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The Justice System That Lets Executives Escape Their Crimes
- okket 10y ago[]
- maxxxxx 10y agoOne alternative would be more transparency so people can at least know what's going on.
- tomp 10y agoEdit: parent's post, now deleted, contained something like "What's the alternative, if we want global trade?" (IIRC). Trade agreements without ISDS, obviously. I mean, I recognise why investors might be reluctant to invest in Zimbabve or Vietnam without some guarantees of a "fair" legal process. But I cannot wrap my mind around why mature Western democracies like USA, New Zealand or Italy would ever sign an ISDS - their courts are transparent, not corrupt and fair (for the local understanding of fairness), so investors don't need to fear any risks (well, apart from the risk of doing business in general, that is).
- aluhut 10y agoSomething completely new maybe? It's not like we have a horde of market ideologists pretending to do science on universities. Why not have them come up with something?
- jameshart 10y agoThe 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.
- ocschwar 10y agoThe alternative is trade agreements with a far weakened ISDS mechanism
- golemotron 10y agoThe thing that lets executives escape their crimes is called incorporation, or limited liability.
- Noseshine 10y agoThat invention is a very good mechanism - and it was/is for "money risk", not for crimes. I can't fathom how you can equate business venture failure with crime.
- tomp 10y agoYou're misinformed, malicious or stupid. (1) limited liability doesn't protect executives, but investors. (2) limited liability only limits financial liability, not criminal liability.
- deleted 10y ago[deleted]
- woliveirajr 10y agoSome early article about ISDS: http://www.economist.com/news/finance-and-economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration http://www.economist.com/news/finance-and-economics/21623756... 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
- mark_l_watson 10y agoI 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 10y agoIt'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
- panic 10y agoWho enforces these ISDS rulings? What happens if the government doesn't pay up?
- woliveirajr 10y agoPerhaps 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.
- deleted 10y ago[deleted]
- HappyTypist 10y agoDepends on the treaty. For some treaties, other treaty members get to seize sovereign assets and imports of the defaulting country.
- vinceguidry 10y agoGlobal 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.
- ajmurmann 10y agoThis sounds very interesting and I've always been intrigued by international trade. Do you have any references where I can learn more?
- vinceguidry 10y agoI follow Tyler Cowen's Marginal Revolution and Matt Levine's Money Stuff. Popehat is another excellent resource. Quora has excellent contributors that are good at synthesizing and distilling deep lessons for easy consumption. Finally Stratfor is the best resource for geopolitics. It takes awhile to piece everything together to get a full picture of how the world works, but in my opinion it's worth it. Then you can read articles like this: https://www.theguardian.com/football/2015/dec/21/sepp-blatter-fifa-power-politics https://www.theguardian.com/football/2015/dec/21/sepp-blatte... And gain insights on how global patronage networks tend to work. You can't just take a course or something on international trade and expect to be able to understand it. It's too complicated, even the top dogs only themselves know pieces of everything, they hire lawyers and accountants to actually understand the details.
- 10y ago
- 0xcde4c3db 10y ago> “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.
- tomp 10y agoIs 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 10y agoI 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 10y agoThe 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.
- tptacek 10y agoI flagged this post right away, since it's a political advocacy piece that --- as you can see --- generated a mostly uninformed and unidirectional thread. Generally we're better off not litigating downvotes.
- deleted 10y ago[deleted]
- tptacek 10y agoThe 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-American-Free-Trade-Agreement?mvid=1&secid=539c50ef-51c1-489b-808b-9e20c9872d25 https://www.nafta-sec-alena.org/Home/Legal-Texts/North-Ameri... 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?partyRole=2 http://investmentpolicyhub.unctad.org/ISDS/CountryCases/62?p... 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.
- sandstrom 10y agoHere is a good, much shorter, article on the subject: http://www.economist.com/news/finance-and-economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration http://www.economist.com/news/finance-and-economics/21623756...