When it dared to halt the production of a gold mine, the government of Romania found itself facing a massive lawsuit from a corporate mining giant in a secret "court". There's nothing about the case that makes any sense – the corporation has said it may seek up to $4 billion in "compensation", which is half of Romania’s annual public healthcare budget.
How awful for Romania to be subject to such a corporate assault, you may think. However, under a controversial trade deal between the UK and America known as TTIP, such cases could become common in Britain. So why is our government one of the biggest cheerleaders of these "corporate courts"?
What's happening in Romania is a terrifying sign of what could happen if TTIP is passed. The corporate vampires are out for blood, and won't rest until they've drained a sovereign state of its money, and destroyed large parts of its land. The mining giant Gabriel Resources originally wanted to develop an enormous gold mine that would involve flattening four mountain tops. There were fears that this would would leave behind a behind a toxic waste lake containing dammed water and cyanide. But in 2014 a critical environmental document that was required for the project to go-ahead was annulled in a Romanian court. In the face of mass protests inside and outside the country, Romania’s parliament decided not to push through a law that would have allowed the project to continue.
Gabriel Resources has recently admitted that they've lost hope of ever building their mine. But at the same time they submitted a request for arbitration at the World Bank, demanding compensation for all the gold and silver that they were unable to extract. The company is using a Jersey subsidiary to bring the case, so it can make use of a UK-Romania investment deal, even though it's based in Canada. The company claims they have spent nearly $500 million on the project, yet in an interview the company’s CEO claimed he was seeking up to $4 billion in "compensation".
This is exactly the kind of case which that TTIP would promote throughout Europe. Through something called the Investor-State Dispute Settlement (ISDS) mechanism, foreign corporations get access to a secret arbitration system to sue governments for "damaging" their profits. These cases are taking place with an alarming frequency using a variety of existing trade deals, but TTIP would massively expand the possibility of this taking place. It would do this by allowing all US corporations to sue EU member states and all EU corporations to sue the US government.
The role corporate courts will play if TTIP is introduced has proven to be the most controversial aspect of the deal. Ninety-seven per cent of respondents to an EU consultation rejected the idea, while the EU parliament descended into farce when passing its opinion on TTIP in June, as the parliament’s president threw out the rule book to prevent a critical vote on the ISDS system. So toxic is TTIP, that the European Commission is considering rebranding ISDS as Investment Court Settlement as a means of undercutting the backlash.
Yet despite all of this, the British government is fully signed up to the corporate courts. Last year it signed a letter that made clear that the secret court system shouldn’t be removed from the trade deal under any circumstances.
There’s lots about TTIP that is speculative, largely because the process has been happening under conditions of such secrecy. But the history of the numerous "corporate court" cases are incontrovertible, and should ring alarm bells. In many similar instances, the corporation beats the government that it's challenged in court and extracts massive damages from them. And even regardless of the outcome, the state still has to foot a huge legal bill, which can run into the millions.
The negotiations around TTIP are entering a critical phase in the next year, as corporate interests are mounting a massive pushback against the wave of public dissent. They will likely accuse anyone who opposes the deal of hyperbole or exaggeration. However, those who are for the deal are the ones who need to explain themselves. Specifically, they need to be able to tell us why letting corporations sue governments for huge amounts of money can be a good thing for democracy. I can't wait to see what they say.
Kevin Smith is the press officer at Global Justice Now
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