Financial stability

Investor-state dispute settlement (ISDS) is one of the greatest threats to the re-regulation of finance. ISDS empowers the very firms that financial regulation seeks to govern. These firms can bypass host country domestic courts and directly challenge domestic policies in a parallel system of justice.

Financial and non-financial firms have increasingly used ISDS provisions in trade agreements to challenge financial regulations and emergency financial stability measures.

Most well-known cases include:

• Investors vs. Argentina: When the country froze its utility rates and devaluated its currency in response to its 2001-2002 financial crisis, it was hit by over 40 lawsuits from investors, including Suez, Vivendi (France) and Anglian Water (UK). By January 2014, Argentina had been ordered to pay a total of US$980 million (various BITs invoked).

• Poštová Banka (Slovakia) & Istrokapital (Cyprus) vs. Greece: the Slovak bank and its Cypriot investor sued Greece on account of the restructuring of the country’s sovereign debt, after having bought Greek government bonds at a knockdown value. The investors lost the case. (Greece-Slovakia & Cyprus-Greece BITs invoked).

• Saluka (Netherlands) vs. Czech Republic: the Dutch investment corporation filed an ISDS dispute against the Czech government for not bailing out a private bank, in which the company had a stake, in the same way that the government bailed out banks in which the government had a major stake. The bailouts came in response to a widespread bank debt crisis. The investor was awarded US$236 million (Czech Republic-Netherlands BIT invoked).

Photo: Maalokki / CC BY 2.0

(March 2020)

Financial Tribune | 1-Dec-2021
Bahrain has been ordered by the Permanent Court of Arbitration in The Hague to pay over €200 million in damages plus costs to two Iranian banks for the unlawful moves against their operations.
L’Orient Le Jour | 1-Dec-2021
Téhéran s’est félicité dimanche de la récente condamnation de Bahreïn à verser plus de 200 millions d’euros de compensation à deux banques iraniennes expropriées par ce pays arabe du Golfe.
In-Cyprus | 4-Nov-2021
The arbitration has been discontinued in response to the non-payment of the claimant’s portion of the required advance payment of the costs of the proceeding.
Mint | 4-Nov-2021
The settlement is under the Taxation Laws (Amendment) Act, introduced this year to put an end to 17 tax disputes India has with multinational companies like Cairn and Vodafone Plc.
Zone Bourse | 7-Sep-2021
Le gouvernement indien s’efforce de résoudre ce problème le plus rapidement possible et vise une conclusion dans les prochaines semaines, a déclaré le directeur général de Cairn.
Mint | 7-Sep-2021
Cairn Energy will drop litigations to seize Indian properties in countries ranging from France to the US, within a couple of days of getting a $1 billion refund resulting from the scrapping of a retrospective tax law.
elsalvador.com | 19-Aug-2021
El caso nace de un proceso judicial desarrollado en los tribunales salvadoreños donde el HSBC buscó recuperar $2 millones en prestamos a una empresa salvadoreña.
Reuters | 19-Aug-2021
HSBC Holdings said the banking group has initiated legal proceedings against El Salvador for what the company called a breach of the nation’s investment treaty with the UK.
Le Figaro | 6-Aug-2021
Le gouvernement indien a publié une proposition de loi fiscale visant à mettre fin à une bataille judiciaire de plusieurs milliards de dollars l’opposant à des compagnies étrangères.
Reuters | 6-Aug-2021
India proposed scrapping a controversial law that taxed companies retrospectively, a move that could potentially settle its multi-billion-dollar tax cases with Cairn Energy and Vodafone.

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