It's not "the worst idea". It's designed to stop countries commandeering or nationalizing assets that a company owns. (Search for "venezuela expropriations" for some recent cases). For that limited purpose it's fine.
I tell you what, if I was PM of my country and, say, a foreign company discovered a significant oil field within our territory, I would want to nationalise the shit out of it, reputation be damned.
The problem with TPP is the ISDS goes far beyond these simple goals (the treaty has been "commandeered by corporations", if you like).
But for simple, limited protection of assets in foreign countries, it's a good thing, encouraging inward investment.
To take your example, if my country nationalizes an oil field found and owned by your country's citizens (assuming that my country originally tricked them into searching for oil by promising it'd be theirs to some extent or other when they find it - otherwise why would they search for it in the first place?), why would your country stop at "tarnishing my country's reputation" when it could apply force, ranging from economic sanctions to an actual war?
And our elected leaders should have that power so that bad laws can be fixed.
Imagine if, in pre-civil-war America a lot of British investors had invested in cotton plantations whose profitability depended on slavery. Should Lincoln have said "gee, I guess my hands are tied, banning slavery would be bad for our foreign investors" and done nothing?
You might argue that in the past we had bad laws, but we don't have bad laws any more and all our laws are perfect. But the fact we still employ legislators rather implies we think we might need some legislating done.
Whether your infringement upon the foreigners' interest is good or bad is an entirely separate question, all I'm saying is that sovereignty does not grant you the ability to automatically get away with it and I don't understand why this word became so fashionable in this context recently (a similar example is defaulting on sovereign debt.)
And I guess if the other country can seriously threaten force without bluffing then we never really had sovereignty all along...
I see this as actually giving power back to the people.
Companies are not democracies. Especially multi-national corporations and the lobbying arms of entire industries are in no sense representative of the will of the general public -- or even of their own employees (see unions)! This is significant because it is categorically not possible to actually choose not to interact with a particular corporation. In fact, the historical truth of that observation is the root cause of environmental, health, and many other regulations.
A defining characteristic of democracy is one person, one vote, and it is that characteristic that safeguards the will of the people. There is no corporate structure (other than unrepresentative radical experimental structures) that even conceits to affording one vote to each person. In fact, there's no provision of the TPP that requires the suing company to be publicly traded, so in some cases it may not even be possible to buy votes.
If anything, corporate structure creates a multiplier effect on the influence of single humans or small groups of humans thereby corrupting the one-person one-vote intent of democracy. While I agree with the philosophical kernel of the Supreme Court's citizens united ruling that money is free speech, just like many things, at large scale, it has unintended side effects that need to be thwarted by campaign finance reform so that some people don't have MORE free speech then others.