Corporations suing countries—how crazy is that?

Lone Pine Resources sues Canada because Quebec has imposed a moratorium on fracking. Philip Morris sues the Australian government over its tobacco plain packaging legislation. Swedish energy company Vattenfall sues Germany because of that country’s decision to phase out nuclear energy.

Fracking is a method of exploiting oil and gas reserves that has been accused of, among other things, poisoning water reservoirs, and Quebec wants a time-out to properly evaluate the technology. Tobacco is the greatest killer drug on the planet, and Australia is simply trying to implement packaging recommendations of the World Health Organization. Germany is attempting to shift to safer sources of energy. All sensible measures. Yet companies are allowed to sue countries because their governments are trying to exercise the foremost responsibility of the state—protect its citizens?

What is more, these corporations are in effect above the law of the land. Rather than pursue their suits in the usual manner, by going to court, they can resort to panels empowered by the "trade" agreement under which they are suing. The treaties, such as NAFTA (Lone Pine vs. Canada), the Hong Kong-Australia investment treaty (Philip Morris vs. Australia), and the Energy Charter Treaty (Vattenfall vs. Germany), grant foreign investors the right to bypass the domestic courts of the host country and to directly file complaints to ad hoc tribunals which may operate in secret. How did this madness come to be?

At one time, in a more sensible past, governments granted charters to corporations to serve some public good—building a canal or a railroad, for instance—and could revoke that mandate when the job was done. But over the years, corporations have extended their influence until today, generously aided by "trade" agreements such as NAFTA, the World Trade Agreement, and other instruments of corporate empowerment, they can hold governments hostage, undermining both democracy and the rule of law.

We have allowed institutions that should be our servants to become our masters. It is time to end the madness and return them to their proper role—exploiting resources, providing jobs, products and services and absolutely nothing more. Their charters should confine them to strict mandates and be revoked if they engage in political activity of any kind. Fail to do this and we will continue to be bystanders as democracy is replaced with plutocracy.