Democracy Gone Astray

Democracy, being a human construct, needs to be thought of as directionality rather than an object. As such, to understand it requires not so much a description of existing structures and/or other related phenomena but a declaration of intentionality.
This blog aims at creating labeled lists of published infringements of such intentionality, of points in time where democracy strays from its intended directionality. In addition to outright infringements, this blog also collects important contemporary information and/or discussions that impact our socio-political landscape.

All the posts here were published in the electronic media – main-stream as well as fringe, and maintain links to the original texts.

[NOTE: Due to changes I haven't caught on time in the blogging software, all of the 'Original Article' links were nullified between September 11, 2012 and December 11, 2012. My apologies.]

Tuesday, November 12, 2013

Harper Moves to Give Up More Canadian Sovereignty

The word ICSID sounds like a sneeze.

It stands for "International Centre for Settlement of Investment Disputes" which is part of the World Bank. ICSID was created in the 1960s to allow foreign companies to sue countries, especially in the developing world. It is relevant to Canada since the Harper government recently committed Canada to ratify the ICSID Convention.

ICSID and investor-state arbitration

ICSID is a house for investor-state arbitration, which is the most powerful form of international adjudication in the world.

Investor-state arbitration allows foreign companies to bypass national courts and sue countries directly before special tribunals. The process is one-way; countries cannot bring claims against companies. Lately, investor-state awards against countries have run into billions of dollars.

It is serious business, especially for law firms.

The ICSID Convention fits into this picture by providing procedural rules for these corporate lawsuits. Fortunately, ICSID is more transparent than the other houses for investor-state arbitration available under NAFTA and other treaties, although ICSID is less open than judicial processes.

Unfortunately, there are important flaws in the rules and ICSID. The flaws were exposed as investor-state arbitration evolved in the late 1990s from a rarely-used mechanism to an exploding opportunity for law firms and source of liability for governments.

Flaw #1: Removal of any role for courts

Perhaps most importantly, ICSID marks a roll-back of independent judging in the name of globalization. Uniquely, the ICSID Convention allows awards against countries to be enforced without any judicial review. Other houses for investor-state arbitration allow at least for limited review by domestic courts, although typically only in a place chosen by the investor-state arbitrators themselves.

Unlike judges, investor-state arbitrators operate for-profit. They lack secure tenure and an objective process of case assignment. They often double as lawyers and lobbyists. Repeat players among them appear to have an interest to favour companies because of the companies' power to bring claims and trigger arbitrator appointments.

Sometimes, arbitrators have ordered countries to pay compensation companies in situations where Canadian courts would not. For example, companies have been given compensation when laws passed for a public purpose caused economic loss to the company. Canadian courts often defer to legislative decisions of this sort, for reasons of democratic accountability.

Despite the absence of a judicial process, if a country refuses to pay an ICSID award, its assets are subject to seizure in any country that is part of the ICSID Convention. According to Article gb of the Convention: "Each Contracting State shall recognize an award... as binding and enforce the pecuniary obligations imposed by that award... as if it were a final judgment of a court in that State."

Thus, ICSID gives arbitrators an immense power over the public purse, even to review Parliament or domestic courts. By ratifying the ICSID Convention, the Harper government has given ICSID awards the status of a Supreme Court of Canada decision, without any opportunity for review in any court.

Flaw #2: ICSID puts Canada more squarely in the US orbit

ICSID awards can however be challenged before so-called annulment committees at ICSID. These committees consist of three new arbitrators chosen by the World Bank President. The grounds for review are limited, but on occasion ICSID awards are annulled.

Politically, this process puts ICSID more squarely in the U.S. orbit than are other houses for investor-state arbitration. Since the Second World War, an informal agreement among the major powers has allowed the U.S. government always to choose the World Bank President. At other arbitration houses, similar powers rest mainly with the Dutch government or business organizations like the International Chamber of Commerce.

To resemble a judicial process, investor-state arbitrators should be chosen randomly, where not agreed by the parties, from a roster of publicly-appointed arbitrators. Such an arrangement seems a long way off. Major states appear wedded to a system slanted that lacks judicial integrity evidently because the system is slanted in favour of their major companies.

Thus, by joining ICSID, the Harper government has relinquished Canada's judicial sovereignty to for-profit arbitrators chosen by a U.S.-appointed official. It is not the first concession of this kind to the U.S. Yet it clearly adds to the tally.

If ICSID were a sneeze, please forgive me for not saying Bless You.

Original Article
Source: thetyee.ca
Author: Gus Van Harten

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