But another reason Obama may support the controversial mechanism is that it is, at least in theory, a major step toward one of the most intoxicating liberal promises of the last century—that an enlightened society can come together to craft a set of global rules and standards that apply to everyone equally. That’s been the defining idea behind trade agreements for a generation—that together we can create a common set of global best practices, governing everything from labor and food safety to investment protections, that will make the world a safer, healthier, more prosperous place. ISDS is a part of that vision. It is designed to enforce an international standard for how all investors and corporations are treated, no matter what country they’re from, or what country they’re operating in.
The problem, like all law, comes down to a question of language. How investment chapters, bilateral investment treaties, and ISDS provisions are actually written—the words and phrases that make their way into those hallowed documents—matters enormously. And how those words and phrases are ultimately interpreted by private arbitrators matters too. To put that another way, it’s not enough to simply agree that foreign investors ought to enjoy certain property protections abroad. There is wide consensus on that much. We’ve actually got to hash out what we mean by “property.” And what we mean by “protections.” And what, exactly, it looks like when a government breaches its obligation to protect that private property. If a foreign oil company’s claim on a well runs up against a local farmer’s access to clean water, who wins? And who decides who wins?
In our hyperglobalized world, where the biggest multinational corporations are vastly wealthier and more powerful than many of the nations where they operate, the question of how we balance private investors’ property rights with the priorities of a public society matters most of all. ISDS—this obscure, almost entirely ignored treaty enforcement mechanism—is at the front and center of that debate.
When Osvaldo Guglielmino was appointed attorney general of Argentina in August 2004, he inadvertently walked into the eye of a storm. Within months of taking the job, he was facing 32 lawsuits, all filed by foreign investors and their corporations, and by 2007, nearly a dozen more had piled on. By the end of his tenure in 2010, he was staring down 47 lawsuits, collectively demanding more than $80 billion dollars in damages—a sum roughly equivalent to ten times Argentina’s total sovereign reserves in 2002. All 47 lawsuits were filed under investor-state dispute settlement, or ISDS.
Having spent the previous 13 years as a judge in a federal court, Guglielmino knew the geography of Argentine law like the back of his hand. But ISDS? “It was a mystery,” he told me recently, leaning onto his elbows in the office of his small law firm, perched just off the 12-lane thoroughfare that slices through the center of Buenos Aires. “We had no experience with it. No one did.”
By the end of 2004, Guglielmino and his small team, based out of the Argentine Treasury, had learned the basics. They knew that the corporations’ claims would unfold before a private, supranational tribunal. They knew that instead of the normal trappings of a court, with a judge or jury, ISDS tribunals would be manned by three private citizens, who would gather in some ad hoc conference room on the other side of the world. But as for the tricks of the trade—like how to appoint the right arbitrator or decipher how the arbitrators were likely to rule—the Argentines were in the dark. ISDS was simply too new. The lawsuits against their country represented half of all of the claims that had ever been brought against any country worldwide.
Within weeks of taking the job, Guglielmino sent up a distress flare. He begged Néstor Kirchner, who was then the president of Argentina, to hire an American law firm that had experience with ISDS. But Kirchner said the government didn’t have enough money for that, so Guglielmino set off on his own. He began by prowling local universities and law firms, and asking friends for the names of their smartest former students, professors, and colleagues—anyone who knew anything about international law. “I had 29-year-olds, 30-year-olds with no experience,” he recalled.
While the specific details of each case were different, nearly two dozen shared the same broad strokes. In each of those, a foreign investor or corporation, usually from the U.S. or Europe, offered a version of the same argument: Before, during, and after Argentina’s massive financial crisis in 2002, the government had pursued policies that violated the country’s obligations under its international investment treaties. As a result, the corporations’ balance sheets had suffered. They were filing ISDS claims because they wanted Argentina to compensate them for their lost profits.
Guglielmino and his scrappy new team believed that the corporations’ arguments were laughable. Were the impoverished taxpayers in Argentina really going to be forced to pay compensation to multinational corporations that were hardly the biggest losers from the financial crisis? “We learned quickly,” Guglielmino said. “We had to—the country depended on it.” But the more they studied the rules, the less clear it was that they would win.
Guglielmino was born into a middle-class family in Pehuajó, a small city three and a half hours northwest of Buenos Aires. His father taught literature, his mother art. He and his younger brother, who died of a congenital illness as a teenager, grew up in a stable home, but came of age in the 1960s and ’70s, an era of political tumult and violence in Argentina.
As a college student, Guglielmino joined the Peronist Youth Organization, a movement that fought to bring Juan Perón, the erstwhile president of Argentina, back from exile. In the early ’70s, Perón served a brief, nine-month-long second term before his death in office plunged the nation into what is remembered as the Dirty War, a period of horrific state terrorism that left tens of thousands of left-wing activists and sympathizers dead. Throughout his life, Guglielmino remained committed to Peronism, a uniquely Argentine and ideologically diverse political movement best described as nationalist populism. But he rejected its many extreme left- and right-wing forms. To him, Peronism is “capitalism with social mobility,” he says.
As a person, Guglielmino is warm but watchful, as if always ready to parry a blow. He pays close attention when people are talking and leaps to his feet when he gets excited. He harbors a deep faith in humanity’s ability to do right unto each other and laments what he sees as modern governmental and legal rules that have been exploited by a small group of powerbrokers willing to use their leverage to enrich themselves.
Twenty-five years ago, Guglielmino, still a young lawyer in his 30s, was appointed to a federal judgeship, where his decisions occasionally landed in the papers. In one ruling, he refused to allow a building that had been used as a prison during the Dirty War to be demolished. It was, he declared, a powerful symbol of the country’s unsavory legacy that must be preserved. But for the most part, Guglielmino stayed in his lane. Untrained in economics and with no experience abroad, he didn’t second-guess Argentina’s foray into global financial markets in the ’90s or question former president Carlos Menem’s predilection for signing investment treaties. “I didn’t have the slightest idea that in those years the bilateral investment treaties were being signed,” he said, “and much less that they were giving up jurisdiction in favor of supranational courts.”
When Guglielmino was first appointed to the position of attorney general in August 2004, Argentina was still fragile from its financial collapse two years earlier. Roving bands of piqueteros, or protesters, were still barricading avenues in the capital, and huge swaths of the population were still living on the streets. In the 1990s, he had watched as one Peronist president, Menem, pushed the country’s economy into overdrive, and had risen to attorney general as another Peronist president, Kirchner, attempted to save it. He was not feeling confident in the political party he had been a member of since he was young.
“I don’t know if I am a Peronist,” he told reporters when he was appointed, but he steeled himself for the