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gentlemanBased on an article about Transatlantic Trade and Investment Partnership (TTIP), read and translated from the Belgian wereldmorgen website written by Frank Mulder Journalist www.dewereldmorgen.be/artikel/2015/11/18/nederland-is-spil-in-isds-wereld

The Netherlands plays a pivotal role in the Investor-State Dispute Settlement (ISDS) World.

The framework of the new TTIP has many people worried about ISDS (ISDS= Investor-State Dispute Settlement) a mechanism where American companies can sue European governments. This is remarkable, because investor-state arbitration has long been used in international trade. The Netherlands is the country with the most outstanding law suit claims and there is a very interesting reason for that.

Suppose a country is struggling with the worst economic crisis in decades. One in four people are unemployed, tens of thousands living on the streets. In two weeks, there have been five different presidents. To stop the downward spiral, the government takes the decision to nationalize previously privatized industries and companies. In response, dozens of companies complain and sue the state. They win in the courts and the state must pay damages to the tune of hundreds of millions of dollars.

It happened to Argentina after the economic crisis early this millennium. With so-called Investment Treaties, Argentina gave foreign investors the right to sue the country if they felt unfairly treated. This has happened 56 times. Argentina is now number one on the list of most accused and thus sued countries.

Arbitration is a form of privatized justice. The investor and the state both choose one arbitrator which together elect a chairman. The tribunal looks, based on the relevant investment treaty, whether the complaint is justified. An appeal is not possible. This system is called ISDS (Investor-State Dispute Settlement) in legal language: investment arbitration. The venue is in many cases the World Bank.

The ISDS card.

The world of ISDS is not transparent. Many things remain secret and there are no good reports with details of the claims submitted. A group of Dutch journalists constructed an interactive map, the first of its kind, containing all ISDS cases ever conducted in the world. The map includes a database with information about the claims, the statements and the arbitrators who were responsible.

ISDS has grown in popularity. Fifteen claims were filed in 2000, in 2014 alone there were nearly seventy. In total there are 629 known claims.

Besides Argentina, Canada, USA and Mexico score high. ISDS represents a part of their free trade agreement, NAFTA. But that is not everything. For example, the USA has never lost a case. If we leave out the cases where the state won, then another list emerges: Argentina, Venezuela, India, Mexico, Bolivia. These are developing countries. This explains why many developing countries see ISDS as a neocolonial tool.

The importance of the Dutch sandwich.

Where do the claims come from? On the list of countries the USA is number one. The Netherlands is surprising second. If we only look at 2014, we see that there are now even more claims from the Netherlands than from the USA.

Further investigation of the relevant investors shows that at least two thirds of them are what we might call a mail box company. Only 16 percent of them are arguably Dutch. Foreign companies like to settle law suits here because the Netherlands has a high coverage, with no less than 95 BITs.(trade agreements)

“It is known as the Dutch sandwich”, says George Kahale III, an American top lawyer, who defends many states in major investment matters.”You are a Dutch company between parenthesis and you can call yourself a Dutch investor. It is an abuse of the system.”

Who are the arbitrators?

Journalists have also examined the arbitrators who were responsible for the statements. In 88 percent of all cases they could trace, a disconcerting picture emerged of a very select club, made up of mostly men and one woman who were asked time and time again to judge. The fifteen most active were jointly involved in 63 percent of all cases in which they could trace the arbitrators.

“This is not surprising, for a few arbitrators to dominate ISDS because they simply are the best people, a lot of know-how is needed. If you’re looking for lung specialists in Belgium, you also end up with a small group. We are specialists”, said Bernard Hanotiau, a Belgian arbitrator who is also in the top-15.

Nevertheless, it is problematic. After all, they are not judges who are publicly appointed and have taken an oath. They are often commercial lawyers, who continue to do lawyer’s work alongside their work as an arbitrator. In addition, it so happen that a party may be considered by a judge who yesterday was opposing counsel in a similar case. In addition, arbitrators may recommend and choose another. They form a closed group where it is difficult for new people and new insights to intervene. The risk of a conflict of interest is high.

This is deplorable, finds Kahale, “It’s not about disputes that are important to one party. It is about billions of dollars. On issues which are crucial to countries, which often have only a small GDP. If there is a mistake made it has far-reaching consequences. There are hardly any checks and balances as in the ordinary courts, the arbitrators express a personal stamp on these statements. Their business background influences their rulings.”

The future.

The criticism of ISDS swells. Indonesia, South Africa, Venezuela, Ecuador, India, all say that they want to cancel their BITs or are working on revisions. Brazil is working on a form of arbitration in which only governments can sue themselves. Even the EU in the TTIP negotiations with the USA, now advocate an international investment court of justice  where matters can be handled by real judges. The future will tell whether this alternative will find acceptance.

Twicemodern commentary.

Slowly but surely a group of companies and their lobbyists take over the Democratic processes on both sides of the pond where the interests are purely political and economical and where social concerns are no longer playing an important role.

This super capitalist system employs the best of any and all ideologies or in older terms, fascist and communist or socialist ideologies. It steers the military industrial complex. It employs religious leaders such as the Roman Catholic Pope to address “constituents” with “recommendations” about climate change and other Agenda 21 United Nations issues whose goal is to abolish State Sovereignty and the merging of all countries into the New World Council (UN) led by the technology and social media companies and the new emerging industry leaders among the alternative energy companies. It uses religious extremism to further their agenda of regional dominance.

Inevitably this leads to economic piracy and plunder under the guise of free trade and sovereignty. This super system will ultimately fail, but it will take time to change things.