
The Justice System That Lets Executives Escape Their Crimes - coloneltcb
https://www.buzzfeed.com/chrishamby/super-court?utm_term=.qummYdw9L#.wrvWJzd93
======
woliveirajr
Some early article about ISDS:

[http://www.economist.com/news/finance-and-
economics/21623756...](http://www.economist.com/news/finance-and-
economics/21623756-governments-are-souring-treaties-protect-foreign-investors-
arbitration)

Which points countries that don't sign treaties with ISDS.

Anyone can also gather more information in
[http://investmentpolicyhub.unctad.org/ISDS](http://investmentpolicyhub.unctad.org/ISDS)

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vinceguidry
Global commerce is ugly, nasty business. It's basically lawless frontier. Only
fools and the unscrupulous dare tread there. You can bet that in any given
deal, human trafficking is going to be involved at some point, everybody
involved does their best to look the other way or justify it. Systems of
justice are easily perverted to suit personal schemes. Slavery may not exist
anymore in the sense of humans being bought and sold on the open market, but
instruments of sovereignty are regularly bought and sold on semi-open markets.

Trade deals like TPP are attempts by the governments of the world to
regularize this world and bring it to heel, like a sheriff to a frontier town.
They can be politically controversial, because you can't build a system of
international law without infringing on the ability of people to pass their
own laws. But it's either trade deals or the Wild West. Goods and capital are
going to move around the world no matter what, all we can do is try to
regulate it the best we can.

~~~
tomp
I disagree. Actually, I kind-of like what the US is doing - it's creating laws
that have international reach (e.g. you can't launder drug money, and you
can't bribe foreign officials), and then they apply it to (i) domestic
companies doing business abroad, and (ii) foreign companies wanting to do
business in the US.

So, each country could very easily create, and enforce, its own set of laws
that would prohibit all of the crimes you mention. Companies would do business
where they could, and if two countries would have incompatible laws (e.g. in
country A, women can't work; companies from country B need to have 50% women
employees in every region), there would be no trade between them. Unless they
synchronize laws or create exceptions, of course.

In the end, you'd arrive to something similar to what we have today (global
trade), except that it would be created democratically, bottom-up, as opposed
to what we have now, which is top-down and inherently undemocratic.

~~~
toufka
You better hope the laws (and those who make them) in the strongest economic
coalition agree with your moral judgement.

The idea that one culture can decide the laws of another or else the weaker
capitulates its economic will is a very tricky concept. It works when the one
doing the deciding is 'right'. It's tough to have 'wrong' laws be imposed on
you by a foreign power. The idea your proposing is very clearly economic
cultural imperialism. Just as in moral philosophy it's very difficult to
extract just and good laws from their cultural context.

'Doing business' in another country, as the US currently interprets it,
includes the entire supply chain. If you make widget X, that's used in Y,
that's used in Z, that's used in a gadget in a car sold in the US, you are
'doing business' in the US and are liable to spend time in US federal prison
if the cultural business practices of your nation are not compatible with
current US law, even if you have never set foot in the US nor sold any product
to US customers. That's scary.

One country's 'anti-competitive behavior' is another's 'human sociability'. Or
one country's 'artistic right to profit' is another's 'crime against society'.
Could not those acts which could be justified as being a 'fiduciary duty to
profit above all else' be otherwise seen as 'immoral business practices' in a
different cultural context? Is tracking foreign users a violation of legal
privacy? Which of the above behaviors would land you in federal prison in your
country? And which would get you charged and extradited to another country's
federal prison?

Does economic might make cultural right?

~~~
tomp
What you're describing now is essentially ISDS, not what I'm proposing.

First, the only way the US (or any other country) can "imprison" foreign
individuals is if other countries agree to enforce its laws - something I
don't support, but accept that it will inevitably happen because of military
or economic alliances - and is in any case completely democratic. The US can
directly only enforce its laws against companies that do business in the US -
and the worse possible penalties are either confiscation of the company's
assets, or prohibition of doing business in the country - so companies can
individually decide whether to abide by US laws and do business in the US, or
neither.

Second, "economic imperialism" is exactly what ISDS/trade agreements are - a
countries' laws can be overruled by arbitrary international courts that have
no relationship with the people of said countries. Instead, I'm proposing that
countries would freely choose whether to collaborate with other countries or
not, and there are many different choices - e.g. UK could choose not to do
business with SA, because they discriminate against women, or they could
choose to do business with SA, because they have common military goals, or
they could say "we don't care" because they decide that they support
international trade despite different value systems.

~~~
toufka
Interesting. It's unclear to me if it's even possible outside of very rare
circumstances that a country would want to cease trade with another country
because their laws didn't align well. What would the incentive be to stop
illicit or otherwise mutually beneficial trade when one party was conducting
part of their trade unfairly?

It does seem that the previously mentioned economic imperialism _is_ what the
ISDS/trade agreements are, but it's not entirely clear how a more voluntary
system would, in the end, be much different.

Maybe that kind of homogenization is inevitable if you have well-ruled trade
between sovereign entities.

------
0xcde4c3db
> “It works,” said Charles Brower, a longtime ISDS arbitrator. “Like any
> system of law, there will be disappointments; you’re dealing with human
> systems. But this system fundamentally produces as good justice as the
> federal courts of the United States.”

Is that supposed to be a ringing endorsement? A lot of people regard the US
justice system as "the best justice money can buy", with victory going to
whoever can afford to put up the biggest fight.

------
mark_l_watson
I find it distasteful, but unfortunately unsurprising, that the financial
royalty can force these one-sided trade agreements in 'democracies'. Perhaps
western democracies are not as democratic as people think.

~~~
nxzero
It's not so much that "democracies are not as democratic as people think" —
but that they're more democratic than non-democracies.

Classic example might be Ancient Greece, were the percentage of the population
that actually participated in the government was 10%. Given most political
topics of major concern are usually closely divided, this means that it would
not have been uncommon for 6% of the population to actually decide the fate of
a given issue. Of that 6%, it's like a singular person (or small group of
people) actually was the key to the outcome of the vote.

[https://en.m.wikipedia.org/wiki/Athenian_democracy](https://en.m.wikipedia.org/wiki/Athenian_democracy)

------
sandstrom
Here is a good, much shorter, article on the subject:

[http://www.economist.com/news/finance-and-
economics/21623756...](http://www.economist.com/news/finance-and-
economics/21623756-governments-are-souring-treaties-protect-foreign-investors-
arbitration)

------
tomp
Is this thread experiencing a downvote/flag brigade?

Many of the comments are downvoted (without good reason), and the thread
itself is at the bottom of the first page, despite being much "better" (70
points, 21 comments in 2 hours) than some of the top threads (granted, I can't
see the flags)!

~~~
0xcde4c3db
I wouldn't be shocked if people were flagging it for the headline being
sensationalized/clickbait (as "letting executive escape their crimes" is just
one aspect of a much bigger story). Or just flagging it because it's BuzzFeed.

~~~
Noseshine
The question is about _comments /replies_ being downvoted, something I too
noticed. Those downvoting could at least leave a comment as to why - when as
in these cases it isn't obvious at all and looks like trolling.

------
panic
Who enforces these ISDS rulings? What happens if the government doesn't pay
up?

~~~
woliveirajr
Perhaps WTO, since it's an agreement. Or the market, as not fulfilling an
agreement is similar on defaulting bonds (lack of trust in the country).

Also found UNCTAD:
[http://unctad.org/en/Pages/aboutus.aspx](http://unctad.org/en/Pages/aboutus.aspx).

------
tptacek
The other side of the argument, submitted without endorsement, and, for
simplicity's sake in writing a comment that is slightly researched but still
just an HN comment, with an unapologetic focus on the US:

* ISDS isn't a "secret court", but rather an instrument used in treaties, the way a venue or severability clause is used in normal civil contracts. Different investment treaties have different ISDS clauses with different rules. ISDS clauses are a big part of what make investment treaties "investment treaties": they're the enforcement part of the agreement.

* ISDS clauses don't preempt or even involve criminal law. In what appear to be literally all cases, they're handled by arbitrators with no formal judicial powers. Those arbitration panels are empowered exclusively to award damages, payable by the host state, to investors. If you look at who the arbitrators are in ISDS cases, they're random industry and academic people. None of them have any ability to "wipe sentences away".

* The US is undefeated in ISDS claims by foreign investors ( _only_ foreign investors have recourse to ISDS; a US investor cannot use the ISDS against the US). No person anywhere has ever won an award of money from the US through ISDS. Obviously, nobody has escaped a US criminal sentence through ISDS, because ISDS can't be used to do that, but even if it could, nobody has, because nobody has won an ISDS claim against the US.

* The reason that nobody wins ISDS claims against the US is that ISDS --- as the argument goes --- is primarily designed to bake into treaty language the norms of US and Western European civil law, particularly with regards to private property and contract enforceability. US investors have a slightly better than 50/50 average in winning ISDS cases, and make up about 20% of all such cases, which is proportional to the amount of foreign investing we do.

* Cases decided under ISDS, at least those with US jurisdiction, are appealable to US courts. You'll find some of those when you go look for ISDS cases.

(End argument that I am repeating without endorsing, begin poorly-informed
commentary).

The most important ISDS clause pertaining to the US and the one under which
every case against the US has been made is NAFTA. You can read the NAFTA ISDS
clause here; it's pretty straightforward:

[https://www.nafta-sec-alena.org/Home/Legal-Texts/North-
Ameri...](https://www.nafta-sec-alena.org/Home/Legal-Texts/North-American-
Free-Trade-Agreement?mvid=1&secid=539c50ef-51c1-489b-808b-9e20c9872d25)

Skip forward to "Article 1122: Consent to Arbitration" and read downward. The
investor gets to appoint an arbitrator, the state gets to appoint its own, and
then both parties agree on a third presiding arbitrator. If the two parties
can't agree on a presiding arbitrator, the secretary-general of (I think?) the
OECD picks them.

At least with respect to NAFTA, there appears to be legal precedent that ISDS
cannot be used to challenge environmental protection laws: that taxes, zoning,
and regulation pertaining to environmental controls cannot be challenged as
unfair takings from investors. I have no idea how forceful that precedent is.

I spent 30 minutes clicking around the UN's UNCTAD ISDS tracker site, which
will make this shadowy world court controlling everything in the world with
its shadowy clutches seem real, real boring _toute suite_ :

[http://investmentpolicyhub.unctad.org/ISDS](http://investmentpolicyhub.unctad.org/ISDS)

For instance, I went looking for the case in which Buzzfeed claims a Trump
partner got their criminal sentence in Egypt vacated by an ISDS tribunal:

[http://investmentpolicyhub.unctad.org/ISDS/CountryCases/62?p...](http://investmentpolicyhub.unctad.org/ISDS/CountryCases/62?partyRole=2)

Maybe you can find it?

* Egypt would have to be the respondent state

* The case would presumably have to be decided in favor of the investor (there aren't many of those)

* You'd think the case would make mention of criminal law somewhere in the decision (there's only one of those, and it pertains to a fine, not a custodial sentence)

* Some principal of that case would somehow be associated with Donald Trump (no principal of any case I can find associated with Egypt has principals who show up in Google searches along with Trump).

Not that Trump matters here; his is a name clearly added by Buzzfeed to juice
up the story.

I don't know whether ISDS is a bad thing, or is instead one of those sort of
common-sense things that happen to be deployed in the middle of (often
legitimate) controversies; like, most large-scale foreign fraud or
environmental damage cases are going to involve some nominal form of
"investment", so the investment dispute processes of our treaties are always
going to be at play, and so on.

What I do feel comfortable saying is that Buzzfeed --- which has often
acquitted itself pretty well in reporting controversies over the last few
years --- is hyping this issue up _way_ past the point where people are
getting an accurate picture from their reporting.

~~~
ddeck
_> Maybe you can find it?_

It's this one concerning Hussain Sajwani:

[http://investmentpolicyhub.unctad.org/ISDS/Details/419](http://investmentpolicyhub.unctad.org/ISDS/Details/419)

It seems Sajwani agreed to drop the case as part of a settlement with Egypt
[1] [2]

[1] [http://www.reuters.com/article/egypt-damac-
idUSL6N0DW4PL2013...](http://www.reuters.com/article/egypt-damac-
idUSL6N0DW4PL20130515)

[2] [http://www.constructionweekonline.com/article-22767-egypt-
su...](http://www.constructionweekonline.com/article-22767-egypt-suspends-
sentence-against-damacs-chairman/)

~~~
tptacek
That'll show me to start Googling before reading like 1/3 of the article. :)

------
okket
[]

~~~
jameshart
The European Union tries to accomplish the same thing with a parliamentary
legislature and intergovernmental council, backed up by a relatively
transparent permanent court system and a framework of laws based on human
rights. But then it gets accused of lacking transparency and accountability
and the U.K. decides to leave and replace it with a bunch of bilateral
agreements which will likely be subject to ISDS arbitration.

------
golemotron
The thing that lets executives escape their crimes is called incorporation, or
limited liability.

~~~
tomp
You're misinformed, malicious or stupid.

(1) limited liability doesn't protect executives, but investors.

(2) limited liability only limits _financial_ liability, not criminal
liability.

