[Ip-health] White House defends ISDS

Ante Wessels ante at ffii.org
Sun Mar 1 03:10:41 PST 2015

White House defends ISDS
with links

United States Senator Elizabeth Warren turned against investor-to-state dispute settlement (ISDS): "Why create these rigged, pseudo-courts at all?"

Jeff Zients, director of the National Economic Council, posted a response to Warren on the White House website. In turn, Simon Lester, trade policy analyst with Cato’s Herbert A. Stiefel Center for Trade Policy Studies, refuted his arguments.

I would like to add a point that does not play a role in the debate in the U.S.: ISDS is rigged to the advantage of the U.S. While this may seem advantageous to the U.S., it can turn against the U.S.


The International Centre for Settlement of Investment Disputes (ICSID) is the most used ISDS forum; investors can choose this forum. In practice the US appoints the president of the World Bank. This president

– is ex officio chairman of the ICSID Administrative Council (article 5 ICSID),
– nominates the ICSID secretary-general (article 10 ICSID),
– appoints all three the arbitrators in annulment cases under ICSID rules (the only possible appeal, article 52.3 ICSID).

The secretary-general of ICSID plays a role in ISDS cases, both in the ICSID Convention and in the EU commission’s proposals for trade agreements. As an example the EU – Singapore trade agreement (EUSFTA) proposal.

The secretary-general
– appoints arbitrator(s) if parties fail to appoint one, or fail to agree on the presiding arbitrator (articles 9.21.2 and 9.32.7 EUSFTA),
– may decide a request for consolidation is manifestly unfounded (article 9.32.4 EUSFTA),
– appoints the presiding arbitrator in consolidation cases unless parties agree otherwise (article 9.32.6 EUSFTA),
– will decide on conflicts of interest (article 9.21.10 EUSFTA).

Executive officials who have a link with the U.S. take and would take important decisions. This gives the U.S. an unfair advantage. The U.S. can push for a corrupt system, knowing that they are protected because ISDS is rigged to their advantage. Other countries will suffer more from ISDS than the U.S. – for now.

Exerting pressure

The U.S. could have lost the Loewen ISDS case. However, the U.S. won the Loewen ISDS case on a technicality.

After the Loewen ISDS case one of the tribunal members publicly conceded having met with officials of the U.S. Department of Justice (DoJ) prior to accepting his appointment. The DoJ put pressure on him.

Long term

ISDS is a corrupt system; the U.S. protects themselves by pressure and the fact that ISDS is rigged to their advantage. But one day China may take over the presidency of the World Bank. ISDS will then be rigged to the advantage of China.

The judiciary is too important to mess with. ISDS is corrupt and rigged; we have to get rid of it.

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