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)

Reuters | 20-Apr-2018
Investors holding billions of dollars in defaulted Venezuelan bonds have formed at least one bondholder committee, which could signal an eventual legal dispute similar to the dispute with Argentina after it defaulted on its sovereign debt in early 2002.
IATP | 11-Apr-2018
The financial industry’s demands for a “modernized” financial services chapter of the North American Free Trade Agreement have been overlooked
Defi Media | 9-Apr-2018
La double nationalité de Dawood Rawat lui prive de l’opportunité de saisir le tribunal de la Cour permanente d’arbitrage pour réclamer des dommages d’un milliard de dollars américains à l’état mauricien.
Kluwer Arbitration Blog | 3-Apr-2018
The Swiss Federal Supreme Court confirmed its statutory restraint in reviewing arbitral awards and rejected the host state’s request to set aside the award for violating substantive public policy.
Times of India | 22-Mar-2018
A week after Japanese automaker Nissan hinted at the scope of an amicable solution, the Tamil Nadu government insisted that the Madras high court hear its plea to stall the international arbitration initiated by company.
Indian Express | 19-Mar-2018
The Madras High Court was told that the Tamil Nadu government was holding “talks” with Japanese automaker Nissan, predictably for an amicable settlement.
Lexology | 16-Mar-2018
The English High Court has set aside parts of an award concerning claims brought by Griffin against Poland; Poland has reserved the right to argue the compatibility of the BIT with EU law.
Live Mint | 14-Mar-2018
Under international arbitration proceedings the final hearing of Cairn’s claim under the UK-India Bilateral Investment Treaty is scheduled for August 2018 in The Hague.
Webmanagercenter | 5-Mar-2018
L’Etat tunisien doit dire officiellement s’il choisit le règlement amiable ou la solution arbitrale par le CIRDI.
Energy Voice | 1-Mar-2018
The tribunal found that Novenergia’s investments were achieving a reasonable rate of return. However, the tribunal held that it was sufficient for the claim to succeed that Novenergia could show “quantifiable prejudice” compared with its position when it initially made its investment.

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