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.

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 sued Greece on account of the restructuring of the country’s sovereign debt, after having bought Greek government bonds at a knockdown value. The investors lost the case. (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).

(March 2020)

Huffington Post | 17-May-2015
Last week, Canadian Finance Minister Joe Oliver gave a speech in New York arguing that the Volcker Rule — a key tenet of the US’ 2010 banking law — violates the North American Free Trade Agreement. This underscores Senator Warren’s warning that such deals, including the Trans-Pacific Partnership that Obama is currently negotiating, jeopardize financial reform.
| 15-May-2015
An international tribunal began hearing a multi-billion dollar case Friday that the US private equity firm Lone Star filed against South Korea’s government over tax and other disputes surrounding its asset sell-offs in Korea.
Indian Express | 3-Apr-2015
The finance ministry has drafted a fresh bilateral investment protection treaty that would keep taxation measures and issuance of compulsory licences for intellectual property rights out of the sphere of arbitration while preventing foreign investors to drag India to arbitration for any dispute that has already been settled by the courts.
CNBC | 30-Mar-2015
According to sources ay India’s Central Board of Direct Taxes, tax matters are not covered under UK-India bilateral Investment treaty (BIT).
JD Supra | 9-Feb-2015
Three recent ICSID decisions involving Ecuador highlight the importance of language addressing the status of taxes in investment treaties.
Huffington Post | 19-Dec-2014
US Senator Elizabeth Warren on Wednesday warned that a major trade deal being negotiated by the Obama administration could hamstring Wall Street reform efforts.
WEED | 12-Dec-2014
The film explains how the settlement works and why it endangers necessary governmental rescue measures in financial crises as occurred in Greece, Cypress and Argentina.
Public Citizen | 4-Dec-2014
US congressional leaders have just sent a letter to the Obama administration warning against TAFTA/TTIP provisions that could restrict Congress’ ability to prevent another financial crisis.
Skadden | 3-Dec-2014
State measures that reduce or nullify existing creditor rights, such as the Argentine “Lock Law” or similar moratoria on repayment, may violate BIT rights and supply investors and creditors in other jurisdictions, particularly in the eurozone, with a basis for challenging similar measures.
Globe and Mail | 31-Oct-2007
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.

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