My Lords, Amendment 15 deals with whether future trade agreements should have a chapter or separate part relating to investor-state dispute settlement systems. These complicated issues have a long history and have been a feature of trade agreements for many years. I think the UK has some 90 in place. As a country, we have not found much difficulty with them. Their main purpose was to ensure that in the case of arrangements for financing and operating the agreements set up under various free trade agreements and similar arrangements, those who put money at risk had a secure route to ensure that when issues outside their control or the control of one of the partners concerned caused difficulties, there was a chance to recoup the monies involved.
In that sense, these ISDS chapters and separate agreements have a place, but they have some downsides, which have not yet had as much discussion as they should have had. The arrangements have been used in the past to prevent social change in countries which have been subject to a free trade agreement where
investors have thought that their investment was at risk. They have sued in courts which have been set up specifically for the purpose and which are not transparent or available for wider scrutiny, in order to recoup the investment involved or to change the policies that have been brought about.
For example, in a recent case in a western European country, an investor sued a town authority which had introduced a national minimum wage on the basis that the deal under which they had been brought in to support the scheme did not make provision for additional wages to be paid out and, as a result, the company was losing funds. That case was not a question of cash transfer, it was the cancellation of a policy, which I think many people would find a rather strange outcome.
These schemes have been the subject of recent debate and discussion, particularly around TTIP, but in particular about the fact that they were included in the agreement with Canada signed by the EU only a few years ago and now in the process of being ratified. However, it is being ratified at the expense of the ISDS chapter. In order to ameliorate that in some ways, the EU has set up a special judicial system under which these schemes can be considered. It may be that the future of ISDS measures, if they are included in schemes, lies in that sort of approach. As will be argued, I am sure, that is a very intensive system in terms of salaries, structures and procedures and it may not be worth the candle.
This is a probing amendment to get a better understanding of where the Government stand on these issues. In moving the amendment today, we are also reaching out to the Government to suggest that it is time we got more organised. It seems strange that, at quite a high level, a mature democracy such as the UK, with tried and trusted judicial systems, has to go to the trouble of setting up a parallel system to deal with this class of activity. Surely our existing legal systems should be capable of drawing these in and working with them. Even it were necessary to set up a separate arrangement, does it need to be a permanent system or could there be an alternative route? If the Government were interested in further discussion on that, we would make an offer to see if we could find an amendment that would work. I beg to move.
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