Open letter

AN OPEN LETTER FROM LAWYERS  TO THE NEGOTIATORS OF THE TRANS-PACIFIC PARTNERSHIP URGING THE REJECTION OF INVESTOR-STATE DISPUTE SETTLEMENT

8 May 2012 (Updated).

(Downloadable word version here).  (See their media release here).

As lawyers from the academy, bench and bar, legislature, public service, business and other legal communities in Asia and the Pacific Rim, we are writing to raise concerns about the Investment and Investor-State dispute arbitration provisions being considered in the on-going negotiations for a Trans-Pacific Partnership (TPP) agreement.
We have diverse views about the TPP generally. However, we are united in our view that the foreign investor protections included in some recent Free Trade Agreements (FTA) and Bilateral Investment Treaties (BIT) and their enforcement through Investor-State arbitration should not be replicated in the TPP. We base this conclusion on concerns about how the expansion of this regime threatens to undermine the justice systems in our various countries and fundamentally shift the balance of power between investors, states and other affected parties in a manner that undermines fair resolution of legal disputes.
We are encouraged to note that the Government of Australia has said it is unwilling to submit to Investor-State dispute settlement powers under a TPP and other future trade agreements, and urge the TPP negotiators to exclude the Investor-State system for all countries, not just Australia.
As lawyers, we believe that all investors, regardless of nationality, should have access to an open and independent judicial system for the resolution of disputes, including disputes with government. We are strong supporters of the rule of law. It is in this context that we raise our concerns.
The ostensible purpose for investor protections in international agreements and their Investor-State enforcement was to ensure that foreign investors in countries without well-functioning domestic court systems would have a means to obtain compensation if their real property, plant or equipment was expropriated by a government.  However, the definition of “covered investments” extends well beyond real property to include speculative financial instruments, government permits, government procurement, intangible contract rights, intellectual property and market share, whether or not investments have been shown to contribute to the host economy.
Simultaneously, the substantive rights granted by FTA investment chapters and BITs have also expanded significantly and awards issued by international arbitrators against states have often incorporated overly expansive interpretations of the new language in investment treaties. Some of these interpretations have prioritized the protection of the property and economic interests of transnational corporations over the right of states to regulate and the sovereign right of nations to govern their own affairs.
Increasingly decisions issued under this system see foreign investors being granted greater rights than are provided to domestic firms and investors under the Constitutions, laws and court systems of host countries. In several instances, arbitral tribunals have gone beyond awards of cash damages and issued injunctive relief that creates severe conflicts of law. For instance, a recent order by a tribunal in the case brought by Chevron against Ecuador under a U.S.-Ecuador BIT ordered the executive branch of that country to violate its constitutional separation of powers and somehow halt the enforcement of an appellate court ruling.
This is not a unique case. The scope of government actions that arbitral tribunals have previously considered they may subject to review for possible violations of investor rights includes a ruling on jurisdiction in the Loewen v. United States case under the North American Free Trade Agreement (NAFTA) in January 5, 2001 that ‘measures’ include the function of a domestic court and the standing rules of civil procedure. The arbitral tribunal concluded that a jury decision in private contract litigation constituted a government measure that was subject to NAFTA’s investor rules.
Investors are also seeking to avoid the deliberate decision of governments to require investors to pursue remedies in the domestic courts of the host nation, at least initially, by invoking the most-favoured-nation rule. Subsidiaries of Philip Morris International are seeking to circumvent a requirement in the Uruguay-Switzerland BIT that they must attempt to litigate their objections to Uruguay’s new tobacco labelling laws through the domestic courts for eighteen months before pursuing international arbitration by invoking a provision from a BIT between Uruguay and a third country that does not have that requirement.
Moreover, the design of the Investor-State system tribunals allows lawyers to rotate between roles as arbitrators and advocates for investors in a manner that would be unethical for judges. The system also excludes the right for non-investor litigants and other affected parties to participate and fails to meet the basic principles of transparency, consistency and due process common to our legal systems. Investment arbitration as currently constituted is not a fair, independent, and balanced method for the resolution of disputes between sovereign nations and private investors.
It is of particular concern that, rather than being an option of last resort, the use of this regime is increasing exponentially. BITs with Investor-State enforcement have existed since the 1950s, but between 1972 and 2000 only about 50 disputes were resolved. Since 2000, in the World Bank’s international arbitration body, the International Centre for the Settlement of Investment Disputes (ICSID), alone 173 cases have been resolved and an additional 128 filed.
To put this in perspective, as recently as 1999 only 69 ICSID cases had been launched. Today, there are 370-plus such cases underway, an increase of 436% – and that is only the number of Investor-State cases at ICSID. Over $675 million has been paid out under U.S. FTAs and BITs alone, 70% percent of which pertained to challenges to governments’ natural resource and environmental policies, not to traditional expropriations. Tobacco companies have also used Investor-State dispute settlement to challenge government tobacco control policies enacted to implement obligations under the World Health Organization Framework Convention on Tobacco Control.
The current regime’s expansive definition of covered investments and government actions, the grant of expansive substantive investor rights that extend beyond domestic law, the increasing use of this mechanism to skirt domestic court systems and the structural problems inherent in the arbitral regime are corrosive of the rule of law and fairness.

WE THEREFORE CALL UPON
all governments engaged in the TPP negotiations to follow Australia’s example by rejecting the Investor-State dispute mechanism and reasserting the integrity of our domestic legal processes.

PRINCIPAL SIGNATORIES

Retired Justice Elizabeth A Evatt, AC, LLB, LLD
Former Chief Justice of the Family Court of Australia & Former President of the Australian Law Reform Commission
AUSTRALIA

Rt Hon Sir Edmund Thomas KNZM, QC, LLB(NZ), LLD(VUW)
Retired Judge of the New Zealand Court of Appeal & Former Acting Judge of the Supreme Court
NEW ZEALAND

Sir Owen Woodhouse ONZ, KBE, DSC, LLD
Retired President of the Court of Appeal and Former President of the New Zealand Law Commission and Chair of the Royal Commission on Accident Compensation

Professor Margaret Wilson M Jur
Te Piringa Faculty of Law, Waikato University
Former Speaker of the NZ House of Representatives & Former Attorney General
NEW ZEALAND

Bruce Fein JD
Bruce Fein & Associates
Former Associate Deputy Attorney General  & General Counsel to the Federal Communications Commission, Reagan Administration
USA

Jovino Guillermo Cabanillas Zaldivar,
Ex  Superior de la Corte Superior de Justicia de Lima
PERU

Professor Bryan Gould CNZM, BCL(Hons)(Oxon), PhD
Former Member of Parliament, Britain & Vice-Chancellor, University of Waikato
NEW ZEALAND

Hon Laila Harré BA, LLB
Former Member of Parliament, NZ & Cabinet Minister
NEW ZEALAND

Professor Jerome Levinson JD
Washington College of Law, American University
Former General Counsel, Inter-American Development Bank
USA

Sir Bruce Slane KNZM, CBE, LLB
Former President NZ Law Society and Auckland District Law Society, Former Chairman NZ Broadcasting Tribunal and Privacy Commissioner
NEW ZEALAND

Professor Margaret Bedggood QSO, LLB, MA (NZ), MA(Lond)
Honorary Professor of Law, Waikato University, Visiting Fellow, Kellogg College Oxford, and Former Chief NZ Human Rights Commissioner
NEW ZEALAND

Nadja Tollemache OBE, LLM (Oxon)
Admitted to the Bar (Middle Temple) 1960, Former NZ Parliamentary Ombudsman & Former Banking Ombudsman
NEW ZEALAND

Peter Hosking LLB, Dip CM
Senior United Nations Consultant
Former (NZ) Human Rights Commissioner
NEW ZEALAND

Ross Wilson BA, LLB, AAMINZ
Former President New Zealand Council of Trade Unions and Chairman Accident Compensation Corporation
NEW ZEALAND

Ralph Nader JD
Public Advocate
USA

Professor Harry Arthurs
Former Dean, Osgoode Hall Law School & Former President, York University
CANADA

Professor Muthucumaraswamy Sornarajah
CJ Koh Professor of Law
Faculty of Law
National University of Singapore
SINGAPORE

Professor Gurdial Singh Nijar LLM
Faculty of Law, University of Malaya
Director, Centre of Excellence for Biodiversity Law
MALAYSIA

Aníbal Sierralta Ríos
Profesor y consultor de Comercio Internacional
PERU

Eliana Ames Vega
Catedrática de la Facultad de Derecho de la UNIFE
PERU

Mercedes Lu De Lama
Asesora Técnica
Alianza Mundial de Derecho Ambiental –ELAW
PERU

Honorary jurists:

Professor Jagdish Bhagwati
University Professor, Economics & Law,
Columbia University
Economic Policy Adviser to Director General of GATT (1991-93) and External Adviser to WTO, Member of Kofi Annan’s  Advisory Committee on the NEPAD Process in Africa
USA

Jose de Echave
Director of CooperAcción
Former Vice-Minister of the Environment
PERU

CURRENT LEGISLATORS

Rt Hon Winston Peters
Member of Parliament, Leader of New Zealand First Party,
Former Deputy Prime Minister, Foreign Minister & Treasurer
NEW ZEALAND

Metiria Turei LLB
Member of Parliament and Co-Leader of the Green Party
NEW ZEALAND

Andrew Little LLB, BA
Member of Parliament, Labour Party &
Former National Secretary, Engineering, Printing
and Manufacturing Union
NEW ZEALAND

Eugenie Sage LLB BA
Member of Parliament, Green Party
NEW ZEALAND

Sharon Anglin Treat JD
Maine State Legislator
Hallowell, Maine
USA

LEGAL ACADEMICS & PRACTITIONERS

Tavake Barron Afeaki LLB
Barrister
Auckland
NEW ZEALAND

Tai Ahu LLB, BA
Assistant Lecturer, School of Law
Victoria University of Wellington
NEW ZEALAND

Professor Gordon Anderson LLM
School of Law
Victoria University of Wellington
NEW ZEALAND

Professor Antony Anghie BA, LLB, SJD
Samuel D Thurman Professor of Law
SJ Quinney School of Law
University of Utah
USA

Associate-Professor Donald Anton
College of Law
Australian National University
AUSTRALIA

Professor Christopher Arup LLM, PhD
Business Law,
Faculty of Business & Economics
Monash University
AUSTRALIA

Professor Brook Baker JD
School of Law
Northeastern University
USA

Professor Barry Barton BA(Hons), LLM
Te Piringa Faculty of Law
University of Waikato
NEW ZEALAND

Dr Sadeq Bigdeli LLM, PhD
Senior Lecturer
Te Piringa Faculty of Law
University of Waikato
NEW ZEALAND

Professor Neil Boister BA, LLB, LLM, PhD
Faculty of Law
University of Canterbury
NEW ZEALAND

Professor Klaus Bosselmann PhD
School of Law
University of Auckland
NEW ZEALAND

Chris Bostic JD
Deputy Director
Action on Smoking & Health (ASH)
USA

Associate Professor Claire Breen BCL,
LLM, PhD
Te Piringa Faculty of Law
University of Waikato
NEW ZEALAND

Professor Warren Brookbanks LLM, BD
School of Law
University of Auckland
NEW ZEALAND

Associate Professor Petra Butler PhD
Faculty of Law
Victoria University of Wellington
NEW ZEALAND

German Inostrza Charnock,
Lawyer, Licensed Jiridical Sciences
Presidente, Directorio Corporaction Innovarte
CHILE

Alison Cleland LLB(Hons), LLM, Dip LP, PG Cert
Senior Lecturer
School of Law
University of Auckland
NEW ZEALAND

David Colley, BA(Hons), LLB, DipEd, DipLegPrac
Industrial Officer
Australian Education Union
AUSTRALIA

Madeleine Collier BA, LLB
Solicitor, Auckland
NEW ZEALAND

Dr Tim Connor LLB
Lecturer in law
University of Newcastle
AUSTRALIA

Associate Professor Alberto Costi LLB(Montreal), LLM(Harv)
Faculty of Law
Victoria University of Wellington
NEW ZEALAND

Nicholas Coxon LLB
Legal Researcher
Cancer Council, Victoria
AUSTRALIA

Stuart Cummings LLB
Barrister sole, Auckland
NEW ZEALAND

Duncan Currie LLB(Hons), LLM
International Lawyer
Globelaw
Christchurch
NEW ZEALAND

Professor John Dawson LLD
Faculty of Law
University of Otago
NEW ZEALAND

Peter Dodd, BA, LLB,BEc,MEc
Solicitor
Public Interest Advocacy Centre
AUSTRALIA

Associate Professor Treasa Dunworth
LLB(Hons), LLM(Harv)
School of Law
University of Auckland
NEW ZEALAND

Professor Kim Economides LLM, FSALS
Faculty of Law
University of Otago
NEW ZEALAND

Dr Richard Ekins DPhil(Oxon)
Senior Lecturer in Law
University of Auckland
NEW ZEALAND

Professor Thomas Faunce LLB(Hons), BMed, PhD
College of Law  & College of Medicine, Biology & the Environment
Australian National University
AUSTRALIA

Associate Professor John Hopkins, PhD
School of Law
Canterbury University
NEW ZEALAND

Dr Chris Gallavin PhD
Senior Lecturer
Faculty of Law
University of Canterbury
NEW ZEALAND

Julian Gardner BA, LLB
Legal Consultant, Melbourne
AUSTRALIA

Professor James Gathii SJD (Harv)
Governor George Pataki Professor of International Commercial Law
Albany Law School
USA

Professor Andrew Geddis BA(Hons),
LLB(Hons), LLM
Faculty of Law
University of Otago
NEW ZEALAND
Kris Gledhill BA, LLM
Director, NZ Centre for Human Rights Law, Policy & Practice
University of Auckland
NEW ZEALAND

Dr Susan Hickey LLB, BSocSci,
LLM, PhD
Barrister
Auckland
NEW ZEALAND

Carwyn Jones LLB, MA
Lecturer
Faculty of Law
Victoria University of Wellington
NEW ZEALAND

Danielle Kelly LLB, BSC
Lecturer in Law
University of Auckland
NEW ZEALAND

Professor Jane Kelsey LLB(Hons),
BCL (Oxon), MPhil(Camb), PhD
School of Law
University of Auckland
NEW ZEALAND

Dr Anna Kingsbury BA, LLB, LLM,
LLM, SJD
Senior Lecturer
Te Piringa Faculty of Law
University of Waikato
NEW ZEALAND

Lawrence Kariithi LLM
Solicitor
Western NSW Community Legal Centre
NSW
AUSTRALIA

Associate-Dean Lydia Lazar JD
Harris School of Public Policy Studies
University of Chicago
USA

Geoffrey Leane BEcon(Hons), LLB,
LLM(Harv)
Senior Lecturer
Faculty of Law
University of Canterbury
NEW ZEALAND

John McBride BA, LLB
Barrister, Auckland
NEW ZEALAND

Richard McCabe LLB
NZALPA Counsel
NEW ZEALAND

Professor Martha McCluskey JD, LLM, JSD
Faculty of Law
State University of New York
USA

Professor Anne McGillivray BA, LLB, LLM
Faculty of Law
University of Manitoba
Winnipeg
CANADA

Professor Janet McLean LLB(Hons),
LLM(Mich)
School of Law
University of Auckland
NEW ZEALAND

Dr Robert McQueen BA,LLB, DipEd,
BLitt(Hons), PhD
Associate Professor
Monash University
AUSTRALIA

Chris Mahony BCom, LLB, MSc(Oxon)
Deputy Director, NZ Centre for Human Rights Law, Policy & Practice
University of Auckland
NEW ZEALAND

Professor Michael Mandel LLB,BCL(Oxon)
Osgoode Hall Law School
York University
CANADA

Associate Professor Ikechi Mgbeoji LLM, SJD
Osgoode Hall Law School
York University
CANADA

Graeme Minchin BA/LLB(Hons)
Barrister, Auckland
NEW ZEALAND

Associate Professor Paul Myburgh BA(Hons), BCL (Oxon), LLM
School of Law
University of Auckland
NEW ZEALAND

Professor Brad Morse
Dean of Law
School of Law
Waikato University
NEW ZEALAND

Associate Professor Chris Noonan,
LLB, PhD
Department of Commercial Law
University of Auckland
NEW ZEALAND

Joseph Nunweek LLB
Issues Assistant
Green Party of New Zealand
NEW ZEALAND

Lily Nunweek BA, LLB(Hons)
Solicitor, Auckland
NEW ZEALAND

Birsha Ohdedar BA, LLB
Solicitor,
Grey Lynn Community Law Centre
NEW ZEALAND

Professor Obiora Okafor LLB(Hons), LLM, LLM, PhD
Osgoode Hall Law School

Associate Professor Kevin Outterson JD
Director, Health Law Program
Boston University
USA

Dr Luigi Palombi LLB,BEc,PhD
Principal,  PalombilIP
Canberra
AUSTRALIA

Harata Paterson LLB, LLM
Lecturer in Law
School of Law
Waikato University
NEW ZEALAND

Professor Ron Paterson LLB(Hons), BCL(Oxon)
School of Law
University of Auckland
NEW ZEALAND

Dr Tina Piper, JD
Assistant Professor
Faculty of Law
McGill University
CANADA

Fifa Rahman LLB, MHL
Policy Executive,
Malaysian AIDS Council
MALAYSIA

Kyle Rainsford BSC, LLB(Hons)
Solicitor , Auckland
NEW ZEALAND

Professor Ben Richardson BA, LLB, PhD
Canada Research Chair
University of British Columbia
CANADA
CANADA
Associate Professor Michael Robertson
BA, MA, LLB, LLM
Faculty of Law
University of Otago
NEW ZEALAND

Professor Paul Roth, BA, LLB, MA, PhD
Faculty of Law
University of Otago
NEW ZEALAND

D W Rowe, LLM
Retired Head of Law
University of Canterbury
NEW ZEALAND

Katherine Sanders BA, LLB(Hons), LLM
Lecturer
School of Law
University of Auckland
NEW ZEALAND

Professor David Schneiderman LLB, LLM
Faculty of Law
University of Toronto
CANADA

Associate Professor Karen Scott LLB, LLM
Faculty of Law
University of Canterbury
NEW ZEALAND

Professor Nan Seuffert JSD,LLM, JD
Director, Legal Intersections Research Centre
University of Wollongong
AUSTRALIA

Steven Shrybman
Partner, Sack, Goldblatt & Mitchell LLP
Ottawa
CANADA

Professor Peter Skegg LLB, DPhil
Faculty of Law
University of Otago
NEW ZEALAND

Associate Professor Sara Slinn  BAH (Queens),
LLB(UBC), MIR(Queen’s), PhD (Toronto)
Osgoode Hall Law School
York University
CANADA

Professor John Smillie LLM (Otago),
LLM, JSD(Yale)
Faculty of Law
University of Otago
NEW ZEALAND

Annette Sykes LLB (Hons)
Partner, Aorere Law, Rotorua
President, Mana Movement
NEW ZEALAND

Associate Professor Pauline Tapp MJur
School of Law
University of Auckland
NEW ZEALAND

Prue Taylor LLB, LLM, LLM
Senior Lecturer
University of Auckland
NEW ZEALAND

Wiremu Te Are LLB
Barrister and Solicitor
Rotorua
NEW ZEALAND

Professor Margaret Thornton BA(Hons),LLB, LLM,FASSA,FAAL
College of Law
Australian National University
AUSTRALIA

Associate Professor Nin Tomas BA,
LLB(Hons), PhD
School of Law
University of Auckland
NEW ZEALAND

Professor David Williams BA, LLB,BCL(Oxon), DipTheol, PhD
School of Law
University of Auckland
NEW ZEALAND

Associate Professor Stepan Wood  BA, LLB(York), SJD(Harv)
Osgoode Hall Law School
York University
CANADA

Faith Wong LLB(Hons), LLM
Legal Counsel, Ipoh
MALAYSIA

Roxana Zulfacar LLB
Human Rights Officer
Community Legal Centres, Sydney
AUSTRALIA

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