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.

As of end of 2014, 7% of all ICSID cases concerned the financial sector.

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 are currently suing Greece on account of the restructuring of the country’s sovereign debt, after having bought Greek government bonds at a knockdown value (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).

(November 2015)

The Hindu | 5-Dec-2017
The Tamil Nadu government moved the Madras High Court for an interim stay on carmaker Nissan Motor from proceeding with international arbitration over the alleged non-payment of incentives being claimed by it from the State.
Reuters | 1-Dec-2017
Nissan Motor réclame plus de 770 millions de dollars (646 millions d‘euros) à l‘Etat indien pour non versement d‘aides publiques et a ouvert une procédure d‘arbitrage internationale.
Reuters | 1-Dec-2017
Japanese automaker Nissan Motor has begun international arbitration against India to seek more than $770 million in a dispute over unpaid state incentives.
Radio NZ | 30-Nov-2017
Government plans to put a royalty on exports of bottled water could be in jeopardy after a top trade negotiator warned MPs it would breach trade deals.
Bloomberg | 15-Nov-2017
An international arbitration tribunal in February will begin trial on Vodafone’s challenge to India using a retrospective legislation to seek Rs 22,100 crore in taxes.
New Indian Express | 27-Oct-2017
The Delhi High Court today allowed Vodafone Group representatives to participate in the process of appointing a presiding arbitrator in its international arbitration process against India in connection with a tax demand of Rs 11,000 crore.
The Market Mogul | 23-Oct-2017
Noting the ad hoc nature of investment arbitration under the ICSID, it is not surprising that two tribunals adopted different interpretations
IISD | 4-Oct-2017
Le tribunal a estimé que la société requérante n’avait pas de siège social au Luxembourg et a fait preuve d’abus de droit pour « étayer la réalité de son siège social luxembourgeois »
IISD | 4-Oct-2017
The tribunal ruled that the investor did not have a head office in Luxembourg and had abused its rights to “give the impression that it had a Luxembourg head office”
Insider | 21-Sep-2017
The Edinburgh-based oil and gas explorer says both it and the Government of India have agreed a timetable for finalising document production, submissions and hearings.

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