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energy charter treaty
The UN Summit of the Future’s Commitment to Corporate Power Undermines Its Goals
If world leaders who are coming to the U.N. Summit on September 22 and 23 are serious about protecting the future of humanity and the planet, they should dismantle an anti-democratic investment system.
Sep 17, 2024
The United Nations is hosting world leaders on September 22 and 23 for a “Summit of the Future.” Unfortunately, the draft action plan for the summit, while full of lofty language and some good intentions, does not challenge the neoliberal model or corporate control of the global economy.
On the contrary, it proposes, for example, to “facilitate access of developing countries to the WTO and promote trade and investment liberalization.”
It’s astounding that this plan, which is supposed to serve as the basis for an inter-governmental agreement, is so stuck in the past. For decades now, social movements and elected officials in many countries have become increasingly opposed to trade and investment rules that grant enormous privileges and power to transnational corporations.
The increase in demand for minerals for euphemistically named “green” energy transitions means that governments will be at greater risk of facing multi-million dollar lawsuits, as these processes are generating social reactions worldwide.
In many ways, these old rules directly contradict the U.N. summit’s overall goal of creating “a world that is safe, sustainable, peaceful, inclusive, just, equal, orderly, and resilient.”
They also make a mockery of the summit’s stated commitment to the U.N. Charter principle of “full respect for the sovereign equality of all Member States” and the principle of “equal rights and self-determination of peoples.”
Just take a look at how the natural resource extractive industries have used the existing investor-state dispute settlement (ISDS) system to undercut national sovereignty and sustainability and to foment conflict. The mining sector, in particular, has used this system, enforced through almost 3,000 treaties, to sue governments in supranational tribunals, bypassing national legal systems.
The vast majority of ISDS claims are directed against countries in the so-called “Global South,” and most suits are targeted at Latin American countries. ISDS allow corporations to suppress the opposition of local and Indigenous communities fighting for their territorial and environmental rights. When governments respond in favor of communities resisting mining projects, companies often use these lawsuits to blackmail governments into backing down and granting permits for environmentally destructive projects or pay “compensation” for the loss of expected corporate profits.
Investment treaties even include “full protection and security” clauses that give companies the right to demand that governments repress communities that oppose their mining projects. In Guatemala, for instance, the Nevada-based mining company KCA claims that the government failed to provide access to a mining site blocked by Indigenous protesters, and is suing the country for more than $400 million.
The increase in demand for minerals for euphemistically named “green” energy transitions means that governments will be at greater risk of facing multi-million dollar lawsuits, as these processes are generating social reactions worldwide. The Transnational Institute, the Institute for Policy Studies, and other organizations recently published extensive information on mining (and other) company lawsuits against governments in an “ISDS-Tracker” site.
Panama is facing a particularly scandalous example of these ISDS lawsuits. The people of this country have risen up against the Canadian mining company First Quantum and in November 2023 succeeded in having Panama’s Supreme Court declare the renewal of the company’s copper mine license unconstitutional. This led the Panamanian National Assembly to approve a mining moratorium law.
According to reports, First Quantum has sued Panama for the unpayable sum of $30 billion at the International Chamber of Commerce in Paris, and has threatened another $20 billion arbitration under the Canada-Panama Free Trade Agreement.
Other transnational mining companies affected by the cancellation of licenses have followed First Quantum’s example and, in total, Panama faces ISDS claims for at least $57 billion, equivalent to more than half of its GDP.
As we demonstrate in our recent report “ISDS: A portrait of transnational power in Mexico, the investment protection regime, and its consequences,” Mexico is facing lawsuits totaling at least $13 billion, with more than half of them related to mining. This figure is partial, as it corresponds only to claims at the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), which publishes information about them. On the other hand, the International Chamber of Commerce, where Panama has been sued, and other supranational tribunals do not publish information on cases.
The ISDS system has been dismantled among some rich countries. For instance, the United States and Canada eliminated it among themselves in the United States-Mexico-Canada Agreement. The European Union eliminated it among its member states and is exiting the Energy Charter Treaty, which also allowed these investor-state suits.
If world leaders who are coming to the U.N. Summit on September 22 and 23 are serious about protecting the future of humanity and the planet, they should dismantle this anti-democratic investment system (ISDS) for all countries.
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ISDS Courts Have Helped Fossil Fuel Firms Rake In $80 Billion in Public Money
"ISDS is the secret weapon for fossil fuel companies against climate laws," said one advocate.
Jun 06, 2024
A week after the European Union announced its withdrawal from the controversial Energy Charter Treaty, which has been criticized for being one of many global agreements that allow fossil fuel companies to sue governments, a coalition on Thursday released an analysis showing just how lucrative such deals have been for firms whose emissions are wreaking havoc on the planet.
The Transnational Institute, the Trade Justice Movement (TJM), Power Shift, and the Institute for Policy Studies joined forces to unveil the Global ISDS Tracker, which includes data on more than 1,300 cases that have made their way to secretive tribunals set up by investor-state dispute mechanisms in treaties including the Energy Charter Treaty.
ISDS courts allow fossil fuel companies and other large corporations to sue governments for compensation over policies that harm their profits, such as regulations to curb planet-heating emissions or air pollution, which is responsible for 1 in 5 deaths worldwide.
Many judgments made by ISDS tribunals are kept secret, but the Global ISDS Tracker revealed that $114 billion in public funds have been paid out to investors across industries, with fossil fuel companies and investors raking in $80.2 billion of that.
Another $48 billion in public money is expected to go to fossil fuel firms from ISDS disputes in the coming years if current trends continue, said the groups behind the tracker.
Tom Wills, director of TJM, said the tracker proves what trade and climate justice groups have said "for years: ISDS is the secret weapon for fossil fuel companies against climate laws."
"Corporate courts are also used to threaten governments not to give in to popular local or national demands for climate action," said Wills. "This needs to be put to an end. The data shows reform is urgently needed."
The tracker includes the $15 billion compensation lawsuit filed by TC Energy against the U.S. government when President Joe Biden canceled the company's permit to build the Keystone XL pipeline, which would have carried 830,000 barrels of tar sands oil each day.
The largest ISDS claim currently being adjudicated is Zeph Investment's case against the Australian government, which the firm says "effectively destroyed" its plans for a major mine, costing it $200 billion.
As Common Dreamsreported last November, civil society groups have called on the Biden administration to dismantle the ISDS system within the Americas Partnership for Economic Prosperity, with one campaigner arguing that ISDS was "created for and by powerful, well-organized corporations, and has served their interests almost exclusively."
Lucía Bárcena, trade policy officer at the Transnational Institute, said eliminating ISDS in treaties should be a top priority for trade and climate justice campaigners in the coming years.
"In this challenging moment, when there is more climate action needed from states," said Bárcena, "it is unbearable to have corporate courts that can wash all the efforts away."
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Campaigners Applaud UK Exit From 'Climate-Wrecking' Energy Charter Treaty
"The Energy Charter Treaty was a major barrier to the progress of a just transition," said one climate action group. "Good riddance!"
Feb 22, 2024
The United Kingdom's decision to exit a 30-year-old fossil fuel-friendly treaty will "untie a straitjacket" on the country's ability to ensure a just transition toward renewable energy, said one campaign group on Thursday.
Officials announced that after two years of negotiations regarding a modernization of the 1994 Energy Charter Treaty (ECT)—which allows fossil fuel companies to sue governments over profits lost due to climate policies that reduce the use of coal, oil, and gas—the U.K. will leave the treaty due to a stalemate.
The U.K., which plans to achieve net-zero fossil fuel emissions by 2050, helped broker a deal in 2022 that would have included protections for a transition to renewable energy sources while maintaining the ECT's investor-state dispute settlement (ISDS) mechanism, which permits the fossil fuel lawsuits.
"The Energy Charter Treaty is outdated and in urgent need of reform, but talks have stalled and sensible renewal looks increasingly unlikely," said Graham Stuart, the energy security and net zero minister for the U.K. "Remaining a member would not support our transition to cleaner, cheaper energy, and could even penalize us for our world-leading efforts to deliver net zero."
Social justice group Global Justice Now noted that Britons "up and down the country have campaigned tirelessly" to end the U.K.'s participation in the treaty.
"Huge congratulations to all the campaigners who have pushed so hard for this for so long," added Fossil Free Parliament. "The Energy Charter Treaty was a major barrier to the progress of a just transition. Good riddance!"
An estimated 60% of decisions by tribunals set up by the ECT favor fossil fuel companies, and the treaty has allowed energy companies to sue the Netherlands for $2.6 billion to compensate for their losses stemming from the Dutch government's planned coal phaseout. A U.K. company also sued Italy for $237 million for banning it from drilling an oil field in the Adriatic Sea.
"The ECT is now a dead man walking, and only those profiting from the destruction of our planet will mourn its passing," said Cleodie Rickard, trade campaigns manager for Global Justice Now. "However, the mechanism in the ECT which made it so deadly—the investor-state dispute settlement provisions—lives on in a number of other treaties... With ISDS's legitimacy crumbling, now is the time to scrap this system."
The U.K.'s decision comes three months after more than 200 civil society groups called on U.S. President Joe Biden to dismantle the ISDS mechanism within the Americas Partnership for Economic Prosperity (APEP), a trade agreement between the U.S. and 11 countries in Central and South America and the Caribbean.
Nine E.U. member states have recently withdrawn from the ECT, including France, Spain, and the Netherlands.
On Tuesday, E.U. energy ministers held a technical meeting on a proposal for all 27 member states to exit the treaty en masse; an agreement could be reached on the plan by next month.
"As it stands, the treaty is not in line with the E.U.'s energy and climate goals and with the E.U.'s investment policy and law," a spokesperson for the European Commission toldThe Guardian. "Despite the commission's successful negotiating efforts with international partners to update the treaty, it was not possible for member states to find the necessary majority to approve the modernized treaty. We therefore proposed that the E.U., its member states, and Euratom withdraw from the ECT in a coordinated and orderly manner."
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