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)

Ukrinform | 1-Apr-2021
Oschadbank plans to immediately appeal against the judgment of the Paris Court of Appeal, which rejected the award in the case against Russia over compensation for losses caused by the occupation of Crimea.
Live Mint | 23-Mar-2021
India is believed to have challenged in a court in The Hague an arbitration tribunal verdict that overturned its demand for ₹10,247 crore in back taxes from Cairn Energy Plc — the second time in three months that it has refused to accept an international award against retrospective tax.
Business Standard | 19-Mar-2021
India has time till mid-April to file an appeal against an international arbitration tribunal ordering it to repay UK’s Cairn Energy Plc USD 1.2 billion-plus interest and cost, but the challenge can only be on limited grounds such as procedure not being followed.
Times Now News | 9-Mar-2021
India will be filing an appeal at The Hague this week against the $1.4-billion arbitration award against British oil firm Cairn Energy.
Business Standard | 8-Mar-2021
Cairn said its shareholders expect the use of the company’s ’strong powers of enforcement’ to recover 1.4 billion.
UNCTAD | 3-Mar-2021
Most international investment agreements do not exclude taxation from their scope, which means that a wide range of tax-related measures are covered by them.
MRT | 3-Mar-2021
Canadian mining company First Majestic Silver Corp submitted a request for arbitration based on NAFTA, due to the tax debt and its differences with the Mexican government.
Mint | 19-Feb-2021
The move signals the government’s resolve to defend its sovereign rights in taxation. The government has kept open possibility of settling the dispute within existing Indian laws.
Mint | 17-Feb-2021
Cairn Energy has filed a case in a US district court to enforce a $1.2 billion arbitration award it won in a tax dispute against India, a court document showed, ratcheting up pressure on the government to pay its dues.
Reuters | 3-Feb-2021
Six banks have agreed not to take legal action against Croatia over its conversion of Swiss franc loans into euros in 2015 at the lenders’ expense.

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