SOMO | 16 March 2021
“Super-protections” for corporations
How investment treaties and investor-to-state dispute settlement grant foreign investors greater rights than Dutch and EU law
Foreign investors enjoy more rights under investment treaties than under Dutch or EU law. A new study, commissioned by SOMO and conducted by the University of Amsterdam International Law Clinic, focuses on four important elements of investment protection and compares the rights of companies under the Energy Charter Treaty (ECT), CETA, Dutch civil and administrative law and the EU non-contractual liability regime. The most important conclusion is that companies under investment treaties and ISDS have a better chance of receiving (higher) compensation.
It is therefore not surprising that foreign investors are increasingly resorting to ISDS, even in countries with a strong rule of law.
“The threat of potential ISDS claims, coupled with the uncertain and unpredictable outcomes of ISDS cases and the high sums involved, influence the policy space of governments more than what would be possible in national legal systems. The impact of the potential liability puts greater pressure on governments to refrain from taking action, for example in the area of climate policy.”
On 2 February 2021, the German energy company RWE initiated arbitration proceedings against the Netherlands under the ECT, because of a law that bans the use of coal for electricity generation from 2030 onwards. This is the first time the Netherlands is being sued on the basis of an investment treaty. Also, it is one of the first cases to directly oppose climate legislation and the phasing out of coal.
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