In recent years, there has been a major increase in the use of arbitration in the United States to decide commercial disputes, but those cases involve contracts in which the parties agreed to arbitration, with the outcome generally depending on how factual issues are resolved
TPP arbitrators, by contrast, will decide what is essentially a legal question: whether governmental actions, which are designed to protect our health, safety, environment and economic well-being, are consistent with the TPP.
Those protections extend from locally enacted laws like the San Francisco minimum-wage provision, to state statutes and regulatory actions, to laws passed by Congress and decisions of federal regulatory agencies. And under the TPP, as under other trade agreements, decisions of a majority of the arbitrators on compliance with the TPP will not be subject to review in any court, federal or state.
Among the other important public policy measures currently being debated that might be the basis for a TPP claim by a foreign investor include water rationing in California, the legality of selling e-cigarettes to minors, and the state regulation of medical facilities performing abortions.
If a foreign investor won a TPP arbitration in these situations or the wage increase discussed above, that would not only cost the Treasury, but it would disadvantage American competitors who cannot benefit from TPP arbitrations, unless the offending law were set aside. And if governments feel compelled to set aside such laws in response to adverse rulings, the three arbitrators will effectively have substituted their own judgments for that of the electorate.