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 Investor | 8-Jul-2019
South Korea’s financial regulator said it will launch a task force later this month to handle lawsuits filed by global investors, such as US private equity fund Lone Star.
IISD | 28-Jun-2019
Dans sa décision finale du 28 septembre 2017, un tribunal de la CCS ordonnait à la Pologne de verser 176 millions EUR à une société d’investissement privée basée au Luxembourg.
Russian Fund for the Protection of Investors’ Rights in Foreign States | 14-May-2019
The Fund for Protection of Investors’ Rights in Foreign States sent an notice of arbitration against Lithuania for the illegal expropriation of the Bank “Snoras”, in accordance with the investment agreement between the Russian Federation and the Republic of Lithuania.
Nepali Times | 7-May-2019
Axiata UK may be required to exhaust local remedies before resorting to arbitration under the UK-Nepal investment treaty
Mobile World Live | 29-Apr-2019
Axiata Group’s UK subsidiary and Nepal mobile unit filed a request for arbitration with the International Centre for the Settlement of Investment Disputes, regarding a capital gains tax bill levied by Nepali authorities.
Reuters | 19-Apr-2019
Oman’s sovereign wealth fund has withdrawn an 80 million euro claim against Bulgaria over the collapse of Corporate Commercial Bank (Corpbank), the Bulgarian finance ministry said.
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.

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