COP26
Corporate courts vs the climate Corporate courts were invented to protect the West’s control of the world against decolonisation. Now they are undermining attempts to halt climate change, writes NICK DEARDEN. Any day now, Italy expects to be ordered to hand millions of dollars over to an oil exploration corporation, following the Italian government’s decision to ban such exploration off its coast. The ruling will be handed down not by a judge in anything approaching a normal Italian or European court, but rather by a secretive arbitration process open only to big business, with Italy having no right to appeal. These ‘corporate courts’ stem back to the 1950s, created by rich countries and oil multinationals to protect Western interests against the decolonisation sweeping the world at that time. Italy’s decision to ban oil exploration came after Italians, fearing the impact of oil drilling off the beautiful Adriatic coast, protested in their thousands. They won. In December 2015, Italy’s parliament banned oil and gas projects within 20km of the coast. That’s when British company Rockhopper, which has been exploring that same coast, sued Italy using an arbitration clause in a trade and investment agreement known as the ‘investor-state dispute settlement’ or ISDS. The ‘compensation’ being claimed totals about $350 million – seven times what the corporation invested in the exploration project. Worse still, it is being brought under an investment deal that Italy is no longer even a part of. But, as so often with such agreements, Italy is still bound by the terms of the ISDS system for 20 years after its exit. In essence, ISDS creates a ‘corporate court’, allowing multinational corporations
14 Ninety-Nine 2021
from a trade partner country – in this case Britain – to sue a government in a tribunal for any law or regulation they regard as unfair. These cases are often heard in secret, overseen by corporate lawyers who don’t have to worry about the impact of their decisions on society, human rights or the environment – only investment law. These ‘courts’ usually have no right of appeal, and they can only be utilised by foreign investors.
A BARRIER TO CLIMATE ACTION Corporate courts have been used by tobacco corporations to challenge governments which want to ensure cigarettes are sold only in plain packaging. They’ve been used to challenge increases to the minimum wage. But increasingly, they’re being used to challenge all manner of environmental regulations necessary to halt climate change. In fact, they’re becoming a major barrier to the climate action governments must undertake to keep our planet habitable. Recently two energy corporations – RWE and Uniper – challenged the Netherlands over that country’s plans to phase out the burning of coal for electricity by 2030. Both corporations run coal-fired power stations in the country and are claiming billions of dollars in compensation, in a case that will clearly make governments think twice before enacting the most important
Top: After prime minister Mohammed Mossadegh nationalised Iranian oil in 1951, corporate courts began to be inserted into investment deals. Middle: A protest outside Rockhopper Oil's office in Salisbury in August Bottom: Our Corporate Courts vs The Climate walking tour in the City of London in September.
