ISDS and sovereignty: The use of investor-state dispute settlement mechanisms in trade agreements and their impact on national sovereignty

Abstract

With the Trans-Pacific Partnership (TPP) trade agreement negotiations in their final phase, much attention has been given to the issue of Investor State Dispute Settlement (ISDS) and the threat it allegedly poses to New Zealand’s sovereign right to pass laws to protect its citizens and environment. This report answers a few of the most commonly asked questions about ISDS. We conclude that concerns over ISDS in TPP are often overstated. ISDS is not a new concept for New Zealand, and we have negotiated ISDS clauses many times before without ill effects. Unless New Zealand negotiators sign up to an ISDS chapter that doesn’t include the safeguards that exist in our other international agreements, then our ability to regulate sensibly and transparently in the public interest should not be imperilled.