Proposed Trade Deal Threat To Fracking “Pause” In UK

A post-Brext trade deal between the UK and Australia is currently being negotiated, with the plan that it should be finalised by mid-June, after the G7 summit in Cornwall. The proposed deal is thought to include an investor-state dispute settlement (ISDS) scheme, which allows companies to sue governments when they believe policies have will a negative impact their current or future profits. This is of particular concern in regard to fracking, since Australian companies and investors are heavily involved in the industry. A major investor, with a 93% stake in the fracking company threatening Lancashire, Cuadrilla Resources, is an Australian company AJ Lucas, while the main fracking company in Northern Ireland, Tamboran Resources, is also Australian.

Since November 2019 the UK government has not been issuing hydraulic fracturing consents, due to the backlash from the 2019 earthquakes caused by Cuadrilla in Lancashire. While this pause has significantly impacted the exploration for shale gas in Northern England, it should be noted that in the Weald Basin (Sussex/Surrey), where the unconventional target is much shallow tight oil, will not exceed the government’s arbitrary limit of 2.4 million US gallons (10,000 cubic metres) requiring a hydraulic fracturing consent. The post-Brexit/pandemic climate is already likely to be advantageous to the frackers, with a focus on “recovery”/growth at any cost. If a ISDS mechanism is included in the agreement there is a significant threat that it could be used as a lever to overturn the current fracking pause.

While such agreements are styled as “trade deals”, they are often as much about giving special rights to foreign investors/owners as they are about actual “trade”. In the post-colonial era these mechanisms originally evolved to protect western multinationals from nationalisation of their assets by countries in the global south, but have since been creeping into more and more “trade deals”. ISDS is a system of international private tribunals, held in secret, which allow multi-national corporations to bypass domestic courts and sue states over any actions they perceive as threatening their profits. The overall effect of these ISDS clauses in an ever growing number of “trade deals” is to shift the balance of power even further away from ordinary people and towards global capital, since even the difficult job of pressuring states to act can be blocked with such mechanisms.

For instance in 2012 Occidental Petroleum sued the government of Ecuador in an ISDS court, and won $2.4 billion, after the country annulled a contract with the oil firm on the grounds that it violated a clause in the contract. Even more pertinently, US fracking company Lone Pine Resources has sued the Canadian Government under ISDS provisions in the NAFTA treaty, over the state of Quebec’s fracking morratorium. A decision in the case is pending. More generally ISDS mechanisms have been used to fight action on a wide range of issues, including smoking advertising bans, and numerous environmental regulations.

While such cases could involve the government in question being ordered to pay compensation to the company, as with domestic court cases, out of court settlements are also possible. This is where the real threat lies, since if a government has been pressured into a certain action by its population (a likely situation for positive actions such as “banning” fracking) then the an ISDS case, or the threat of one, is an additional tool in the arsenal of fracking companies to gain access to the areas they wish to exploit. It may be that in the near future intensified community resistance will be need to counteract this. While the most obvious direction of threat is Australian companies suing the UK government, given the UK’s fracking pause, UK corporations would be able to sue the Australian government as well, potentially undermining communities there.

Join the fracking resistance and support the UK’s threatened communities! Join or form an anti-fracking group where you live. Read up on how you can fight fracking where you live.

Check out our factsheet about the fracking tests Cuadrilla was planning in Lancashire, your community may be threatened with impacts (e.g. fracking waste being dumped or transported through your community) even if you live hundreds of miles from Lancashire.