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.
Indiana Resources expects to begin arbitration with Tanzania over the expropriation of the Ntaka Hill nickel project and other alleged breaches of the UK-Tanzania BIT early 2021.
The Netherlands’ top court ruled that shareholders in dismantled oil giant Yukos can continue to pursue Russia for $50 billion in compensation pending a final judgement in a long legal saga.
Barrick is offering the government of Papua New Guinea to pause legal proceedings upon signing of a framework agreement to reverse the decision not to grant it a licence renewal for its former Porgera mine.
The European Commission has confirmed for the first time that Brussels could withdraw from the controversial Energy Charter Treaty (ECT), which critics say shields the fossil-fuel industry.
The South Korean government has opted for an international arbitration over its longstanding dispute with Lone Star Funds after it turned down the US fund’s final $870-million out-of-court settlement proposal.
Lone Star Funds, which is in litigation against the South Korean government at the International Centre for Settlement of Investment Disputes, suggested US$870 million as a concession.
The groups said they are concerned about the ICSID’s long-standing failure to promulgate clear rules for addressing cases where corruption has been alleged.
The ICSID has turned down a lawsuit filed by Spanish companies Cementos La Union and Aridos Jativa against the Egyptian State, demanding a compensation of more than €236 million.
National Accountability Bureau (NAB) Balochistan has collected irrefutable evidence revealing that billions of rupees have been lost to the national exchequer in the Reko Diq project after the bureau scrutinized its 30-year record.
Prime Minister Imran Khan has approved the formation of a working group of experts for reforming Pakistan’s international investment regime.
The dispute stems from the Community of Parán’s actions, which invaded Lupaka’s project held through Invicta Mining Corp.
Brussels’ proposed green reforms to the Energy Charter Treaty face resistance from Japan, yet do not go far enough for environmental campaigners.
The problem with the ISDS is not the format of the dispute settlement. The problem is that it is designed to give corporations power to go after government policies.
Solicitor General Tushar Mehta has advised the government that the decision of an arbitration tribunal cannot contradict the law passed by a sovereign parliament.
Australian mining companies are increasingly using ISDS processes and are being awarded billions based on dubious calculations of potential lost profits by unaccountable international tribunals.
Most recently, Jersey has joined Hong Kong as another non-sovereign entity that negotiates its own BITs. Jersey is set to sign its first BIT with the UAE later this year.
The scope of consent to arbitration is an important issue that needs to be finally settled - not least because it could have multi-billion dollar implications for India in respect of other cases involving challenges to India’s taxation measures by foreign investors.
Meaningful reform aligned with sustainable development seems less likely
Cross-party MEPs called on the European Commission to be prepared to withdraw from the controversial Energy Charter Treaty, if negotiations for its modernisation fail.
Why retain ISDS, this neo-colonial vestige that is not supported by consistent evidence that it contributes to advancing development or the rule of law?