investor-state disputes | ISDS
Investor-state dispute settlement (ISDS) refers to a way of handling conflicts under international investment agreements whereby companies from one party are allowed to sue the government of another party. This means they can file a complaint and seek compensation for damages. Many BITs and investment chapters of FTAs allow for this if the investor’s expectation of a profit has been negatively affected by some action that the host government took, such as changing a policy. The dispute is normally handled not in a public court but through a private abritration panel. The usual venues where these proceedings take place are the International Centre for Settlement of Investment Disputes (World Bank), the International Chamber of Commerce, the United Nations Commission on International Trade Law or the International Court of Justice.
ISDS is a hot topic right now because it is being challenged very strongly by concerned citizens in the context of the EU-US TTIP negotiations, the TransPacific Partnership talks and the CETA deal between Canada and the EU.
The federal government has confirmed it is now playing a part to help resolve a dispute between AbitibiBowater and the Newfoundland and Labrador government.
The United Kingdom has formally declined to release a notice of arbitration delivered by an Indian citizen under the UK-India bilateral investment treaty, explaining that it would likely “prejudice relations between the United Kingdom and an international organisation; UNCITRAL.”
A tribunal has determined that it holds jurisdiction to hear a claim brought by Chevron Corporation against Ecuador for alleged violations of the Ecuador-United States bilateral investment treaty (BIT).
Argentina has refused calls by Siemens to suspend proceedings at the International Centre for the Settlement of Investment Disputes (ICSID) in which a committee is considering Argentina’s request to revise a 2007 award, following the admission by the German firm that it had bribed Argentinean officials.
When the government of Ecuador failed to make a scheduled interest payment on private bonds this month, it was hardly the first time a country had defaulted in the middle of a financial crisis.
A Canadian mining company intends to sue El Salvador’s government for several hundred million dollars if it is not granted permission to open a widely unpopular gold and silver mine that scientists warn would have devastating effects on local water supplies.
A Canadian mining company and its American subsidiary have threatened the government of El Salvador with a lawsuit after it failed to receive regulatory approval to begin digging for gold and silver in an area some 65 km from San Salvador. The proposed mine has drawn intense opposition from civil society and church-based groups, although the mining company maintains that it enjoys broad public support in El Salvador.
British water giant Biwater cannot use an investment treaty to make Tanzania pay millions for an abrogated water privatization contract, an international tribunal ruled in July.
Is there a backlash brewing against the international legal system used by states and investors to settle FDI disputes? For several years, lawyers and academics have been debating whether the current system - consisting of more than 2600 bilateral investment protection treaties - is ensuring the security and protection of investor assets and contracts without unnecessarily handcuffing the sovereignty of governments to regulate business activity within their borders.
There is a Slovak proverb which says: “When catching a bird, they sing it a sweet song”. Another Slovak proverb says: “Those who want to beat a dog will certainly find a club“. For investors who find themselves in a situation similar to that described by these proverbs, the bilateral investment treaties (“BITs”) very often provide the last available legal option. A BIT is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in the state of the other.
Dow AgroSciences, maker of the commonly used herbicide ingredient 2,4-D, is challenging the Quebec government under the North American Free Trade Agreement for banning its product.
In spite of the fact that consent is the main building block of arbitration, arbitral awards have been steady for some years that a claimant need not have a contractual relationship with a respondent state to initiate arbitral proceedings versus this state, i.e. states unexpectedly were made respondents in arbitrations under arbitration clauses they have never approved or even bargained.
An arbitration tribunal constituted under the France-Dominican Republic Bilateral Investment Treaty released an award last week ruling on the jurisdictional objections raised by the Dominican Republic in a claim brought by TCW and its parent company.
Ecuador’s new constitution provides that Ecuador will not enter into international agreements under which Ecuador would have to cede jurisdiction to international arbitral tribunals in contractual or commercial matters between the State and individuals or corporations.
Until the Philippine government and Fraport AG (Frankfurt Airport Services Worldwide) have resolved all the legal issues and Fraport fairly compensated, the NAIA Terminal 3 is unlikely to attract long term locators, according to German ambassador to the Philippines Christian Ludwig Weber-Lortsch.
A panel from the World Bank’s International Center for Settlement of Investment Disputes, or Icsid, said late Tuesday that it has jurisdiction for the claim of the US-based oil company Occidental Petroleum Corp. (OXY) against Ecuador.
A British water company thrown out of Tanzania over a bungled privatisation deal has failed in its bid to win up to £10m in damages.
How beneficial are Bilateral Investment Treaties (BITs) for Contracting states remains a hotly debated issue, threatening to eclipse the success due to misgivings generated largely by the Latin American experience.
While media coverage of the China-NZ Free Trade Agreement has focused almost entirely on the possible dollar gains, scant attention has been paid to the equally valid exposure of New Zealand to compensation claims — should any NZ government be so bold in future as to pass laws or regulations that a foreign investor feels will impact on profitability.
While it is a US company, Exxon Mobil is entitled to invoke protection under the Netherlands-Venezuela Investment Promotion and Protection Convention, which guarantees resolution of Exxon Mobil’s dispute with Venezuela in the International Center for Settlement of Investment Disputes (ICSID).