This is from a new paper by Gus Van Harten and Pavel Malysheuski:
The sociological legitimacy of investment treaty arbitration, commonly known as investor-state dispute settlement (ISDS), appears to depend in part on an expectation that it benefits smaller businesses, not just large multinationals and the super wealthy. Proposed trade agreements that would expand greatly the role of ISDS – such as the U.S.-led Trans-Pacific Partnership (TPP), Europe-U.S. Transatlantic Trade and Investment Partnership (TTIP), and Canada-EU Comprehensive Economic and Trade Agreement (CETA) – have been promoted as delivering benefits for smaller enterprises.
We examined the relationship between ISDS and smaller firms by collecting data on size and wealth of the foreign investors that have brought claims and received monetary awards due to ISDS. Our main findings are that the beneficiaries of ISDS-ordered financial transfers, in the aggregate, have overwhelmingly been companies with more than USD1 billion in annual revenue – especially extra-large companies with more than USD10 billion – and individuals who have over USD100 million in net wealth. ISDS has produced monetary benefits primarily for those companies or individuals at the expense of respondent states.
It should be noted that actual small businesses -- like, say, the local dry cleaner -- do not have nearly enough money to make use of ISDS. With ISDS, we are talking about lawsuits by very wealthy companies and individuals, as well as lawsuits by moderately wealthy companies and individuals. But putting that aside, is it surprising that wealthier companies and individuals are more likely to win ISDS lawsuits and collect money? Would the breakdown be similar under domestic law?
Also, does any of this matter? Is it true that the "sociological legitimacy of investment treaty arbitration" depends in part on "an expectation that it benefits smaller businesses, not just large multinationals and the super wealthy"? I would have thought that the legitimacy of investment treaty arbitration depends more on whether international law -- because investment treaty arbitration is part of international law -- offers protections for both foreign investors and people who are not foreign investors.
There is also this from the paper: "The data on ISDS costs also highlights financial benefits of ISDS for ISDS lawyers, arbitrators, experts, and other actors who earn income from ISDS fees. In 214 ISDS cases with a confirmed adjudicative resolution, based on the OECD estimate of ISDS costs the total payments of fees from disputing parties to the ISDS industry would have been about USD1.7 billion." No word on whether it is large or small law firms getting most of that business.
