobacco. It also talks about a Swedish electricity company called Vattenfall filing an ISDS suit against Germany, which has one of the largest economies in the world and hosted the FIFA World Cup as recently as 2006, for deciding to stop using nuclear power plants. These states cannot be described in any sense of the word as being "corrupt or authoritarian."

Also in that report, the author refers to an ISDS case called Vivendi v. Argentina. One of the arbitrators in the Vivendi case was literally a director of UBS, "the single largest shareholder in Vivendi," to the point where part of her salary was being paid in UBS shares. Argentina's appeal of their defeat because of this was subsequently rejected,

[CoraSpia]

The premise is objectively wrong though. These courts require qualified arbitrators which both sides have the opportunity to select and to challenge. They are created with the consent of both nations.

The function of these courts is to protect the rights of foreign investers who have had their property expropriated or who have suffered discrimination in corrupt or authoritarian states. In fact with the ridiculous police powers doctrine which prevented the investers in the case you have referred to (regarding plain packaging on cigarettes), I would argue that these courts give far too much weight to the interests of host countries.

In my OP, I link to a UN report called A/70/285. In that report, the author talks about Philip Morris filing ISDS suits against Uruguay - one of the most prosperous countries in South America - and Australia for having the cheek to impose common-sense regulations on tobacco. It also talks about a Swedish electricity company called Vattenfall filing an ISDS suit against Germany, which has one of the largest economies in the world and hosted the FIFA World Cup as recently as 2006, for deciding to stop using nuclear power plants. These states cannot be described in any sense of the word as being "corrupt or authoritarian."

Are you aware that Philip Morris lost both times?

[Tinhampton]

Only about one in three ISDS cases are won by the sued state IRL.

Regardless - if ISDS usually finds in favour of the investors, then the WA should ban it because it often requires members to compensate corporations for exerting self-interested influence outside the regular court system. If ISDS usually finds in favour of the state, then the WA should ban it because it often requires members to fork out to successfully defend themselves against such compensation/exertations. Interesting...

[Wormfodder Delivery]

The Wormfodder Delivery Service supports this, less problems with governments disliking our business practices, hooray!

[CoraSpia]

Only about one in three ISDS cases are won by the sued state IRL.

Regardless - if ISDS usually finds in favour of the investors, then the WA should ban it because it often requires members to compensate corporations for exerting self-interested influence outside the regular court system. If ISDS usually finds in favour of the state, then the WA should ban it because it often requires members to fork out to successfully defend themselves against such compensation/exertations. Interesting...

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.

[Barfleur]

"Barfleur supports this common-sense measure to bring some degree of parity to the field of international commercial arbitration. It boggles the mind that, under the ISDSs targeted by this proposal, a corporation may bring a suit against a nation, for any number of reasons, and yet the nations--and their people--are confined to a reactive, defensive role. Litigation of any kind has got to be a two-way street, and no system should literally place one class of litigant above the law."

[Tinhampton]

El bump.

[Xernon]

"This... is not a bad proposal when you actually get to the meat of what it is trying to accomplish, but our delegation must note how much effort that task alone requires. Clause a ii specifically is incredibly dense and difficult to follow through and understand. If that section can be simplified and be made more clear, that'd go a long way in helping readers understand what exactly the resolution seeks to accomplish. We should also note -- you explain the need for this well in your replies to other comments, but your sole pre-ambulatory clause does not readily inform the specific necessity for why the WA needs to tackle this topic (or what topic it is even tackling tbh). Our last comment is a bit of a question/inquiry -- you reference 'legal person' several times but don't seem to have it defined anywhere. More so, why does this need to be limited to legal persons only as opposed to all inhabitants? That is all as far as our comments on this proposal go. Good luck with the drafting." - Count Nyle

[Tinhampton]

Mitchell: All corporations are legal persons, but not all legal persons are corporations - charities, for example. I would urge the Count to carry out his own research into the investor-state dispute settlement system.

[Tinhampton]

Mitchell: It's been a few religious holidays. Does anybody else have anything else to say?

(OOC: and probably a few dozen Big Macs...)

[Tinhampton]

This will be submitted on April 18th 2022 absent further feedback of note.

[Tinhampton]

Still working on this.