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Slovakia's legal battle to implement single payer VS. special corporate "rights" under "free trade agreement"- Read the documents

mellon's picture

Recap: Slovaks were fed up with the ever rising cost of health insurance, so in 2006, they elected a government that ran on a platform promising to limit the profits of the insurers and transition to single payer.

However, a previous government had- back in the 1990s, signed one of those (quite inappropriately named, we will see) "free trade agreements", which had the kinds of clauses which a lot of the others have too (in the US, going back to NAFTA and GATS) limiting what they could do. It created these new "rights" - under investor-state. If anything the country did adversely effected any multinational corporations business interests, the corporations "rights" came first!

If Slovaks wanted their freedom, they would now have to pay.

But, in what is now clearly a pattern, they didn't realize this so in 2006 they passed this health reform law, the first part of the law was to limit the profits of health insurers, the second part was to end commercial for profit and transition to single payer, nonprofit, but they didn't get that far, because a multinational, an insurer sued them for what countries should have a right to do, adjust to changing conditions! Then in a second case the insurer sued them for what appears to me to be what they consider to be a "taking" of their "property" They lost because the panel said they had to wait until Slovakia actually implemented the law

(Slovakia said they could no longer afford to since the first decision had taken their money) So the insurer actually won because the country's people's rights were frustrated.

A similar series of events occurred in the early 1990s in Ontario with single payer car insurance, also a similar series of events occurred in South Africa.

Also the United States' real wishes are being frustrated because we are enslaved by so called "free trade agreements" written with the express purpose of doing so.

Passed in secret by politicians who pretend to be doing the exact opposite.

Slovakia's ability to set their own policy was what was taken with no compensation.

Here are the documents:

Here is news media coverage:

South Africa's story:

Canada's story

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Here is the TOC:


I.
INTRODUCTION...........................................................................................................1
A. The Claimant ................................................................................................................1
B. The Respondent ............................................................................................................1
C. The Dispute...................................................................................................................2
II.
PROCEDURAL HISTORY ...........................................................................................3
A. Commencement of the Arbitration ...............................................................................3
B. Constitution of the Tribunal .........................................................................................4
C. Written Proceedings .....................................................................................................5
D. Hearing on the Intra-EU Jurisdictional Objection........................................................7
E. Post-Hearing Proceedings.............................................................................................8
III. HISTORICAL AND FACTUAL BACKGROUND ...................................................10
A. The Slovak Republic’s Entry into the European Union .............................................10
B. Liberalisation of Slovak Heath Insurance Sector in 2004 and Eureko’s Entry to
Market.........................................................................................................................12
C. Reforms in the Slovak Republic Health Insurance Sector in 2006 – 2009 ................13
D. Dispute Between Eureko and Slovak Republic and Complaint to the EU.................13
IV. ARGUMENTS ON THE “INTRA-EU JURISDICTIONAL OBJECTION” .........14
A. Termination of the BIT under Article 59 of the Vienna Convention .........................16
1. Do the BIT and the EC Treaty relate to the same subject matter?.......................17
Respondent’s Position..........................................................................................17
Claimant’s Position .............................................................................................22
2. Did the Parties intend the EC Treaty to replace the BIT? ...................................25
Respondent’s Position..........................................................................................25
Claimant’s Position .............................................................................................28
3. Are the provisions of the EC Treaty and BIT so far incompatible that the
treaties are not capable of being applied at the same time?.................................32
Respondent’s Position..........................................................................................32
Claimant’s Position .............................................................................................35
B. Inapplicability of the BIT’s Arbitration Clause BIT under Article 30
of the Vienna Convention...........................................................................................37
Respondent’s Position..........................................................................................37
Claimant’s Position .............................................................................................37
C. Inapplicability of the BIT and Incompetence of the Tribunal
as a Matter of EU Law................................................................................................38
Respondent’s Position..........................................................................................38
Claimant’s Position .............................................................................................40
D. Non-Arbitrability as a Matter of German Law...........................................................41
Respondent’s Position..........................................................................................41
Claimant’s Position ..................................................
E. Request to Submit the Dispute to ECJ or Stay the Arbitration Pending
ECJ Decision ..............................................................................................................43
Respondent’s Position..........................................................................................43
Claimant’s Position .............................................................................................43
F. Request that the European Commission be Invited to Participate
in the Arbitration ........................................................................................................43
Respondent’s Position..........................................................................................43
Claimant’s Position .............................................................................................44
V.
OBSERVATIONS FROM THE NETHERLANDS GOVERNMENT AND THE
EUROPEAN COMMISSION ......................................................................................44
A. Written Observations of the Netherlands Government ..............................................45
1. Netherlands Government Letter of 10 June 2010................................................45
2. Netherlands Government Letter of 23 June 2010 appending Note Verbale
from the Slovak Republic ....................................................................................47
3. Parties’ comments on Netherlands Government observations and Slovak
Republic Note Verbale.........................................................................................48
Respondent’s Position..........................................................................................48
Claimant’s Position .............................................................................................48
B. Written Observations of the European Commission ..................................................49
1. Distinction between extra-EU BITs and intra-EU BITs ......................................49
2. Discrimination issues with intra-EU BITs...........................................................51
3. Competing judicial and arbitral mechanisms.......................................................52
4. Termination of the Dutch-Slovak BIT is desirable but has not happened
automatically under VCLT Article 59 .................................................................53
5. Some BIT provisions are inapplicable under VCLT Article 30(3) .....................53
6. Suspension of proceedings until doubts resolved by ECJ ...................................54
7. Parties’ comments on the European Commission’s observations .......................55
Respondent’s Comments ......................................................................................55
Claimant’s Comments..........................................................................................57
VI. RELIEF REQUESTED BY THE PARTIES ..............................................................59
Respondent’s Request for Relief ..........................................................................59
Claimant’s Request for Relief ..............................................................................59
VII. ANALYSIS BY THE TRIBUNAL...............................................................................60
A. Termination of the BIT under Article 59 of the Vienna Convention .........................63
B. Inapplicability of the BIT under VCLT Article 30.....................................................72
C. Inapplicability of the BIT under EU Law...................................................................74
D. Non-Arbitrability of the Dispute under German Law ................................................75
E. Relationship between the Tribunal and EU Institutions.............................................76
VIII. DECISION .....................................................................................................................77

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Comments

V. Arnold's picture
Submitted by V. Arnold on

...anyone who gave a crap knew the truth. It always comes back to the same thing; an apathetic ignorance, willfully engaged by the majority....
It's magic, look here, but the facts are over there. It's bloody hopeless unless somebody figures out how to negate the apathy and ignorance. It's a terminal illness...

editor_u's picture
Submitted by editor_u on

Important subject, thanks, but it's morning, and I haven't had a second cup of coffee yet, so I'm confused by this:

But, in what is now clearly a pattern, they didn't realize this so in 2006 they passed this law, the first part of the law was to limit the profits of health insurers, the second part was to end commercial for profit and go to single payer, nonprofit, but they didn't get that far because a multinational, an insurer sued them for what countries should have a right to do, adjust to changing conditions! Then in a second case the insurer sued them for what appears to me to be what they consider to be a "taking" of their "property" They lost because the panel said they had to wait until Slovakia actually implemented the law

(Slovakia said they could no longer afford to since the first decision had taken their money) So the insurer actually won because the country's people's rights were frustrated.
[My Emphasis (editor_u)]

What was the first decision? You mention two cases. Was that the case in which "a multinational, an insurer sued them for what countries should have a right to do…"? I assume they lost, but the original post don't say as much. How did that decision take their money?

mellon's picture
Submitted by mellon on

The first decision said that they had no right to limit the insurer in what they could do in their country. Nor could the country extricate themselves from the deal, nor could they limit the profit taken.

99.9999% of us don't have the context necessary to understand the case. Thats done intentionally. For a quick 1 page introduction to the concepts like standstill and "investor-state" and "expropriation" read page 9 of this:

http://www.law.harvard.edu/programs/lwp/nafta.pdf

Submitted by lambert on

What law? I don't want to seem cranky, and this is a very important topic, but the HTML A tag allows users to surround text like "this law" with a URL that points to the actual law, such that a user, clicking on the text, will be taken to the law. And so on and so on for citations to court cases, links to other pieces of history, and the text of the trade deals themselves.

Still not wanting to sound cranky, but dumping the links at the end of the post just isn't helpful; the reader has to click on them -- which ones? why? -- and then integrate the evidence for a complex topic themselves. You are the one who has the knowledge, but you are asking the readers to act as if they already know, when they don't!

Still not wanting to sound cranky, but one reason your very valid concerns aren't getting a lot of traction is that they ask the readers to do too much work. As you point out, the powers that be obfuscate everything. But your writing style does not sufficiently clear away the obfuscation! DON'T say "Go read this PDF," because (a) not all browsers (Tor Bundle) have the horribly insecure and crash-prone PDF readers and (b) PDFs can be hundreds of pages long so the reader doesn't know what they're getting into by clicking. DO go to the PDF yourself, copy the relevant text, paste it into a BLOCKQUOTE here, and supply the URL in an A tag in case the reader wants to verify it. That's how to share knowledge on a blog.

When a friendly and willing reader writes "What was the first decision? You mention two cases" he is asking that question because the post was filled with unclear references. You didn't offer links and cites!

You are the only one with any sense of what's going on here, so make a maximum effort to walk the reader through the subject matter, instead of leaving them to wander through the minefield themselves!

"This law." What law????? Linking to the law, or at least giving the name of the law, would answer that question. And so throughout!

mellon's picture
Submitted by mellon on

Okay Lambert, I went to the decision and copied part of the "factual summary" sort of as a teaser, giving the information on the law and some context.. then at the end of the text there is the PDF URL. The part I copied was many pages but the PDF itself is 85 pages long.

The "factual summary" gives the story up until the second case. Its truncated so as not to be overlong. I'm encouraging interested readers to read the PDF, it has references which didn't get pasted in.

Submitted by lambert on

Honestly, the posts are just too hard to make sense of, and that's because of unclear referents and missing or misplaced links. Help us to help you here!

mellon's picture
Submitted by mellon on

I replaced the attempt to include the first part of the factual summary with the TOC of the document.

Its worth reading the entire thing. There is a lot of useful information in there, especially to get a sense of the framing of the various parties and - bluntly, the culture clash. One side Slovakia - sees the situation in a completely different way than the others. They see it as a battle to have adequate healthcare that is being made exceedingly difficult by the waste of the for profit system. However, they are dealing with a system that is designed to frame things quite differently. There is precious little recognition of the fact that this is healthcare here. Its all business.

A number of your questions are answered, for example, what if they want to pull out of the treaty. Thats in the analysis section at the end.

mellon's picture
Submitted by mellon on

Looks pretty good. Although for some reason some of the treaties (like GATS) don't seem to be listed.

I'm trying to figure out what you're not understanding. I hope you understand that people have to be experts on these kinds of things to be able to speak expertly. I am sticking to the outline of the thing.

Its not the only situation like this, as i said, similar things happened with both Canada and South Africa. You can see Scott Sinclair discuss this a bit here - in this video:

letsgetitdone's picture
Submitted by letsgetitdone on

This an important post as a cautionary tale. But meanwhile, why didn't Slovakia just repudiate the Court decision, default on the debt, and threaten with withdraw from the EU if any sanctions were taken against them? Can't they just withdraw from the Treaty?

mellon's picture
Submitted by mellon on

The EU countries seem to have all agreed to enforce one another's court decisions, including these FTAs.

Don't forget the EU started out as an FTA.

So 30 million euros of their money was seized and they are appealing that.. that was the "lost profit"

mellon's picture
Submitted by mellon on

period so that no "investment" is lost. Some of the US treaties I think are ten years. I have no idea what the period is on the Slovakia treaty.

So, if that inded is the case (now, I'm just speculating) even if a country specifies that they are leaving, say WTO/GATS, then they still cannot change anything that causes an adverse effect for ten years.