Unfortunately it's sometimes necessary, with certain people, to explain things again and again so that they finally get it. So it is with George Monbiot and the upcoming US/EU trade treaty. Here he is whining again that there will be a clause insisting that governments must obey their own laws:

But this is not all that democracy must give so that corporations can take. The most dangerous aspect of the talks is the insistence on both sides on a mechanism called investor-state dispute settlement (ISDS). ISDS allows corporations to sue governments at offshore arbitration panels of corporate lawyers, bypassing domestic courts. Inserted into other trade treaties, it has been used by big business to strike down laws that impinge on its profits: the plain packaging of cigarettes; tougher financial rules; stronger standards on water pollution and public health; attempts to leave fossil fuels in the ground. At first, De Gucht told us there was nothing to see here. But in January the man who doesn't do give and take performed a handbrake turn and promised that there would be a three-month public consultation on ISDS, beginning in "early March". The transatlantic talks resumed on Monday. So far there's no sign of the consultation. And still there remains that howling absence: a credible explanation of why ISDS is necessary. As Kenneth Clarke, the British minister promoting the TTIP, admits: "It was designed to support businesses investing in countries where the rule of law is unpredictable, to say the least." So what is it doing in a US-EU treaty? A report commissioned by the UK government found that ISDS "is highly unlikely to encourage investment" and is "likely to provide the UK with few or no benefits". But it could allow corporations on both sides of the ocean to sue the living daylights out of governments that stand in their way.

That it's not going to do much of any importance in the UK is true. But this is because the UK Government generally obeys the laws that it itself has passed. And this is not true of all and every government in all and every country around the world: not even, sadly, true of each and every government of each and every country here inside the EU.

And this is indeed very much the point of this sort of arbitration. It is, quite simply, to make sure that a government keeps its word. That it does not, after someone has made an investment into the country being governed, change the rules so as to, say, confiscate some part of that investment. And the way we do that is by making sure that the court which decides whether the rules, the law, the agreement, has been broken is not under the control of the same government accused of breaking the rules, the law or whatever agreement there has been. And that's all it is about too.

Any government can still go off and, say, nationalise anything it wants, whoever owns it. That's a legitimate, if stupid, use of State power. But the insistence that it is someone outside the country that determines the price that must be paid to the original owners seems sensible. And for an example of what happens when this is not the case we only have to look back to, as I've mentioned before, the Greek bond haircut.

If you were an investor in Greek government bonds that were issued under Greek law then you get shafted. For the Greek government changed the law after the issue of the bonds on what was needed for the collective action clauses to be valid. That is, when the borrower is obviously bust (as Greece indeed was) then clearly there's going to be a restructuring of those bonds and or loans. The creditors are just going to have to take a haircut. However, there are usually clauses which detail the level of agreement that is necessary between creditors and the debtor before this can happen. The general rule is that 90% of the creditors have to agree to the level of the haircut. The Greek government unilaterally changed this to 75% and this made their cramming of a deep deep haircut onto the creditors easier.

If you had Greek government bonds issued under English law you didn't in fact get that haircut: they were repaid in full. Because the Greek government didn't have the power to get the English law changed in that manner. It's a good example of why you would like to have legal matters dealt with by people who aren't the government that you might end up having the argument with. And that is, again, why the whole idea of offshore arbitration exists. Simply to keep governments on the straight and narrow about obeying the law of their own land.

And to be honest, I can't actually think of a reason why this might be a bad idea. Shouldn't governments credibly commit to obeying their own law of the land?