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Services

Utility corporations have used investor-state dispute settlement (ISDS) provisions found in trade and investment agreements to challenge state attempts to regulate privatized public services such as water, social security or other services.

In response to several governments which have tried to lower public services rates for poorer populations or in face of a significant economic crisis, foreign companies have initiated ISDS disputes, claiming they were treated “unfairly”, due to their loss of profits.

Potentially, any significant reforms of standards in relation to major infrastructure or utilities and associated services could be the target of ISDS.

As of end of 2019, about 2/3 of all ISDS disputes concerned the services sector at large, including public services but also financial services, telecommunications, transport, construction, etc.

Most well-known disputes include:

• Azurix (US) v. Argentina: US$165 million awarded in 2006 to the investor, a water company. The dispute arose from the contamination of a reservoir, which made the water undrinkable in the area. The firm claimed the government had expropriated its investment and denied the firm “fair and equitable treatment” by not allowing rate increases and not investing sufficient public funds in the water infrastructure (Argentina-US BIT invoked).

• Tampa Electric Company “TECO” (US) vs. Guatemala: the US-based energy company challenged Guatemala’s decision to lower the electricity rates that a private utility could charge. TECO was awarded US$25 million in 2013 (CAFTA invoked).

• TCW (US) vs. Dominican Republic: the US investment management corporation that jointly owned with the government one of the Dominican Republic’s three electricity distribution firms, sued the government for failing to raise electricity rates and to prevent electricity theft by poor residents. Case settled in 2009 for US$26.5 million paid to the investor (CAFTA invoked).

Photo: Aqua Mechanical / CC BY 2.0

(March 2020)

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The Conversation | 6-Oct-2014
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investor-state disputes | ISDS , services , TTIP , UK
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Eurasia Review | 23-Sep-2014
This study considers the likely regulatory impact of the proposed EU-US Transatlantic Trade and Investment Partnership (TTIP) in three key policy areas: investor protection, public services and food safety.
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Two-third of voters in Tory marginals want NHS exempt from US trade pact
The Guardian | 8-Aug-2014
More than two-thirds of voters in 13 battleground constituencies want to see the NHS safeguarded from a new trade deal that critics say threatens to make the privatisation of UK health services permanent.
health , investor-state disputes | ISDS , services , TTIP , UK
India: Nokia mulls invoking bilateral investment treaty
Indian Express | 13-May-2014
Entangled in a protracted tax mess in the country, Nokia has said that it would like to address the issue under the bilateral investment treaty between Finland and India, sources told The Indian Express.
Finland , India , investor-state disputes | ISDS , telecommunications
Vodafone initiates investment arbitration against India
Live Mint | 8-May-2014
Vodafone Group Plc has abandoned the conciliation process and started international investment arbitration against the Indian government over its long-running tax dispute.
India , investor-state disputes | ISDS , Netherlands , telecommunications
Argentina settles five outstanding investment treaty arbitration claims in historic break with its anti-enforcement stance
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Argentina has agreed to settle five separate investment treaty arbitration claims at a cost of around USD 500 million, in an historic departure from the Latin American state’s refusal to comply with awards made by international investment treaty arbitration bodies.
Argentina , corporate interests , energy , ICSID , investor-state disputes | ISDS , UNCITRAL , US , water
Investment protection clause: India can’t do a Maldives without paying a price
| 24-Dec-2012
Recent disputes, including the GMR-Maldives government row and the clash between foreign telecom firms Telenor, Sistema, Etisalat and Vodafone and the Indian government, have exposed India’s vulnerable position in investment agreements. While the foreign telecom companies can use a potent weapon - the ’investment protection’ clause in bilateral treaties - against India, GMR cannot do the same with Maldives.
ICSID , India , investment | BITs , investor-state disputes | ISDS , Maldives , telecommunications
Malaysia headquartered Axiata Group threatens Indian government with international arbitration
Economic Times | 26-Jul-2012
Malaysia headquartered Axiata Group, which holds about 20% stake in Idea Cellular has threatened claim damages and drag the Indian government to international arbitration under bilateral investment protection pacts (BIPA), making it the sixth international investor in the telecoms space to serve notice under bilateral trade agreements.
India , investor-state disputes | ISDS , Malaysia , telecommunications
French company, Veolia, launches claim against Egypt over terminated waste contract and labor wage stabilization promises
IA Reporter | 27-Jun-2012
French multinational Veolia has had an ICSID arbitration claim registered against the Arab Republic of Egypt.
Egypt , France , investor-state disputes | ISDS , services
India to oppose Vodafone’s move to invoke BIPA pact
Economic Times | 31-Mar-2012
The Indian government is likely to oppose any move by Vodafone Plc to invoke the India-Netherlands Bilateral Investment Promotion and Protection Agreement (BIPA) if it is forced to cough up Rs 12,000 crore in taxes on the grounds that the investment was routed through several step down firms based in different countries and that the treaty does not cover tax disputes.
India , investor-state disputes | ISDS , Netherlands , telecommunications , UK