‘No State shall assume or pay any debt or obligation incurred in aid of the protection of fossil fuel capital, or any claim for losses incurred due to decarbonisation; but all such debts, obligations and claims shall be held illegal and void.’
Prospects for this are bleak and discussions in Sharm El-Sheikh will bring us no closer.
Warming or chilling?
As COP27 gets underway under the patronage of an all-too likely alliance of a police state and the world’s largest corporate plastic polluter, one might take some solace from the fact that the Intergovernmental Panel on Climate Change (IPCC) this year finally acknowledged the risk that investor-state dispute settlement (ISDS) can be ‘used by fossil-fuel companies to block national legislation aimed at phasing out the use of their assets’. The mere threat of lawsuits under investment treaties—in particular the multilateral Energy Charter Treaty (ECT)—is already winning companies negotiated payments worth billions of euros for losses due to decarbonisation. A European Commission-led push for ECT reform, the outcome of which will be determined one week after COP27 at the Energy Charter Conference in Mongolia, and a slow but steady exodus from the treaty are unlikely to resolve the problem. Many still regard a consensus on reform as nigh impossible. Meanwhile, ECT-based tribunals may rely on the treaty’s twenty-year ‘sunset’ clause to refuse to surrender jurisdiction over withdrawing parties’ disputes. The story is far from over: while European states are fast becoming the most wanted fugitives of their own ‘brainchild’, the Commission is still committed to the treaty’s expansion in the Global South.
It is hard to imagine a more toxic dilemma than choosing between unacceptable levels of public debt or stalling emissions reduction plans for fear of the spiralling costs. Nevertheless, the IPCC’s central claim is fairly easy to refute: no ISDS tribunal has ever “blocked” national legislation. Arbitrators are adept at pointing out that the ‘right to regulate’ has never really been in question and that they can at most impose a price on regulations. In applying the tired label ‘regulatory chill’ to this dilemma, the IPCC Report’s authors resort to what has always been a polite euphemism, one which obscures as much about the insidious relationship between property and sovereign power as it reveals, while entrenching neoliberalism’s core myth of shrinking states amidst the steady and palpable rise of authoritarianism.
These days, critics increasingly describe the ECT’s effect as simply ‘ransom’. That term offers an instructive and compelling alternative to the genealogy of the doctrine of vested rights that underpins the principle of compensation.
Up until the mid-nineteenth century, ‘ransom’ was still widely used to describe the buying of slaves’ freedom, conflating purchase with an ancient Christian ideal of philanthropic redemption. The term was prominent in debates over compensating slaveholders for the ‘expropriation’ of slaves in the antebellum US, which pivoted on the application of the Fifth Amendment’s takings clause guaranteeing ‘just compensation’ for expropriations, irrespective of any public purpose. This same constitutional requirement would later serve as a model for modern investment law’s core principle of compensation for expropriation—the Hull formula—which is expressed today in the vast majority of thousands of international investment agreements, including the ECT, and stipulates that all expropriations must be accompanied by ‘prompt, adequate and effective’ compensation: both ‘just’ and ‘adequate’ have effectively translated as a presumption in favour of market value. Breaking this norm’s hegemony was central to the abortive struggle to launch a New International Economic Order in the twentieth century. Despite the principle’s elevation as a central credo of constitutional legality, its legacy as a ‘triumph’ of liberalism echoes on in a seemingly irresolvable double-bind of maldistribution and debt—not least in debates over decolonising land in Zimbabwe and South Africa. Tracing the principle back to the nineteenth century slaveholder indemnities, which today appear to us as the repugnant apogee of racial capitalism’s first unjust transition, we might well begin to wonder how our indemnification of fossil fuel assets will appear to future generations.
“We Are Not Yet Quite Free”
Curiously, it was an arbitration under a bilateral treaty that galvanised the debate on slaveholder indemnification. During the American Revolution and the war of 1812-14, the British capitulated on growing unrest amongst slave populations in the United States by promising freedom to those who fought for the Crown. Under the terms of the 1814 Treaty of Ghent, the parties finally resolved to refer to arbitration the question of compensating US slaveowners for slaves ‘carried away’ by the British, and appointed Russian Czar Alexander I the sole arbiter in the case. Two hundred years old this year, the Czar’s 1822 decision led to Britain paying US slaveholders $1,204,960 in compensation for the loss of 3,601 slaves. Pro-slavery interests capitalised on the precedent to begin demanding compensation in the British Parliament (where they were well represented), and succeeded in winning £20 million in compensation for slaveholders upon abolition in the West Indies. The decision also likely influenced the outcome of negotiations over Haiti’s indemnification of French former slaveholders and plantation owners: in 1825, France substituted force for influence and extorted 150 million francs from Haiti—a sum which the New York Times described this year as not only ransom but probably ‘the single most odious sovereign debt in history’, equivalent to $560 million in today’s terms.
The 1822 decision further precipitated four decades of speculation about the price of emancipation in the US, the largest slaveholding society in history. In 1819, one year after the parties had agreed to arbitration, the sole architect of the Fifth Amendment’s takings clause, James Madison, began to speculate on the cost of abolition in the US, suggesting an initial sum of 600 million dollars. Ultimately the US only paid slaveholder indemnities in the District of Columbia in 1862, but the question proved divisive amongst abolitionists. William Lloyd Garrison opposed any indemnity on principle; Gerrit Smith supported it on the basis of Northern complicity in slavery; Abraham Lincoln continued to offer the South $400 million in compensation for the loss of slaves right up until the end of the civil war. By that time, with a slave population of nearly four million, the value of slave property in the US was in fact higher than the value of all other property in the South—Amanda Laury Kleintop estimates an equivalent of 13 trillion dollars in today’s terms.
In the US debates, the deployment of the term ‘ransom’ underwent a crucial shift. In 1846, Frederick Douglass invoked the term upon the occasion of his own manumission for $710.96. Divested of its theological trappings, by ransom he simply meant what we commonly understand it as today: to be robbed for one’s freedom. Moreover, Douglass wished with his freedom papers to show the world that his ransom was intrinsically not a private affair, but was effected with ‘the whole civil and naval force of the nation… at [the slaveholders’] disposal’—that is, through the State’s protection and its monopoly on force. After the civil war and the Constitution’s Fourteenth Amendment finally ruled out further indemnities, Douglass observed that although US abolition had been long overdue, it was an ‘incomparably greater act’ than the British abolition three decades prior. In an 1869 speech entitled “We Are Not Yet Quite Free”, Douglass declared that by compensating the slaveholders, the British had fallen for a ‘trick’ that had ‘marred… a glorious triumph of truth and justice’. British taxpayers were paying for that trick—worth an equivalent of £17billion today—until 2015.
We might consider this unfamiliar genealogy of the compensation requirement in light of Hortense Spillers’ remark that ‘it is, perhaps, not by chance that the laws regarding slavery appear to crystallize in the precise moment when agitation against the arrangement becomes articulate in certain European and New-World communities’. The Fifth Amendment was ratified a mere four months after the uprising in Saint Domingue in 1791 and its application to human chattel was from the outset taken as read. After the civil war, the takings clause’s consolidation and extension to all state-level exercise of eminent domain powers was set in motion by the same Fourteenth Amendment that invalidated the US slaveholder compensation claims; meanwhile the federal scope of the Fifth Amendment served to immediately stall the land reform that abolitionists such as Douglass and Smith had long regarded as an essential precondition of true emancipation. That meant, as W.E.B. Du Bois would later recall, that in the aftermath of ‘a general strike that involved directly in the end perhaps a half million people’, the Freedman’s Bureau was unable to confiscate and redistribute land. Instead it was left with the unedifying task of informing the freed slaves that ‘that there was a mistake––somewhere’.
Perhaps most significant of all however, is that in 1831, in the direct aftermath of the Nat Turner revolt, the Virginia state legislature began to construe the duty to pay ‘just compensation’ as demonstrating that abolition was financially impracticable: valuations of Virginia’s 400,000 slaves at 100 million dollars helpfully illustrated that abolition had a value was so high as to preclude change. That these speculative expectations of value were prompted by the uprising—a harbinger of the impending bankruptcy of the slave economy—was, to borrow Spillers’ phrase, certainly not ‘by chance’.
How to blow up a relation
Last year, Andreas Malm and the Zetkin Collective concluded their book White Skin, Black Fuel by approximating decarbonisation to slavery abolition: as long as fossil fuel capital exists it will ‘resist its own abolition’, just as slaveholding capital did in the past. Their comparison is perhaps timelier and more compelling than even its authors are aware. Not unlike developments in Virginia in the 1830s, compensation amounts in ISDS awards today are characterised by ‘spectacular inflation’. The knock-on effects are felt even beyond the tribunals: Germany’s 2021 €4.35 billion sweetheart deal with two lignite-fired power plant operators—RWE and LEAG—, which was struck over the bargain of LEAG relinquishing any claim under the ECT, was likely based on a ‘systematic overvaluation’ of the companies’ assets (prompting their investigation as potentially unlawful subsidies). The indemnification of what are essentially carbon liabilities looks set to outstrip the US slaveholder indemnities by several orders of magnitude: one estimate suggests that fossil fuels assets worth $9 trillion – around a tenth of the world’s economy – may be litigated in response to decarbonisation. By giving speculators in energy markets priority for unjustified amounts of compensation, not only distributive justice but the entire energy transition is being put in jeopardy.
As Malm has bluntly put it, ‘Property will cost us the earth’. However, despite his commitment to direct action, Malm himself seems to believe that only States can ‘ram through the transition’, even once proposing the ‘total expropriation of the top 1 to 10 per cent’ to rein in that demographic’s disproportionate emissions. We might therefore consider Malm’s own titular injunction, How To Blow Up A Pipeline, a propitious metaphor for property theory for our age. Because it has long been a basic tenet of property thought, that property is not a ‘thing’ at all, but essentially and irrefutably a relation. Thus property in the sense Malm uses it does not strictly speaking exist: property’s ‘things’ cannot simply impose costs on us by themselves. Indeed, as Fred Moten suggests contra Marx, commodities do not speak like economists; rather, in our failure to hear them scream, we might discern something of our politics.
The pipeline we need to blow up is the relation of property to sovereign power—States’ underwriting of capital. Fossil fuel capital today is—much like slaveholding capital was in the antebellum US— not only thoroughly invested in necropolitics, it is too big to indemnify without violence, without perpetuating that same investment. We can only escape this dilemma by way of something equivalent to Section Four of the US Constitution’s Fourteenth Amendment, which in 1868 abolished the billion dollar slaveholder indemnity in the US—one aimed at global fossil fuel capital: ‘No State shall assume or pay any debt or obligation incurred in aid of the protection of fossil fuel capital, or any claim for losses incurred due to decarbonisation; but all such debts, obligations and claims shall be held illegal and void.’
Prospects for this are bleak and discussions in Sharm El-Sheikh will bring us no closer. But achieving this might be the only way to secure public funds, both for the energy transition and for the reparations essential to any transition that might be even remotely regarded as ‘just’.
Ciaran Cross is writing his Ph.D. at the Department of Law, Free University of Berlin, with a focus on compensated expropriation and the black radical tradition. He previously worked on issues of human rights, trade and investment, and environmental law with the International Centre for Trade Union Rights and Greenpeace, among others.