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investor-state disputes | ISDS

Investor-state dispute settlement (ISDS) refers to a way of handling conflicts under international investment agreements whereby companies from one party are allowed to sue the government of another party. This means they can file a complaint and seek compensation for damages. Many BITs and investment chapters of FTAs allow for this if the investor’s expectation of a profit has been negatively affected by some action that the host government took, such as changing a policy. The dispute is normally handled not in a public court but through a private abritration panel. The usual venues where these proceedings take place are the International Centre for Settlement of Investment Disputes (World Bank), the International Chamber of Commerce, the United Nations Commission on International Trade Law or the International Court of Justice.

ISDS is a hot topic right now because it is being challenged very strongly by concerned citizens in the context of the EU-US TTIP negotiations, the TransPacific Partnership talks and the CETA deal between Canada and the EU.


US trade expert finds fishhooks in FTA
While media coverage of the China-NZ Free Trade Agreement has focused almost entirely on the possible dollar gains, scant attention has been paid to the equally valid exposure of New Zealand to compensation claims — should any NZ government be so bold in future as to pass laws or regulations that a foreign investor feels will impact on profitability.
Experts: Exxon case has to be addressed in the ICSID
While it is a US company, Exxon Mobil is entitled to invoke protection under the Netherlands-Venezuela Investment Promotion and Protection Convention, which guarantees resolution of Exxon Mobil’s dispute with Venezuela in the International Center for Settlement of Investment Disputes (ICSID).
NAFTA clause that allows companies to sue governments draws flak
When agribusiness giant Archer Daniels Midland Co. quietly filed court documents this month to overturn — and increase — a multi-million-dollar trade penalty it won against the Mexican government, the move shone a light on Chapter 11, perhaps the most controversial clause in the North American Free Trade Agreement.
Canada strengthens investor protections
Canada has just passed legislation implementing the ICSID Convention, a very important tool for the resolution of investor-state disputes. But the government has not yet indicated a timetable for ratification of the treaty. To date, only four provinces and one territory have passed similar implementing legislation.
Venezuela: Gov’t celebrates British ruling against Exxon
Venezuela celebrated, as a triumph for countries of the developing South, Tuesday’s ruling in its favour by a British court in a legal dispute with US oil giant Exxon Mobil, which overturned an earlier court order to freeze around 12 billion dollars in Venezuelan assets.
The story of a Dutch letterbox which could cost Bolivia a fortune
Running their business via a letterbox company in the Netherlands, transnational corporations profit from the corporate-friendly Dutch tax regime and bilateral investment treaties the Netherlands has with third countries. Euro Telecom Italia (ETI), a subsidiary of Italian telecoms giant ENTEL, is one such letterbox company. ETI recently lodged a complaint with the World Bank tribunal ICSID against Bolivia for compensation, after the Bolivian government had launched a review the company’s much-criticised performance and attempted to negotiate a buy back of what used to be a public telecommunications company.
Govt may face ‘claims worth billions’ from foreign firms
Foreign companies operating in South Africa that have lost production and ultimately profit as a result of the power supply crisis might be able to sue the government under bilateral investment treaties
Investor-State dispute settlement and impact on investment rulemaking
The experience with the investor-State dispute settlement of a number of countries, mostly in the Asia-Pacific region, is influencing the development of new international investment agreements in those countries
Zimbabwe admits breach of law against Dutch farmers
The Zimbabwe government has admitted that it wronged white commercial farmers when it violently evicted them from their farms at the height of Zanu PF-instigated land invasions in 2000.
Zimbabwe farmers a step closer to compensation
A group of Dutch farmers is one step closer to gaining compensation for land and farms lost to the government of Zimbabwe, after a recent hearing in Paris.
US couple sues over income-trust taxes
A Chicago couple is launching a challenge under the North American Free Trade Agreement after they lost money when the Canadian government opted to tax income trusts last year.
Zimbabwe: White farmers appeal to Sadc
The last remaining white commercial farmers have appealed to the regional Southern African Development Community (Sadc) Tribunal in an effort to stop government from expropriating their properties.
Interview: Argentina seeks diplomatic exit from ICSID suits
Facing a flood of unfavorable arbitration rulings, Argentina is shifting from a legal strategy to a diplomatic one in a bid to dismiss billions of dollars in foreign investor claims arising from its 2002 financial crisis.
Sempra Energy awarded $172 million in Argentine arbitration
The International Centre for Settlement of Investment Disputes in Washington DC has awarded Sempra Energy approximately $172 million, including interest, to settle a 2002 dispute involving the company’s 43-percent ownership in two Argentine natural gas holding companies, Sodigas Pampeana and Sodigas Sur.
Pakistan, US enhance cooperation: Teams formed to finalise trade, economic issues
Pakistan and United States on Wednesday constituted sub-groups of high officials from both the countries to pave the way for early finalisation of issues regarding trade and economic cooperation
Permanent Court of Arbitration to set up facility in Singapore
With rapid growth in the Asian economies, it is inevitable that legal issues and disputes to matters like investment treaties will arise as more and more parties enter into cross-border contracts and agreements.
Vivendi wins decade-long Argentina legal battle
French media and telecoms group Vivendi said on Tuesday it had been awarded $105 million in compensation at the end of a decade-long dispute with Argentinian authorities about a former water concession.
WB junks Fraport’s Naia 3 claim
The World Bank has dismissed the claim for compensation from the Philippine government over the Naia Terminal 3 project of Germany’s Frankfurt Airport Services Worldwide (Fraport)
The water margin
Tanzania was glad to secure the services of a British-led consortium to run the newly privatised water system in its capital Dar es Salaam. But then the price of water started to rise
Investor-state dispute settlement rewritten to favor US
With Seoul and Washington concluding their renegotiation of the Korea-US free trade agreement (FTA), it has been confirmed there were some ‘‘unfair parts’’ added to the economic deal under which investors of both sides are not treated equally in their respective countries.