Under the New “Investor-State Arbitration” in the Trans Pacific Partnership, Claimants May Have to Pay Attorneys’ Fees
The U.S. and eleven other Pacific Rim countries announced they have reached agreement on the Trans Pacific Partnership trade agreement, which will more tightly integrate 40% of the world’s economy into a single regional bloc. There will be a huge fight in Congress over the TPP by progressive Democrats in the U.S. Even presidential candidate Hillary Clinton has already announced her opposition (sort of).
One area of ire for critics will certainly be the TPP’s provisions for investor-state dispute resolution (See Sen. Elizabeth Warren’s attack on this area here). The TPP negotiators seem to have recognized that those provisions needed modifications and they seem to have focused on providing more transparency in arbitral proceedings. But I was particularly struck by the U.S. Trade Representative’s official summary of the agreement’s provisions on investor state arbitration below.
The chapter also provides for neutral and transparent international arbitration of investment disputes, with strong safeguards to prevent abusive and frivolous claims and ensure the right of governments to regulate in the public interest, including on health, safety, and environmental protection. The procedural safeguards include: transparent arbitral proceedings, amicus curiae submissions, non-disputing Party submissions; expedited review of frivolous claims and possible award of attorneys’ fees; review procedure for an interim award; binding joint interpretations by TPP Parties; time limits on bringing a claim; and rules to prevent a claimant pursuing the same claim in parallel proceedings.
I find this provision on attorneys’ fees fascinating. I presume this will allow state-respondents to actually recover attorneys’ fees from investor-claimants if those claims were somehow deemed frivolous. I didn’t realize frivolous claims were actually a huge problem in investor-state dispute resolution. I am not aware of data showing lots of weak claims being filed with state-respondents just settling to avoid the costs of arbitration.
I am also not aware of any other kind of international dispute resolution, public or private, which has this kind of arrangement. It is worth the wait to see the details, but it is sign the TPP negotiators are getting ready to take fire on this area from folks like Sen. Warren, and have added a little armor ahead of time.