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)

Le Soir | 9-Jan-2023
Un tribunal arbitral a condamné la Corée du Sud sur un volet du dossier l’opposant au fonds d’investissement Lone Star mais a confirmé que le montage fiscal réalisé par le fonds américain avait pour unique objectif d’échapper à l’imposition.
KBS | 17-Oct-2022
Should the claims be accepted, the amount the South Korean government has to pay to Lone Star would be reduced to a little over 216 million U.S. dollars.
Pulse | 3-Oct-2022
The South Korean government is found to have spent nearly $40 million in litigation expenses for its decade-long legal dispute against US private equity firm Lone Star Funds.
Médias24 | 16-Sep-2022
Le Maroc et Carlyle ont trouvé un accord qui réduirait les prétentions du fonds d’investissement américain à 14 millions de dollars contre plus de 400 millions initialement réclamés.
Yonhap | 1-Sep-2022
Le ministère de la Justice coréen a exprimé sa volonté de demander une annulation de la décision du CIRDI condamnant la Corée du Sud à verser 216,5 millions de dollars à la société de capitale-investissement américaine Lone Star Fund.
Korea Herald | 1-Sep-2022
South Korea plans to seek annulment of an international tribunal’s verdict to compensate Lone Star Funds in a decade long investor-to-state dispute arbitration.
Yonhap | 31-Aug-2022
Un tribunal internacional ha ordenado a Corea del Sur pagar 216,5 millones de dólares a la firma estadounidense de capital privado Lone Star Funds, poniendo fin a una batalla legal de décadas.
Yonhap | 31-Aug-2022
An international tribunal ordered South Korea to pay the US private equity firm Lone Star Funds US$216.5 million, bringing an end to a decade long legal battle surrounding its sell-off of a local bank.
Yonhap | 31-Aug-2022
Un tribunal international a ordonné à la Corée du Sud de verser à la société de capital-investissement américaine Lone Star Funds 216,5 millions de dollars, mettant fin à une bataille juridique de 10 ans.
Korea Herald | 26-Aug-2022
The Korean public has been in outrage over the matter for more than a decade, claiming that the case was an international “fraud” committed by an overseas private equity firm.

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