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)

BNE Intellinews | 11-Apr-2019
Atlas Group is seeking payment of €500mn in damages from Montenegro at an international court.
Times of India | 11-Mar-2019
Cairn Energy said it expects the long-running arbitration process against the Indian authorities over retrospective taxation to be concluded before late 2019.
South Centre | 7-Mar-2019
The broad language in investment agreements has allowed investor-state dispute settlement tribunals to scrutinize tax measures adopted by States, and determine that such measures resulted in a breach of State’s obligations under the agreement.
Interfax | 19-Feb-2019
The Permanent Court of Arbitration has announced a partial arbitration decision in favor of PrivatBank and against Russia. The question of the amount of compensation is left for the next stage of the arbitration proceedings.
Le Monde | 12-Feb-2019
27 associations, syndicats et ONG appellent les députés européens à rejeter un projet d’accord commercial entre l’UE et Singapour, comparable au très contesté CETA.
SOMO | 11-Feb-2019
An analysis of its impact on managing government bonds and capital flows.
Stop ISDS | 11-Feb-2019
The most worrying thing about the EU-Singapore deal is not the risk that Singapore firms themselves pose, but the fact that the agreement looks set to be used as a model for reinvigorating ISDS.
Washington Post | 3-Jan-2019
Investment treaties with ISDS provisions make it hard to tax foreign firms and worsen human rights and labor practices.
W Radio | 13-Dec-2018
Se establecieron los parámetros para que el país responda por una demanda por 40 millones de dólares que presentó una heredera de los dueños del Banco Granahorrar.
Nasdaq | 28-Nov-2018
Ukraine’s Oschadbank has been awarded $1.3 billion by an international arbitration court in respect of the bank’s claims against Russia to compensate for loss of business and assets in Crimea following Moscow’s annexation of the peninsula in 2014.