KUALA LUMPUR, Aug 16 ― The hundreds of cases of legal action brought by private corporations against sovereign nations clearly show what is in store for Malaysia if it ratifies the Trans-Pacific Partnership Agreement (TPPA), according to Klang MP Charles Santiago today.
Pointing out that there have been 450 such cases since 2011, mostly against developing nations, the DAP lawmaker said this was because the corporations have learnt that the odds appeared to be in their favour under the so-called Investor-State Dispute Settlement (ISDS).
“What started as a fair and neutral dispute settlement system has now mutated into something else.
“A research by Transnational Institute (TNI) has shown that arbitrators tend to defend private investor rights above public interest, and that the ISDS system is now ‘a multimillion-dollar, self-serving industry, dominated by a narrow exclusive elite of law firms and lawyers whose interconnectedness and multiple financial interests raise serious concerns about their commitment to deliver fair and independent judgments’,” he said in a statement today.
The ISDS is one of the more controversial aspects of the 12-nation free trade deal that has been under negotiation since 2010. The system allows private corporations to sue TPPA signatory nations for losses that occur as a result of public policy.
Former prime minister Tun Dr Mahathir Mohamad last month sounded the alarm over signing an agreement with such a clause, highlighting Malaysia’s lack of success in defending international lawsuits.
“If we breach the agreement, their corporations can sue the government for billions. I have my doubts about our ability to convince the international arbitrators or courts.
“They will have the best lawyers, lots of them. We will exhaust all our funds to pay our less experienced lawyers. At the end we will lose and pay indemnities and fees running into billions. And we will continue to pay until we comply. And when we comply we will lose more money,” Dr Mahathir predicted in a blog post last month.
Today, Santiago noted that recent studies on investment treatise and arbitration showed the process lacked transparency, judicial independence and procedural fairness.
“To further strengthen the interests of corporation, the ISDS mechanism does not stipulate investor obligations but only investor rights.
“This further cements corporate control over sovereign nations,” he said.
Santiago went on to show the potentially devastating costs of such action on countries, asking if Putrajaya was fully aware of the consequences of being party to the TPPA and the attendant ISDS.
“Swedish energy multinational Vattenfall is seeking US$3.7 billion (RM12 billion) from Germany following a decision to phase out nuclear energy in the country after Fukushima.
“The Philippine government spent US$58 million defending two cases against German airport operator Fraport. These are funds that could have paid the salaries of 12,500 teachers for one year or vaccinated 3.8 million children against diseases such as TB, diphtheria, tetanus and polio,” he said.
The TPPA is a free trade agreement that has been negotiated by the US, Malaysia and nine other nations as part of the larger Trans-Pacific Strategic Economic Partnership since 2010.
Critics allege that the agreement has since been co-opted by powerful corporations to allow them to trample over existing consumer, worker and environmental rights in signatory countries.
Although it is not definitively known how much — if any — of the allegations are true, the secretive nature of the negotiations continues to provide a fertile breeding ground for such speculation.
