The most controversial part of the Trans-Pacific Partnership comes in the investment chapter and carries a deceptively dull name: investor-state dispute settlement, or ISDS.

Elizabeth Warren called it the "Trans-Pacific Partnership clause everyone should oppose." A visibly annoyed President Obama said Warren's arguments "don’t stand the test of fact and scrutiny."

It was a hard spat to score because there was no final text to read. But now there is. The TPP is out, and we know what's in it.

ISDS provisions are common in trade agreements, and have been for a long time. They create what is, in essence, an alternative judicial system where foreign investors can argue that they're receiving unfair treatment — and have the argument decided by an international tribunal rather than a local judge.

It's a tricky issue, because both the arguments for and against it are compelling. The argument for it is that governments can prey on multinational corporations in ways that ultimately harm ordinary people; the argument against it is that multinational corporations can prey on governments in ways that ultimately harm ordinary people.

What makes it harder is that the Obama administration actually agrees with many critiques of the ISDS system — they just think they've crafted a next-generation architecture that keeps the good of ISDS while protecting against abuses.

This is a long piece on a complex, acronym-laden subject, so if you just want the bottom line, here it is: the ISDS system isn't likely to have much effect on Americans at all; ISDS cases are rarely brought against America, and no one has ever won an ISDS case against America. The reason ISDS is so controversial is because it's a miniature, and more outrage-friendly, version of the broader argument over the TPP itself — the question it raises is whether multinational corporations already have too much power, and whether rules meant to make their expansion smoother and their lives easier are really a good idea.

Why let corporations sue foreign governments in a special court at all?

The argument for ISDS is that developing countries with weak judicial systems face a problem when trying to attract foreign investment: Foreign investors aren't sure they'll be treated fairly — they worry that a populist new government will decide the easiest way to make money is to tax them or take their property, or that local judges and regulators will be bought off by domestic firms and weaponized against foreign entrant.

"There are many countries in this world that want foreign investment," says Gary Hufbauer of the Peterson Institute for International Economics. "They really want the big multinational firms to come and set up a plant or an office in their country. But these countries recognize their judicial practices may have made it unattractive to invest there. So what the governments of these countries want to do is say, 'We realize we can't reform our judicial system, but we can have this overlay of an international agreement so companies don't have to care how the courts of that country work.'"

This is a key point, and it's worth stopping on for a moment: ISDS agreements are there because developing countries, in many cases, want ISDS systems. They may have corrupt court systems or unpredictable local governments, and that makes it hard for them to attract the foreign investment necessary to level up their economy.

The best solution would obviously be cleaning up the court systems and making sure local regulators weren't being bought off by domestic firms. But the best solution often isn't possible. For these countries, ISDS is a second-best solution.

Along those lines, the Center for Strategic and International Studies notes that the countries with the highest numbers of ISDS claims are Argentina and Venezuela — countries that are known to have pretty weak legal systems. In the absence of ISDS, it might be that much harder for foreign companies to invest in those countries.

"It’s not that the US is stuffing ISDS down these countries' throats," says Hufbauer. "These governments want it."

Of course, the US is also party to these agreements — in theory, a foreign firm could sue, say, the city of Tallahassee over discriminatory treatment. In practice, ISDS cases are rarely brought against the US, and in the history of ISDS agreements, the US has never, ever lost a case.

ISDS provisions aren't new, by the way, and defeating TPP wouldn't make them go away. The White House notes that "over the last 50 years, 180 countries have entered into more than 3,000 agreements" with some form of investor-state dispute settlement, and the US is part of about 50 of those agreements.

The case against ISDS: It's anti-democratic, and gives corporations too much power

The good of ISDS is, in the telling of its critics, also the bad of it: it gives multinational corporations a special, separate legal system just for them.

"Where is the evidence that international investors are an oppressed class that deserve their own, private legal system that’s totally divorced by national courts, that gives them rights totally distinct from domestic law?" asks Celeste Drake of the AFL-CIO. "If you look at who has power and strength in the US, it is surely not multinationals that are an oppressed class."

The point about power is crucial: ISDS provisions are framed as remedies for multinational corporations who find themselves at the mercy of corrupt or greedy governments. But what about the governments who find themselves at the mercy of corrupt or greedy multinational corporations?

The ISDS tribunals are often led by former (and, in some cases, future) corporate lawyers. The corporations themselves are represented by the best legal minds that dump trucks full of money can buy.

The result is that courts meant to protect foreign corporations from the predations of local governments can become a way for foreign corporations to prey on local governments — to take perfectly reasonable laws and regulations and recast them as discriminatory efforts.

Progressives, in particular, worry about corporations using ISDS as a way to achieve through trade deals what they can't win at the ballot box. As Elizabeth Warren wrote:

Recent cases include a French company that sued Egypt because Egypt raised its minimum wage, a Swedish company that sued Germany because Germany decided to phase out nuclear power after Japan’s Fukushima disaster, and a Dutch company that sued the Czech Republic because the Czechs didn’t bail out a bank that the company partially owned.

Some of these cases look more reasonable when you dig into their details. Take the French suit over the Egyptian minimum wage law. As the Washington Post's editorial board noted, that case is often misinterpreted. The company, Veolia, had a contract with the Egyptian city of Alexandria that said the city was responsible for increases in operating costs, and employee compensation was one of those costs. So Veolia argued that the increase in the minimum wage increased compensation costs and that the city was on the hook for the difference.

The case, in other words, is about a specific quirk of a specific contract, not the minimum wage — Veolia isn't trying to roll back the new wage but to argue that the increases in labor costs, including from minimum wage hikes, were covered under their agreement. (It's also worth noting that that case, which is still being litigated, is going through an ISDS agreement between France and Egypt that's different from the one in the TPP.)

Still, the broader point holds: Corporations are getting access to their own legal system, and they have enough lawyers and enough money to use that access to their advantage.

A related argument is that ISDS systems end up giving multinationals an advantage over domestic firms. "If court systems are unreliable and corrupt, you need to fix that for everyone," says Drake. "If global companies get to deal with their own courts, then you’ve set up a two-tier system, because the local guy across the street from you is stuck pressing his claims in the corrupt court system."

Arguably, a world with ISDS is a world in which developing countries feel less political pressure to improve their institutions, because foreign investment doesn't depend on reforms.

What happens to ISDS systems in the real world?

It's easy to get too theoretical about this discussion — but with thousands of ISDS systems in force, there's actual data worth looking at.

The Center for Strategic and International Studies has a good working paper summing up the evidence on ISDS systems. The main findings:

More than 90 percent of bilateral investment treaties "have operated without a single investor claim of a treaty breach." TPP is a multilateral investment treaty, but still — for all the sound and fury, ISDS claims aren't that common, in part because they're a slow, costly way to resolve disputes.

ISDS's critics note that there's been an explosion of ISDS filings in recent years, but CSIS finds that "the rise in disputes has been proportional to the rise in outward foreign capital stock." In other words, the rise in ISDS claims tracks the rise in foreign investment.

About 40 percent of ISDS claims are in "oil, gas, mining, and power generation sectors which often feature prominent state involvement."

Filings are more common in states with "weak legal institutions" — Argentina and Venezuela lead the rankings, which CSIS suggests is evidence that the system is working as intended.

When a suit does end in a decision, states win about twice as often as investors, and even when investors win, they tend to get less than 10 cents on the dollar of their initial claim.

Another interesting finding in the paper is that "the majority of U.S. investors who have filed investment arbitration claims are firms with fewer than 500 employees." That implies that the big multinational firms may not need to file ISDS claims, as they have enough power to influence local governments on their own — it's smaller firms operating in foreign countries that avail themselves of this system.

The Obama administration improved ISDS — but did it go far enough?

The Obama administration considers itself in sympathy with ISDS's critics — they agree that ISDS suits have been used to attack reasonable laws and regulations, and they think they've reworked the process to protect against abuses.

The effort begins in the preamble, which states that all parties to the deal:

Recognize their inherent right to regulate and resolve to preserve the flexibility of the Parties to set legislative and regulatory priorities, safeguard public welfare, and protect legitimate public welfare objectives, such as public health, safety, the environment, the conservation of living or non-living exhaustible natural resources, the integrity and stability of the financial system and public morals.

The idea here is that this language rules out corporations using ISDS as a way to challenge basic, progressive lawmaking. USTR officials note that this language is binding on the ISDS tribunals — it is the context in which all cases must be considered.

Similar language can be found in the ISDS chapter, though the AFL-CIO's Drake notes that neither the laundry list of worthy causes in the preamble nor the relevant chapter mentions labor standards or workers' rights.

In order to try to protect against companies simply throwing their weight around to try to intimidate local governments into caving, the investment chapter states that "the investor has the burden of proving all elements of its claims," and puts them on the hook for legal fees if their case is found to be frivolous.

The deal also limits the kinds of claims companies can make. Bernie Sanders, for instance, released a statement slamming the TPP because corporations could sue over "an increase in the minimum wage or any other law that could hurt expected future profits." But the text of the TPP makes clear that hurting expected profits is not sufficient cause for action.

The fears the Obama administration is attempting to allay, though, are not necessarily the fears its critics have. The White House's modifications to the ISDS process work if you fundamentally think ISDS processes make sense and worry about occasional bad actors trying to game the system. Many ISDS skeptics, however, think the system itself is rotten, and see the corporations as the predators and local governments as the prey.

To them, the whole argument for corporate protection simply shows how much power corporations already have to set the terms of the debate.

"Why do the investors get to go to the ISDS tribunal, but workers, who also have protections under this agreement, have to go petition their government?" asks Drake, who notes that far fewer worker grievances move to formal resolution than ISDS cases.

In that way, the fight over ISDS is a miniature version of the fight over the TPP. The case for ISDS is it makes it easier and safer for multinational corporations to invest abroad — this is also, of course, the case for the TPP itself. The provision's critics, like the deal's critics, think multinational corporations have it easy enough, and further biasing the rules in their favor is not just unnecessary but fundamentally unjust.

After reading a lot about ISDS provisions and hearing from both their supporters and detractors, I don't think ISDS is likely to matter much from the American point of view. Few ISDS cases are brought against America, and no one has ever won an ISDS case against America. The heat of this argument has more to do with the principles involved, and the larger passions over TPP and multinational corporations, than with ISDS itself.