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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.


NAFTA claim dismissed, dicey clause remains
A seven-year legal battle by the US postal carrier United Parcel Service of America (UPS) against Canada, brought under a controversial free trade agreement, has been dismissed, but advocacy groups say a provision that allows corporations to sue for lost profits should be permanently dropped.
Canada Post NAFTA win sets precedent
A landmark NAFTA decision this week dismissing allegations that Canada Post is competing unfairly has significantly restricted the rights of foreign investors to elbow their way into markets served by Crown corporations and other government enterprises.
Ecuador pursues trade-preference extension but faces critics in Congress
Ecuador is furiously lobbying members of Congress to extend trade preferences, set to run out at the end of the month, that are intended to counter narcotics trafficking.
NAFTA Chapter 11 investor-state disputes
Table of all disputes and their status as of 1 March 2007
The ultimate risks of water privatization
MNCs can always refer to Bilateral Investment Treaty (BIT) to which Indonesia is a party and use the "umbrella clause" in the BIT to transform a problem that was originally a contractual dispute into an international investment dispute.
Torched accord
A recently spawned legal battle between Slovakia and Madeta, the Czech Republic’s largest dairy processor, has led to a discovery that, for the past 10 years, Slovakia has not honored a trade agreement signed between the countries during the Velvet Divorce.
Bolivia notifies World Bank of withdrawal from ICSID, pursues BIT revisions
Investment Treaty News has learned that Bolivia has sent a formal notice to the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID) declaring its withdrawal from the ICSID convention.
Challenging corporate investor rule
How the World Bank’s investment court, free trade agreements, and bilateral investment treaties have unleashed a new era of corporate power and what to do about tt
Foreign investors gone wild
When Bolivian President Evo Morales took office in January 2006, he pledged to follow through on his campaign pledge to increase Bolivians’ share of revenues from their major source of foreign income, natural gas. International gas companies, however, threatened to sue. Previous Bolivian governments had signed a flurry of bilateral investment treaties that gave foreign investors the right to bypass domestic courts and file such lawsuits through international tribunals. Morales complained that these rules made him feel like a “prisoner” in the presidential palace.
Latin leftists mull quitting World Bank arbitrator
Bolivia and Venezuela, both nationalizing huge swathes of their economies, should quit a World Bank body that arbitrates between foreign investors and states, Bolivia’s president said on Sunday.
Weaving webs of influence: The United States, free trade agreements and dispute resolution
Peter Drahos looks at the issue of dispute settlement in the gowing web of US bilateral free trade agreements, how this relates to the WTO’s dispute settlement system and the implications for developing countries.
Claim against ROA Government
Global Gold mining company submitted its claim to the International Center for Settlement of Investment Disputes (ICSID), a body adjunct to the World Bank, against the Government of the Republic of Armenia (ROA). The Company is trying to protect its investment rights in arbitration court.
Ex-USTR negotiator Vargo key in CAFTA case
Pittsburgh-based Railroad Development Corporation (RDC) has hired former US trade agreement negotiator, Regina Vargo, and filed suit against the Guatemalan government under the investor-state provisions within Chapter 10 of CAFTA.
Italian lawsuit against SA government reinforces historical injustice
Finstone Ltd SA, a foreign mining company based in Luxembourg, is suing the South African government for an alleged expropriation of its mineral rights. Finstone is a holding company in control of three South African granite producing operations i.e. Marlin, Red Graniti and Kelgran. The real challenge posed by this legal action is that the abovementioned investors find the black economic empowerment programme is in violation of the bilateral treaties signed with South Africa by both Luxembourg and Italy.
US mining firm sues Armenian government
A US company mining gold in Armenia has initiated an international arbitration of its bitter dispute with Environment Minister Vartan Ayvazian whom it accuses of corruption and other violations of the law.
Dominican Republic warned about lawsuit
Foreign energy investors said on Friday that they warned the Dominican Republic it had to mend its crippled power sector months before filing a US$680 million (euro510 million) lawsuit against the country for lost electricity revenue.
New $19B arbitration case threat to Turkish government from Dutch company on Telsim sale
Dutch investment company Saba Fakes, who claim to hold the biggest part of shares of Turkey’s second big GSM operator Telsim, is preparing to file an arbitration case at International Arbitration amounting to 19 billion dollars in reparations.
RDC files notice of intent to submit claims for arbitration under CAFTA against the Republic of Guatemala
On the morning of Tuesday, March 13, Railroad Development Corporation (RDC) filed its Notice of Intent to Submit Claims to international arbitration against the Republic of Guatemala under the Central America-Dominican Republic-United States Free Trade Agreement (CAFTA).
South Africa: Govt faces first expropriation suit
A foreign mining company is suing the South African government over alleged expropriation of its mineral rights in a move that has huge implications for the country’s new mining dispensation.
Peru, Colombia trade deals would lock in more bad investment rules
The investment rules in the Colombia and Peru trade pacts with the US deserve special scrutiny. They grant protections for private foreign investors that are virtually identical to those in NAFTA, CAFTA and myriad bilateral investment treaties signed over the past two decades. And yet these countries are being pulled on board at a time of a dramatic awakening about these rules’ potential for harm.