Investor-State Dispute Settlement in NAFTA, TPP, and T-TIP : Back to the Future?

The Trans-Pacific Partnership (TPP) and Trans-Atlantic Trade and Investment Partnership (T-TIP) are both slated to contain investor protections similar to those contained in the North Atlantic Free Trade Agreement (NAFTA). These measures, as included in NAFTA, allowed businesses to seek compensation from members for actions – whether by national or subnational political units – for any action tantamount to expropriation through a supranational arbitration. In practice, this allowed companies to both (1) force countries to roll-back human health and environmental protections and (2) receive payments for alleged or even potential losses. This article will consider the origins and development of this mechanism, now called Investor-State Dispute Settlement (ISDS). ISDS cases have recently become more common, even before the fates of TPP and T-TIP are known. In particular, it will highlight that the original intent of such treaty provisions. In doing so, the authors intend to clarify the context for which such ISDS procedures were imagined. Namely, such arbitral proceedings were meant to remedy a lack of ability to seek redress for interference or outright seizure of physical assets, and not intended to effectively allow foreign business interests to veto and seek remuneration for government actions intended to protect society and the environment. The authors join others who suggest common sense safeguards against ISDS abuse, assuming that such provisions and trade treaties are deemed desirable and ratified by the party governments