Investor-state lawsuits are a very real possibility
The well-being of Malaysians is increasingly being affected by issues arising from environmental degradation. Recently, Malaysians in the state of Selangor experienced a prolonged period of water rationing. Apart from being deprived of basic amenities, environmental degradation also has health implications. The haze is one such ongoing environmental issue.
Corporate entities often cause these problems in the pursuit of their interests. Mega corporations are primarily focused on increasing operations to achieve better profits without regard for the environment, or health and socioeconomic impact on the people.
Now, a monster in the form of Investor-State Dispute Settlement (ISDS) under the Trans-Pacific Partnership Agreement (TPPA) that is under negotiation threatens to circumvent mitigation of these problems and further restrict promotion of environmental preservation and conservation.
ISDS is a system that allows large corporations - including multinational corporations - to sue the government of Malaysia if environmental regulation reduces their ability to make profits. So if a government instructs a company to clean up the toxic waste they released into the environment, the company could sue and ask for hundreds of millions of US dollars.
This happened in Peru v Renco, where lead-cadmium waste caused 98 percent of children in that area to be poisoned. Renco, the American company, is demanding US$800 million in damages, which will come from taxpayers’ money. Canada has banned fracking - or high volume hydraulic fracturing - for oil and gas due to its impacts on waterways and air pollution, and as a result Lone Pine is now suing Canada.
Both these cases involve Free Trade Agreements that include ISDS clauses.
Recently, Indonesia decided not to renew the permit of a British mining company, resulting in that mining company suing the government of Indonesia in Churchill PLC v Indonesia. Indonesia’s recent decision to not renew its bilateral investment treaty (BIT) with Netherlands, and also review all other BITs has been regarded as a reaction to this suit.
ISDS elevates corporations to the same level as nation states.
Given the increasing industrialisation in Malaysia, and in light of the recent Indonesian situation, ISDS lawsuits are a very real possibility and will punish governments for protecting the environment.
We urge the Malaysian government to:
1. Reject ISDS in the Trans-Pacific Partnership Agreement (TPPA) currently being negotiated by the US and 11 other countries.
2. Review all bilateral investment treaties (BITs) that have ISDS.
This statement is signed by the following organisations: Malaysian Nature Society - Ecocentric Transitions - Blue Life Ecoservices - Reef Check Malaysia – EcoKnights - WWF-Malaysia – Environmental Protection Society Malaysia.