The allegations are breach of contract by the government (Veolia), local government changing the rules after signing a contract in order to make it difficult or impossible for the company to fulfill the contract (Vattenfall), and allegations that the government seized a company's IP without due compensation (Phillip-Morris). If the claims hold up, those are three very good examples of companies being victimized by local governments. The "chilling effect" that you mention is in regards to the Phillip-Morris case, where the author speculates that PM was attempting to use the suit to discourage similar behavior in other signatory countries. It didn't work out for them[0] - the system did what it was supposed to in that case, and (properly) no chilling effect was produced. We cannot simply say that because any threat of legal action may have a chilling effect that the possibility for companies to seek legal remedies is a bad thing.

> So I come away wondering what is the value proposition for the public. Or is this provision all carrot?

The value proposition is that by having an arbitrating entity that is not likely to be under the thumb of this or that sovereign entity, companies are much more willing to conduct business in those countries when they have some assurance that their disputes against a local government won't be heard and denied by a sock puppet court controlled by that same government. It's much the same reason that we domestically use our judicial system and neutral third-party arbitration to resolve disputes, rather than just relying on counterparties to self-police themselves.

[0] http://www.theguardian.com/australia-news/2015/dec/18/austra...