340 Civil Society Groups Call For An End To Corporate Rights To Sue Governments Over Climate Action

More than 340 civil society organisations from over 50 countries, including a substantial number from Australia, have signed a global statement urging governments to work together to end from investor-state dispute settlement (ISDS). ISDS is controversial system in many trade and investment agreements that allows foreign investors to claim billions from governments if public interest regulation threatens their future profits, including regulation to reduce carbon emissions.

The statement is being released ahead of next week’s First Conference on Transitioning Away from Fossil Fuels in Santa Marta, Colombia, where governments will for the first time formally consider the barriers that ISDS poses to fossil fuel phase-out and the transition to net zero carbon emissions.

ISDS rules in trade agreements allow transnational corporations to sue governments in international tribunals outside national legal systems over laws and policies that may affect their profits. The statement warns that the system is undermining urgent climate action and a just transition, with fossil fuel companies alone having secured more than $87 billion in payouts, with the worst impacts in developing countries.

Fossil fuel companies are suing governments for billions over coal phase out, refusal to license new coal mines or extend existing ones, windfall taxes on excess energy profits, a ban on offshore oil drilling and fracking regulation. Australian billionaire Clive Palmer has registered his mining company in Singapore, claimed to be a Singaporean investor and is using ISDS in a trade agreement with Singapore to sue the Australian government for $120 billion over refusal of coal mining and energy permits.

33 Australian organisations are among the signatories backing the global call for coordinated government action to exit ISDS arrangements.

Dr Patricia Ranald, Convener of the Australian Fair Trade and Investment Network, said:

“Governments are withdrawing from ISDS arrangements. The Australian government is excluding ISDS from new agreements and reviewing ISDS in existing agreements. But this is a slow process and we urge them to join with others in exploring collective government action to withdraw from ISDS arrangements.

The statement calls on governments to form an international coalition to phase out ISDS, and to explore the development of a multilateral framework to eliminate the system altogether.”

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