Sixty-one New Zealand lawyers are among signatories to an open letter to negotiators of the Trans Pacific Partnership trade talks calling for them to drop "investor-state" provisions which allow companies to sue governments directly over alleged breaches.

They include retired Appeal Court justice Sir Ted Thomas; present and former MPs including Winston Peters, Meteria Turei, Andrew Little, Eugenie Sage, Laila Harre and former Speaker and Attorney-General Margaret Wilson; and a long list of legal academics.

They call on all negotiating governments to "follow Australia's example by rejecting the investor-state dispute mechanism and reasserting the integrity of our domestic legal processes".

Free trade agreements and their associated investment provisions oblige host governments to provide foreign investors with new rights.


An investor-state provision empowers those investors, rather than their own governments, to bypass domestic courts and sue governments in international tribunals for damage claims.

The jurists say substantive rights granted by free trade agreements' investment chapters have expanded significantly, and awards issued by international arbitrators against states have often incorporated overly expansive interpretations of the new language in investment treaties.

"Some of these interpretations have prioritised the protection of the property and economic interests of transnational corporations over the right of states to regulate and the sovereign right of nations to govern their own affairs," the open letter says.

Auckland University law professor Jane Kelsey, a longstanding opponent of TPP who helped organise the open letter, said: "This is a New Zealand-led initiative, as New Zealand is one of the few parties to the TPP negotiations that is not already committed through a free trade agreement to an investor-state disputes process with the United States."

Kelsey noted the support it had garnered from Canadian lawyers, based on their experience with the Nafta treaty. However, Canadian Trade Minster Ed Fast, a Queen's counsel, defended the mechanism when in Wellington last week.

"Done right, an investor-state dispute resolution mechanism is an effective tool to bring resolution to trade disputes ... [It] has served us well."

But Professor Bryan Gould, a former British MP and vice-chancellor of Waikato University, said the TPP agreement seemed likely to give foreign investors greater legal rights against our government than any New Zealand investor would enjoy.

"Those rights could even allow a foreign investor to argue before a specially constituted international tribunal that a future New Zealand government, elected with a mandate to change the law, should pay massive compensation for doing so."