Well it's mostly to give signatories incentive by showing group compliance. For instance, if Congress were to decide to get together and pass a law tomorrow in the vein of, "Guess what world - we're nationalizing all investments made by Swiss nationals." There would be no possible way for the Swiss nationals whose assets were just expropriated to challenge the action.

It's essentially a security measure, that gives everyone a little comfort. Especially Americans. We invest in shit all over the world, as individuals, as corporations, as capital management groups, etc.

So, with an ISDS clause in place, if someone pulled that shit one a big New York capital management group with an army of transactional and securities lawyers on retainer, their life would be a fuckin nightmare.

The major purpose of ISDS clauses is to give a little meat to the deal, and say "we're in this as a team, guys. Let's not fuck each other over."

Because there is no international tribunal for securities or transactional disputes, there is no other available vehicle to accommodate those kinds of international disputes.

Not to mention, the vast majority of international transactions that have a significant amount of money, assets, or goods involved, will have a contract associated that requires the entities go to arbitration anyway.

This is what most transactions that fall under the CISG (international transactional/contract agreement) have in their contracts anyway, is an agreement to go to arbitration should a disagreement arise. Most countries, and most American states, who've promulgated some or all of the CISG can force the dispute into their jurisdiction anyway, but major groups doing international deals pretty much sign up to go to arbitration no matter what as it is.

ISDS is just a way to keep the states involved, incase some law is passed in like fuckin Peru or somewhere that says "anyone invested in our textile industries is getting their assets seized and turned into treasury equity to bail out our banks."

If a country who's a signatory to the TPP really passed a law like that, it wouldn't be some quiet little tribunal in the mountains in Europe where rich guys are overthrowing laws in America, everyone would be focused on them waiting for whoever fucked up to fix the problem. No one wants to pass a law that would jeopardize international corporations (the big tax payers) business from never coming back.