Keystone lawsuit shows TTIP’s threat to climate action – report

A $15 billion lawsuit by the company behind the Keystone XL pipeline against the US government shows the serious threat to democracy posed by special privileges for investors, a new report has said. TransCanada is suing under investor-state dispute settlement (ISDS) clauses of the North American Free Trade Agreement (NAFTA) to demand damages following rejection of the controversial pipeline due to its climate impact.

Keystone illustrates how the increasingly common ISDS clauses, that are contained in the draft EU-Canada trade agreement (CETA) and the proposed EU-US deal (TTIP), can be used to undermine climate action, the report by T&E, Friends of the Earth Europe and Sierra Club stated.

Last year US president Barack Obama denied permission to build the US-stage of the Keystone XL pipeline, which would have transported crude oil from Canada’s tar sands to American refineries, as it was not in the interest of national security and would have undercut America’s climate leadership. TransCanada’s lawsuit is under chapter 11 of NAFTA, which allows multinational corporations to sue governments if they feel they have not been treated as a domestic company would have been.

TransCanada has reportedly invested $3.1 billion in the project but is seeking five times this amount in damages. It will be able to launch its case as early as May 2016. A three-judge tribunal will issue a ruling, which cannot be appealed to any national court. It can award damages but not force the US to grant permission for Keystone to be built

Cécile Toubeau, better trade manager at T&E, said: ‘This is yet another example of how ISDS halts climate action. Worryingly, the revised Commission proposal on ISDS does not prevent this type of undemocratic privileges for foreign investors, which comes at the expense of citizens and the environment.’

If TTIP and CETA are passed with ISDS, thousands more corporations will be able to sue the US, Canada and EU member states for actions they take to protect citizens and the environment, the report finds. So even during the years when the Paris climate deal was being negotiated, the EU was providing, via TTIP and CETA, investors more opportunities to challenge climate action.

Last week trade negotiators from the EU and US discussed a European proposal for an ‘Investment Court System’ as an alternative to ISDS in the TTIP deal. The proposed new court has been roundly criticised by civil society for failing to fundamentally reform investor privileges and being legally questionable.