Second, national governments cannot sue for compensation. The most a government can do if the tribunal rules in its favor is to reimpose tarriffs on the violating nation. The effect on environmental regulation could be chilling. The safeguard against frivolous lawsuits has been removed by giving investors the right to sue national governments on their own behalf. When governments are the only entities that have legal standing to bring a case against a regulation or other law under an international agreement, political and diplomatic pressures reduce the likelihood that frivolous lawsuits will be initiated.
Any corporation can simply represent itself in a binding international proceeding.
The Ethyl suit demonstrates the danger in granting investors this new power. The threat of suits like Ethyl's can be used to intimidate lawmakers who are considering new regulations. Ethyl submitted an intent to file suit six months before the MMT ban was passed in the Canadian legislature. Ethyl hoped that the threat of a multimillion dollar lawsuit would deter policymakers from passing the bill. While Ethyl failed in this instance, the ability of investors to use their private legal standing to credibly threaten major suits could lead to successful efforts in the future to derail the democratic decision-making process and alter the outcome of the legislative debate.