Full text: Trading away democracy

Trading Away Democracy
6
There is every reason to expect that CETA will pave the 
way for more such claims against the Canadian govern-
ment, as well as against the EU and its member states. 
CETA’s investment chapter arguably grants even greater 
rights to foreign investors than does in NAFTA (most nota-
bly by protecting investors’ “legitimate expectations” under 
the so-called “fair and equitable treatment” clause and 
on investor-state disputes with regard to financial ser-
vices (see Annex 1). CETA would significantly increase 
the risk of investor-state challenges to Canadian policies 
given that European investors have initiated 61 per cent 
of all known disputes (425 cases) as of mid-201620. 
BOX 2  
HOW EU CORPORATIONS USE INVESTOR-STATE 
ARBITRATION
EU corporations versus environmental protection – Vattenfall vs. Germany I & II: In 2009, 
Swedish energy multinational Vattenfall sued the German government, seeking US$1.4 billion in 
compensation for environmental restrictions imposed on one of its coal-fired power plants. The case 
was settled after Germany agreed to water down the environmental standards. In 2012, Vattenfall 
launched a second lawsuit seeking US$5.14 billion for lost profits related to two of its nuclear power 
plants. The legal action came after Germany decided to phase out nuclear energy, following the 
Fukushima nuclear disaster. The German government has already spent over US$3.54 million to 
defend the case, and expects a total of US$9.98 million in legal costs21. Both actions were taken 
under the Energy Charter Treaty.22
A close analysis of the dispute Vattenfall vs. Germany I (over a coal-fired power plant in Hamburg) 
revealed that it could still be launched under ICS, the investor-state dispute settlement (ISDS) 
mechanism in the revised investment chapter of CETA.23
EU corporations versus anti-discrimination – Piero Foresti and others vs. South Africa: In 2007, 
Italian and Luxembourg investors sued South Africa for US$350 million because a new mining law 
contained anti-discrimination rules from the country’s Black Economic Empowerment Act, which 
aims to redress some of the injustices of the apartheid regime. The law required mining companies 
to transfer a portion of their shares into the hands of black investors. The dispute (under South 
Africa’s investment treaties with Italy and Luxembourg) was closed in 2010, after the investors 
received new licenses requiring a much lower divestment of shares.24
EU corporations against policies to combat economic crises – Investors vs. Argentina, Cyprus 
and Greece: When Argentina froze utility rates (energy, water, etc.) and devalued its currency in 
response to its 2001-2002 financial crisis it was hit by over 40 lawsuits from investors. By January 
2014, the country had been ordered to pay a total of US$980 million in compensation. Among the 
claimants were several EU multinationals, including Suez and Vivendi (France), Anglian Water (UK) 
and Aguas de Barcelona (Spain). Similar cases have now been brought against Cyprus and Greece.25
Corporations against the minimum wage – Veolia vs. Egypt: Since 2012, the French utility 
company Veolia has been suing Egypt based on the bilateral investment agreement between France 
and Egypt for an alleged breach of a contract for waste disposal in the city of Alexandria. The city 
had refused to make changes to the contract which Veolia wanted in order to meet higher costs – in 
part due to the introduction of a minimum wage. In addition, according to Veolia, the local police had 
failed to prevent the massive theft of dustbins by the local population. According to media reports, 
Veolia is seeking US$90.9 million in compensation.26
        

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