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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.

Human rights and BITs: Mapping the role of human rights law within investor-state arbitration
22-Jun-2009 Rights & Democracy
Investment treaties and free trade agreements offer few instructions as to how such agreements should be reconciled with human rights obligations of the state.
Goldcorp loses bid for $50 mln NAFTA compensation
11-Jun-2009 Reuters
A unit of Goldcorp has lost a bid to get $50 million in compensation after a US trade tribunal rejected claims the gold miner’s operations were hampered by environmental regulations
Do bilateral investment treaties lead to more foreign investment?
1-May-2009 ITN
The global network of over 2800 bilateral investment treaties has been built on the basis of promoting foreign direct investment, and yet, after a decade of research, whether in fact BITs lead to an increase in FDI flows is a matter of debate. ITN has posed a few questions to three academics for their views on the relationship between BITs, FDI flows and sustainable development.
Will Dow challenge Quebec pesticide law?
3-Apr-2009
Dow AgroSciences is mulling over a NAFTA challenge to Quebec’s law banning the cosmetic use of pesticides, setting a spotlight on one of the most controversial clauses of the trade agreement among Canada, the United States and Mexico.
ASEAN Comprehensive Investment Agreement (February 2009)
26-Feb-2009 ASEAN
Human Rights and Bilateral Investment Treaties: Mapping the role of human rights law within investor-state arbitration
21-Feb-2009 Rights and Democracy
Profiles a series of lawsuits that have arisen between foreign investors and their host states — where state compliance with investment treaty obligations is in question and where human rights concerns have resulted from investment projects.
US trade policies limit 52 governments’ use of capital controls to fight financial crisis
13-Feb-2009 IPS
As the global economy descends further into crisis, a new report finds that U.S. trade and investment agreements with 52 countries have removed one tool that has proved effective in past crises: capital controls.
Ottawa involved in AbitibiBowater dispute, Day says
29-Jan-2009
The federal government has confirmed it is now playing a part to help resolve a dispute between AbitibiBowater and the Newfoundland and Labrador government.
The UK tight-lipped over dispute with an Indian investor
23-Jan-2009 ITN
The United Kingdom has formally declined to release a notice of arbitration delivered by an Indian citizen under the UK-India bilateral investment treaty, explaining that it would likely “prejudice relations between the United Kingdom and an international organisation; UNCITRAL.”
Tribunal rejects Ecuador’s jurisdictional objections in dispute with Chevron
6-Jan-2009 ITN
A tribunal has determined that it holds jurisdiction to hear a claim brought by Chevron Corporation against Ecuador for alleged violations of the Ecuador-United States bilateral investment treaty (BIT).
Argentina takes the offensive as Siemens pleads guilty to corruption charges
24-Dec-2008 ITN
Argentina has refused calls by Siemens to suspend proceedings at the International Centre for the Settlement of Investment Disputes (ICSID) in which a committee is considering Argentina’s request to revise a 2007 award, following the admission by the German firm that it had bribed Argentinean officials.
Glitch in the system: Ecuador’s conscientious default
24-Dec-2008
When the government of Ecuador failed to make a scheduled interest payment on private bonds this month, it was hardly the first time a country had defaulted in the middle of a financial crisis.
Canadian company threatens El Salvador with CAFTA lawsuit over mining project
22-Dec-2008 Upside Down World
A Canadian mining company intends to sue El Salvador’s government for several hundred million dollars if it is not granted permission to open a widely unpopular gold and silver mine that scientists warn would have devastating effects on local water supplies.
El Salvador warned of CAFTA-DR lawsuit by mining company
13-Dec-2008
A Canadian mining company and its American subsidiary have threatened the government of El Salvador with a lawsuit after it failed to receive regulatory approval to begin digging for gold and silver in an area some 65 km from San Salvador. The proposed mine has drawn intense opposition from civil society and church-based groups, although the mining company maintains that it enjoys broad public support in El Salvador.
Tanzania: Thirsty for justice
24-Nov-2008 Multinational Monitor
British water giant Biwater cannot use an investment treaty to make Tanzania pay millions for an abrogated water privatization contract, an international tribunal ruled in July.
Out of order
19-Nov-2008 FDI Magazine
Is there a backlash brewing against the international legal system used by states and investors to settle FDI disputes? For several years, lawyers and academics have been debating whether the current system - consisting of more than 2600 bilateral investment protection treaties - is ensuring the security and protection of investor assets and contracts without unnecessarily handcuffing the sovereignty of governments to regulate business activity within their borders.
Investment protection - Bilateral Investment Treaties
5-Nov-2008
There is a Slovak proverb which says: “When catching a bird, they sing it a sweet song”. Another Slovak proverb says: “Those who want to beat a dog will certainly find a club“. For investors who find themselves in a situation similar to that described by these proverbs, the bilateral investment treaties (“BITs”) very often provide the last available legal option. A BIT is an agreement establishing the terms and conditions for private investment by nationals and companies of one state in the state of the other.
Quebec herbicide ban violates NAFTA, pesticide maker alleges
23-Oct-2008 CBC
Dow AgroSciences, maker of the commonly used herbicide ingredient 2,4-D, is challenging the Quebec government under the North American Free Trade Agreement for banning its product.
The wrongful acts of independent state entitites
12-Oct-2008
In spite of the fact that consent is the main building block of arbitration, arbitral awards have been steady for some years that a claimant need not have a contractual relationship with a respondent state to initiate arbitral proceedings versus this state, i.e. states unexpectedly were made respondents in arbitrations under arbitration clauses they have never approved or even bargained.
Dominican Government loses court round in US$680M suit
8-Oct-2008 Dominican Republic Lawyer
An arbitration tribunal constituted under the France-Dominican Republic Bilateral Investment Treaty released an award last week ruling on the jurisdictional objections raised by the Dominican Republic in a claim brought by TCW and its parent company.