World Video | Defence | Foreign Affairs | Natural Events | Trade | NZ in World News | NZ National News Video | NZ Regional News | Search

 


Exposed: Elite Club Of Lawyers Make Millions Suing States



Exposed: Elite Club Of Lawyers Who Make Millions From Suing States

A small club of international law firms, arbitrators and financial speculators are fuelling an investment arbitration boom that is costing taxpayers billions of dollars and preventing legislation in the public interest, according to a new report from the Transnational Institute and Corporate Europe Observatory.

Profiting from Injustice uncovers a secretive but burgeoning legal industry which benefits multinationals at the expense of taxpayers, the environment and human rights. Law firms and arbitrators, who are making millions from investment disputes against governments, are actively promoting new cases and lobbying against reform in the public interest.

Cecilia Olivet, from the Transnational Institute, one of the report’s authors said: “The alleged fairness and independence of investment arbitration is entirely illusory. Governments have their hands tied, while multinationals benefit from an inherently pro-corporate bias. A handful of firms are actively encouraging corporate clients to sue governments; meanwhile top arbitrators are using their influence to secure investor-friendly rules and sustain the flow of multi-million dollar lawsuits.”

The 76-page report explains how investment arbitration, which was originally envisioned for cases of straightforward expropriation, has boomed in recent years. There were 450 known cases in 2011, compared to 38 in 1996.[1] Fees and awards have also skyrocketed, with legal and arbitration costs averaging over US$8m per dispute, and exceeding US$30m in some cases.[2]

The industry is dominated by a small number of northern law firms [3] and elite arbitrators.[4] Three firms, Freshfields (UK), White & Case (US), and King & Spalding (US) claim to have been involved in 130 investment treaty cases in 2011 alone, while fifteen arbitrators – the ‘inner mafia’ – have decided on 55% of all known investment treaty disputes.

Many arbitrators also act as counsel, as well as working as academics, government advisors, lobbyists and media commentators. Some have strong personal and commercial ties to companies. All this gives them huge influence over the system, which they have a vested interest in sustaining.[5]

The report also describes a new aspect to the investment arbitration industry: third-party funding. Increasingly, investment funds such as Burford (US) and Juridicia (UK) are speculating on cases, lending money to companies so they can sue governments, and taking between 20% and 50% of the final award.[6]

Emblematic investor-state disputes include tobacco giant Philip Morris suing Uruguay and Australia over health warnings on cigarette packets; and Swedish energy multinational Vattenfall seeking $3.7bn from Germany following that country’s decision to phase out nuclear energy.[7]

Some governments are taking action against investment arbitration. Australia no longer allows investor-state provisions in its trade agreements. Bolivia, Ecuador and Venezuela have terminated several investment treaties; and South Africa has just announced that it will neither enter into new agreements nor renew old ones.

Pia Eberhardt, from Corporate Europe Observatory, the other author, said: “The self-serving actions of the investment arbitration industry have unveiled the inherent injustices at the heart of the international investment regime. Governments should either refuse to sign investment treaties, exclude clauses that allow companies to sue the state, or, at the very least, ensure public interest legislation such as environmental protection and human rights can not be challenged.”

Notes

[1] By the end of 2011, the United Nations Conference on Trade and Development (UNCTAD) knew of 450 investor-state disputes. With most arbitration forums subject to confidentiality, the actual number is likely to be much greater. In 1996, only 38 investor-state disputes had been registered at the World Bank’s International Center for Settlement of Investment Disputes (ICSID), the main handler for these arbitrations. (See chapter 2)

[2] In 2009/2010, 151 cases involved corporations demanding at least US$100m from states. One government has just been ordered to pay US$1.7bn in compensation. (See chapter 2 and 3)

[3] Top 20 firms: Freshfields Brukhaus Deringer (UK); White & Case (US); King & Spalding (US); Curtis Mallet-Prevost, Colt & Mosle (US); Sidley Austin (US); Arnold & Porter (US); Crowell & Moring (US); K&L Gates (US); Shearman & Sterling (US); DLA Piper (US); Chadbourne & Parke (US); Cleary Gottlieb Steen & Hamilton (US); Appleton & Associates (Canada); Foley Hoag (US); Latham & Watkins (US); Hogan Lovells (US / UK); Clyde & Co (UK); Norton Rose (UK); Salans (France); Debevoise & Plimpton (US). (See chapter 3)

[4] Top 15 investment arbitrators: Brigitte Stern (France); Charles Brower (US); Franciso Orrego Vicuña (Chile); Marc Lalonde (Canada); L. Yves Fortier (Canada); Gabrielle Kaufmann-Kohler (Switzerland); Albert Jan van den Berg (Netherlands); Karl-Heinz Bocksteigel (Germany); Bernard Hanotiau (Belgium); Jan Paulsson (France); Stephen M. Schwebel (US); Henri Alvarez (Canada); Emmanuel Gaillard (France); William W. Park (US); Daniel Price (US). (See chapter 4)

[5] Daniel Price has worked in government, as investment lawyer and as an arbitrator. He has benefited from the investment treaties he helped to negotiate. As Deputy General Counsel for the Office of the US Trade Representative, Price negotiated the investment provisions of the North-American Free Trade Agreement NAFTA and the bilateral investment treaty between the US and Russia for the US. When Russia was sued for US$103bn in the largest claim ever, the investors appointed him as arbitrator. (See chapter 4)

[6] Prominent third-party funders in investment arbitration: Burford Capital (US); Juridica Investment Ltd (UK); Omni Bridgeway (Netherlands); Fulbrook Management (US); Calunius Capital (UK). (See chapter 5)

[7] In the midst of the recent debt crisis in Greece, a number of law firms urged multinational corporations to use investment arbitration to defend their profits. K&L Gates suggested clients should use the threat of arbitration as a ‘bargaining tool’ in debt restructuring negotiations. Meanwhile, during the civil war in Libya, firms including Freshfields, advised their clients on how to use investment treaties to sue the Libyan state. The new government might now have to compensate companies that supported the dictatorial regime. (See chapter 3)

ENDS

© Scoop Media

 
 
 
 
 
World Headlines

 

Support Needed For Olive Farmers In Palestinian Territory

Olive trees in the Palestinian town of Ni'lin in 2008 were very close to expanding Israeli settlements. Photo: IRIN/Shabtai Gold More>>

ALSO:

Use Of Drones In Law Enforcement May Violate Human Rights

22 October 2014 – The increasing use of armed drones within domestic law enforcement risks depersonalizing the use of force and infringing upon the rights of individual citizens, a United Nations independent human rights expert warned today. More>>

Gaza: Pledges For Aid, Reconstruction Must Be Honoured

Secretary-General Ban Ki-moon (left) addresses the Security Council meeting on the situation in the Middle East, including the Palestinian question. Security Council President for the month of October, María Cristina Perceval of Argentina, is at ... More>>

Ebola: UN Prepares For Arrival Of Trial Vaccines

In early October 2014, with the help of the US Navy, a new mobile laboratory opened at Island Clinic, one of the WHO-supported Ebola Treatment Units (ETU) in Monrovia, Liberia. Photo: WHO/R. Sørenson More>>



Palestine: Human Rights Defender Abdallah Abu Rahmah Found Guilty

Human Rights Defender Abdallah Abu Rahma was found guilty by an Israeli military court of “disturbing a soldier”. More>>

NCRI: Iran: 13 Executions In One Day

The henchmen of the clerical regime hanged 13 prisoners on Sunday October 19, 2014 in Ghezel-Hessar Karaj Prison, Tabriz Central Prison and Rasht Central Prison. More>>

MSF: Ebola Crisis Update - 16th October 2014

16 October 2014 Cases Deaths Guinea 1,472 843 Liberia 4,249 2,458 Nigeria 20 8 Sierra Leone 3,252 1,183 Senegal 1 0 Total 8,994 4,492 WHO Figures - Data are based on official information reported by Ministries of Health. These numbers are subject to change ... More>>

ALSO:

Detroit: City-Backed Water Shut-Offs Contrary To Human Rights

20 October 2014 – The city of Detroit must restore access to water for its citizens who remain unable to pay their bills, two United Nations experts urged today, adding that a failure to do so would be a violation of the most basic human rights of those ... More>>

ALSO:


Get More From Scoop

 
 
 
 
 
World
Search Scoop  
 
 
Powered by Vodafone
NZ independent news