As we all know Global Justice Now and Nick Dearden are screaming blue bloody murder about the ISDS provisions in investment contracts. These are private – private! – courts where government can be forced to compensate businesses for expected profits. What a perversion of all that is holy, eh?
What they actually are, these ISDS arbitration proceedings, is a place where a business can sue a government to conform to the contract that the government signed. Outside the courts controlled by that government that is. There being parts of the world where a foreign company doesn’t have all that much hope of fair treatment in the local courts. You know, BP and America say.
The reason GJN and Dearden are making the argument they are is simply that as proper and good Little Trots they think that limitations upon government power to steal anything are morally wrong.
What is rather fun though is this about the train operating companies. Covid meant that losses ballooned. OK, not exactly the operating companies’ fault, but there we are, they signed the contracts. Government has come in a rejigged the contracts. OK:
Abellio and Mitsui struck a deal with the Government at the end of May to pay £30.5m in similar penalties for another troubled franchise, Greater Anglian.
The decision last year by Grant Shapps, the Transport Secretary, to end franchising followed years of tumult on the railways in which services were blighted by poor performance, a bungled timetable overhaul and rows with trade unions.
Ministers expected that operators would have suffered losses if their franchise agreements had run to the full term. These companies were asked to pay termination payments in exchange for avoiding these losses, before opening negotiations over new fixed-fee contracts.
At which point we get to see the symmetric nature of contracts. Government can demand payments for the avoidance of losses. Seems fair enough that the corporation can therefore demand payment for lost profits if the boot’s on the other foot, no?
And yes, these are foreign investors into the British economy. If no joy were had from the British domestic courts then this would move upward to international legal forms. Within the EU to the European Court of Justice which allows companies to sue governments, governments to sue companies. Outside the EU to the ISDS process as governed by the varied treaties that have been signed.
Presumably now we’re going to see shouting from Global Justice Now and Nick Dearden about how this iniquity, of having to pay for avoided losses, cannot be allowed to stand. Or, you know, perhaps they’re just hypocrites with a political agenda?