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DW: Trial of Strength (1/2) – The power struggle between corporations and the state


NOTE: Online Until 29 June 2019

What happens when a law doesn’t please a multinational company? [Online until: June 29, 2019, Part 2 online: June 7, 2019]

It challenges the state before a private court – an international tribunal of arbitration – with the proceedings held in camera. Billions are at stake for taxpayers in the power struggle between states and multinationals.

The Wallonia region in Belgium triggered a Europe-wide crisis in the fall of 2016 by refusing to sign the CETA free trade agreement with Canada, as millions of EU citizens took to the streets to protest against the agreement. The CETA negotiations had turned the spotlight on the system of private arbitration courts. This allows multinational corporations to sue states for enormous sums in damages if their environmental, social or health policies affect their actual or even expected profits. The bill is paid by the taxpayers who the state was originally supposed to protect. Why are there private arbitration courts at all? They exist mainly due to free trade agreements: In order to attract investments from large corporations, states conclude trade agreements with each other. These include arbitration clauses that allow companies to appeal to private arbitration tribunals. The arbitration proceedings take place in camera and are conducted by specialized commercial lawyers from large law firms. Globalization means the number of arbitration proceedings is increasing all over the world – in strong economies as well as in developing countries and emerging markets. But these are having a devastating effect on fundamental citizens’ rights such as health, environmental protection and labor laws and give rise to the question as to whether people want this this sort of globalization at all.

This documentary examines three case studies to illustrate the power of the international arbitration tribunals: Canadian company Cosigo sued the Colombian state for 16 billion euros in damages before a private arbitration tribunal; in Germany, Swedish energy provider Vattenfall is demanding 4.7 billion Euros in compensation for the country’s nuclear phase-out; and the US company Renco, whose lead smelters poison the environment, wants 800 million Euros in compensation from the Peruvian state.

Many states whose sovereignty is threatened are now finally waking up to the danger. But is it perhaps already too late to do anything about the seemingly over-mighty corporations?

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