Haley Sweetland Edwards (Part 1): The History of Investor State Dispute Settlements

Come back to the museum everyone Hi, I'm David Callen, president of the museum and our guest today is Haley Sweetland Edwards and she is a correspondent at the time. Interestingly, she recently covered policy issues at both the Republican and Democratic conventions and if that's not interesting enough. Between 2009 and 2012 she lived abroad in Yemen and the former Soviet Union, where she wrote blogs and articles for places like the New York Times, LA Times Atlantic and New Republic. She previously worked as an editor at Washington Monthly and before that. As a resident reporter at the Seattle Times, her undergraduate work is in philosophy and

history

at Yale and then she went to Columbia to get her journalism degree.

Now we've all heard a lot about international governing bodies, there's the Olympic Committee, there's FIFA, there's the Hague Tribunal, but this book and what she's going to talk about today is about something that certainly when I read it I had no idea. that it is called isds,

investor

-

state

dispute

settlement, and is the subject of his book, is very interesting like most. things Haley it's a pleasure to me news Haley Sweetland Edwards thank you very much for having me here today it's lovely to be here is that it's the microphone at the right level so actually it was when we were talking just before this and the resolution of

dispute

s between

investor

s and

state

s or isds Everyone has asked me why you would choose to write a book on this topic and the answer is basically that I discovered that it existed and I thought this can't be true, there is no way that this whole judicial system that exists at the level international that I've never heard of and certainly never read and I did a search in the New York Times archives, it had been mentioned once and I think in 1999 or 2000 something like that, this is a court system that has been present in international trade agreements since the 1950s and that was the first time it was mentioned in the New York Times, so when I came across this I thought: either I don't quite understand what this is or it's a totally underreported topic. that desperately needs some attention and then I started researching and realized it was the latter and now you have a book that addresses at least

part

of it, so one of the things I wanted to start with here and I've given it to this speech several times now, but since we're on Wall Street, I wanted to start with the investors' experience and go back in time

history

, 2,000 years ago, overseas investors basically had no rights if they wanted to leave their land native with its assets. in your goat cart, as soon as you left the area, the monopoly of power that you know the leader had was in the place where you were, you are on your own, if some warring tribe wanted to take all your stuff and send you home or kill you, you really had no choice, that was it, it was a very, very, very risky business that changed slowly over the millennia and you saw these, there are these little turning points in the Middle Ages.

A great example is that we have started to see these groups of merchants come together and form Confederations where they would say: you know we are going to protect each other and in return, if any Kingdom does not treat us well, together we will boycott them and or they would all pay a little money to create real ships to protect them. In the North Sea, there were basically private armies, and that was six hundred and seven hundred years ago and then it started about three hundred years ago. I saw the rise of nation states and all of this starts to change, the importance of global trade starts to increase and these very informal courts form and they were almost always in the wake of wars, so you would know, and again.

Starting the first nation-states, it was hard to remember that what we have now was not how it always was, but after the wars, these nation-states would come together and say no, let's just sign this. treaty, but we're actually going to look at what private property was destroyed over the course of this war, so one of my favorite examples is that no one knows, and it certainly isn't, marijuana in our fifth grade US history classes degree, but in the wake of during the Revolutionary War here in the U.S., representatives from England came, representatives of the founding fathers or you know, their cohorts sat down and said, "Okay, we're not just going to end this war, but let us see what properties were destroyed, what merchant ships were destroyed.

During this process, what farms were destroyed and what is the obligation of the English to give back a little to these private farmers, these private investors? So again, that started in these courts very informally, you're sitting in a room and you'd say can these original documents be fascinating because there's really just people sitting around saying well, you know, I think that guy's farm It's worth about 200 dollars or the things that were destroyed, so would you agree to discuss it? Well I think it was more like 150 and then they would come to a conclusion so that was in the 1780s or so throughout the 1800s these courts start to emerge more in the early 20th century they emerge more and more and then it wasn't World War II as a consequence of World War II that this idea that maybe we should have these tribunals that are informal and exist after disputes maybe we should have them written into trade agreements or these bilateral investment treaties and that's the The core of how we got to this is the It's what we have now and investor-state dispute settlement started out as a very good idea and I think that's the core of this thinking that everyone in this room can probably get behind the idea of If you're going to start a factory in some other country, you want certain protections for that private property and that's what happened in the 1950s, people got together in a room and they started putting into these trade agreements provisions that said If someone messes with your property, when you're in a foreign country, you have a private avenue to solve that problem basically and that was like that, that's basically the story of the last 2000 years of how we got to where we are now and then during the last 2000 years.

Over the last forty years, this started being included in trade agreements in the 1950s, over the last 40 years, it was very rarely used, so to give you an example, the United Kingdom that the British had there was a British company that It had a factory in Sri Lanka. was destroyed there was a military confrontation and their factory was destroyed, they used this is Des Klaus written in this investment treaty and they and the people got together in a room and determined that that factory was worth about five hundred thousand dollars and that's what was paid , the Sri Lankan government paid this private investor five hundred thousand dollars to destroy their property and everyone got to everyone, it was a very good idea, it wasn't a problem, it really was and this is what's fascinating about it and this is why this hasn't appeared in the New York Times or any other court or any other publication for so many years because it wasn't a problem, if someone's property was destroyed in a foreign country, they would form this court to determine how much money they should owe. be paid and that was the end, it was the first 50 years in which ISDS was written in every trade agreement, every bilateral investment treaty, there are about 40 claims in total that we know about, so it is known every two years , so there would be a court formed, so this is where it started to go crazy.

In the last 20 years, we know about 700, so suddenly in the late '90s, it was just this explosion of new demands and the question was: are there so many things about this, but the question is why and one of the quickest reasons why I wrote this book is I wanted to know why and you see these graphs, it's just one claim every two years, one claim every five years and then all of a sudden it just shoots through the roof 700 what are we looking at? and one of the there are some answers to that question: one, probably many people in this room are aware that global trade exploded in the '90s, but another is that suddenly we're just our world became a lot more litigious and we started to looking back at these paragraphs written in these trade agreements and again looking at these primary documents is so fascinating because you think okay, well, we're forming this global court system, it's all this global. judicial system there will surely be pages and pages of documents that say this is how it's going to work and this is how this arbitrator is appointed and this is how it plays out, none of them are literally like three paragraphs, what I've seen The posts of Facebook are longer and they are all based on everyone using this language that says and this is an actual sentence that foreign countries must provide fair and equitable treatment to all ambassadors operating on their territory sounds reasonable, but what the hell does it mean? that really?

That's why we've seen this explosion of cases because suddenly you get a situation where you say well, what does it mean to treat me fairly and what does it mean to treat my property fairly?