GOVERNMENTS promising climate action at Cop27 must end the “system of secretive tribunals” through which corporations block progress, hundreds of civil society organisations warned today.

More than 380 organisations from 60 countries, including Oxfam and Friends of the Earth, said that so-called investor-state dispute settlement (ISDS) clauses in dozens of trade and investment agreements pose a serious threat to efforts to reduce carbon emissions.

“ISDS empowers transnational corporations to sue governments in secretive tribunals outside the national legal system, over law and policy changes they fear could reduce their profits,” a statement by the organisations said.

“Often the amounts involved can be hundreds of millions if not billions of dollars.

“Fossil fuel corporations are already suing over coal phaseout, the cancellation of a tar sands oil pipeline, a ban on offshore oil drilling and fracking regulation. Industry insiders themselves expect these cases may be only a foretaste, given the scale of fossil fuel ‘stranded assets’,” the statement warns.

In August, the Italian government was ordered to pay British oil firm Rockhopper £210 million in compensation for imposing a ban on offshore drilling within 12 miles of the coast, a measure intended to protect the marine and coastal environment.

Rockhopper’s investment was estimated at just £33m, but under the Energy Charter Treaty through which Italy was sued, companies can claim for hypothetical lost future profits, rather than proven losses. Even though Italy withdrew from the treaty in 2016, a 20-year “sunset clause” means that the country remains subject to its terms.

“Following Cop26, governments acknowledged that they had not joined climate initiatives … to avoid the risk of being sued under ISDS,” the organisations point out.

“Governments must take immediate action to put an end to the risks of ISDS.”