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Saturday, June 16, 2012


The investor dispute clause
When a dispute arises between the NZ Government and the Foreign Investor, the Foreign Investor under the investor dispute clause, will be able to sue the NZ Government. In effect, the Foreign Investor is suing the people of NZ, since any monetary remedy will be plucked form the taxpayer purse, and any other remedy, likely to be legislative will be despite the views of NZ public, thus overriding the democratic will of the people who voted MP’s into Parliament. On the other hand, the New Zealand companies investing in foreign countries will also be able to sue under an investor dispute clause.
So what’s the problem? While there are no disputes there is no problem. And the likelihood of a dispute exhausting all appeals resulting in a binding remedy is probably very low. However, that in itself raises other questions. For instance, what concessions would the government be prepared to make to avoid arbitration?
Consider the example of the Crafar Farm sales to Chinese investors. Under the NZ-China Free Trade Agreement (FTA), if the government had determined that the farms should be sold to NZ investors, this would have provided the Chinese investors an opportunity to sue the NZ government under the investor dispute clause in the FTA. How? The FTA has a provision called the ‘National Treatment’ clause, which essentially means that the host government (NZ) cannot give preferential treatment to New Zealand investors over Chinese investors. Whilst there are some exceptions, such as the ‘public interest’ which could potentially be decided in NZ’s favour, the cost of arbitrating the matter is extremely expensive with no guarantee that the scales will tip in favour of NZ. It surprises me that this clause has not been discussed in the mainstream media and should be given more consideration than it currently is. That is not to say that the relationship with China isn’t an important one. This is simply an example of how and when an investor dispute clause could be triggered.
Now consider the partners in the TPPA, the most dominant one being the US. US companies are prolific litigants. So how does NZ fare against a giant US conglomerate? Our current economic position puts NZ at a massive disadvantage, so why on earth would the government sign up to a Treaty that risks further destabilising the economy? Well, in short, they won’t let it get to that point. Instead, they will make deals with those companies by ramming through legislation with their 1 seat majority, which leads to my next point – the democratic will of Parliament.
The democratic will of Parliament
In NZ, laws can only be passed by majority in Parliament. The issue here is that the majority that will be voting through any legislation, is marginal - a majority by a single seat. It might be the law, but it is a law that needs further consideration since it seems hardly democratic when that one seat that holds the balance of power is only in Parliament because they won their election seat through the puppeteering of the National Party.
NZ politics has forgotten that it is the people who empower Parliament. Citizens have forgotten that it is they who empower Parliament. So when parliament votes on law, they are voting on behalf of those who elected them as representatives. But, it is apparent that today’s politicians represent their own will and agendas, particularly the current government that claims the people gave them a mandate. For a government who claim to be the supreme number crunchers, they failed to realise that 53% of those who voted, did not vote for National and therefore there is no mandate. The argument that those who didn’t vote indirectly gave National a mandate is flawed. There is no logical connection between a person not voting equating to a vote for National.
I could go on to asset sales from here but will leave that for another discussion.