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)

Business Today | 1-Feb-2021
For a government struggling to find revenue to boost a COVID-19 battered economy, options of appeal against the arbitration award are limited and it may not have the financial bandwidth for such a payout.
The Hindu | 27-Jan-2021
UK-based Cairn Energy Plc has threatened that it may be forced to begin attaching Indian assets including bank accounts in different world capitals, unless the government resolves the issue.
Live Mint | 25-Jan-2021
Investors have written to the Indian government as well as the governments of the US and UK seeking adherence to the award of a tribunal at the Permanent Court of Arbitration in The Hague
Finance Uncovered | 21-Jan-2021
The battle between ConocoPhillips and Vietnam result could mark a significant shift in the way huge multinationals fight off the threat of taxes from desperate revenue authorities in developing countries.
El Economista | 19-Jan-2021
El banco informó al ejecutivo, fiscalía y corte suprema que de no obtener respuesta a una solicitud de Amparo en el caso que perdió ante José Salaverría, iniciará un proceso contra el país.
Pulse | 1-Dec-2020
The South Korean government has opted for an international arbitration over its longstanding dispute with Lone Star Funds after it turned down the US fund’s final $870-million out-of-court settlement proposal.
Business Korea | 24-Nov-2020
Lone Star Funds, which is in litigation against the South Korean government at the International Centre for Settlement of Investment Disputes, suggested US$870 million as a concession.
Business Today | 27-Oct-2020
Solicitor General Tushar Mehta has advised the government that the decision of an arbitration tribunal cannot contradict the law passed by a sovereign parliament.
Bar and Bench | 26-Oct-2020
The scope of consent to arbitration is an important issue that needs to be finally settled - not least because it could have multi-billion dollar implications for India in respect of other cases involving challenges to India’s taxation measures by foreign investors.
Le Temps | 23-Oct-2020
Le Pérou, le Mexique et l’Argentine sont menacés de plaintes par des multinationales pour des mesures adoptées pendant la crise. Le Chili aussi, où un référendum pour une nouvelle constitution a lieu le 25 octobre

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