Don't like that law? Just sue the Government

POSTED BY Rick Shera
12 January 2012

posted in | TPPA | International | Arbitration



Even if the proposed trans pacific partnership agreement (TPPA) is net beneficial to New Zealand (and some evidence on that would be good), we should be wary of including the so called investor state provisions. I'll analyse the provisions in more detail in another post but, briefly, these are the provisions which would allow a foreign company to take action against the New Zealand Government if we pass a law that damages that company's economic interests here.

These clauses are not new and I think traditionally no-one has given them much credence. A foreign company suing New Zealand?  Yeah Right.

Be not so sanguine.

Increasingly this is the modus operandi of larger corporations - another string to the lobbying bow when the law does not fit their (often outdated) business plans and alternative lobbying methods seem to be failing. We're seeing it particularly in the intellectual property sphere where, for example:

  • Philip Morris has issued an investor state claim against Uruguay alleging that the change to its tobacco laws will damage its intellectual property investments in that country.
  • British American Tobacco has sued the Australian Government over the new Australian plain tobacco packaging law, again on the basis that its IP interests will be damaged.
  • Philip Morris has threatened to do the same but has also launched action under the investor state provisions of Australia's trade agreement with Hong Kong in a move analogous to that it has already taken in Uruguay.
  • Just this week, the music industry got in on that act by suing Ireland because its laws don't allow termination of internet accounts for infringement of copyright.
  • In its submission to the USTR on TPPA, after referring to Australian and Singaporean plain packaging laws as "excessive legislative proposals", Philip Morris argues for even stronger investor state provisions (and intellectual property protections) based on those in the US Korea trade agreement.

The pattern doesn't bode well for small countries like New Zealand.

But it is good to see Australia waking up to this (not surprisingly) with Prime Minister Gillard now rejecting such provisions (at p14 of 19 page pdf):

The Gillard Government supports the principle of national treatment – that foreign and domestic businesses are treated equally under the law. However, the Government does not support provisions that would confer greater legal rights on foreign businesses than those available to domestic businesses.

Cases like those above should be a clear warning to our negotiators also to reject such provisions. It is highly unlikely they would ever provide a level playing field for New Zealand companies.

POSTED BY Rick Shera
12 January 2012

posted in l@w.geek.nzTPPAInternationalArbitration



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