Legal Scholars Voice Support for ISDS Model in US Trade Agreements
The basic principles of U.S. investment agreements, including related proposals in Trans-Pacific Partnership (TPP) talks, represent the “hallmarks of a society that is governed by law,” said dozens of law professors from U.S. and Canadian universities in an April 7 letter (here). The professors rejected the argument that investor-state dispute settlement allows companies to sue governments over lost profits, and emphasized such mechanisms help ensure fair treatment for foreign investors.
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The letter, which the professors sent to congressional leadership, is a response to a March letter from legal critics of ISDS (see 1503120011). “While some challenges involve environmental, health, and safety regulations, fears that such claims threaten legitimate state regulatory conduct must be tempered by recognizing that a state can be penalized for those regulations only if their acts are arbitrary, discriminatory, or otherwise violate the investment guarantees to which states have previously agreed,” said the April 7 letter.
U.S. trade critics hoped to generate opposition for ISDS in the TPP after the investment chapter leaked in recent weeks (see 1503260017), but so far the leak hasn’t prompted outcries from Capitol Hill. The letter points to a number of high-profile investment cases, but doesn’t mention recently-decided Bilcon v. Government of Canada. Following the ruling in support of Bilcon, House Ways and Means ranking member Sandy Levin, D-Mich., said the case shows the need to revise the ISDS model (see 1503300013).