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)

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.
The Wire | 12-Sep-2017
By restraining a foreign investor from pursuing a claim under a bilateral investment treaty (BIT), the Delhi high court is coming in way of India’s accountability being tested under international law.
Energy Infra Post | 12-Sep-2017
UK-based Cairn Energy Plc has increased its compensation claim by $249 million in the retrospective dispute case after the income tax department adjusted tax refund due to the oil explorer towards settlement of its tax liabilities.
Kapitalis | 26-Jul-2017
Le Cirdi a rendu son verdict : l’Etat tunisien s’est rendu coupable de violation du droit de propriété d’ABCI sur la Banque franco-tunisienne (BFT)
Web Manager Center | 30-Jun-2017
La partie tunisienne ne veut pas d’un règlement amiable avec l’actionnaire majoritaire ABCI, même dans une phase ultérieure.
Manila Standard | 27-Jun-2017
The ICSID designated the team that will hear Shell Philippines Exploration B.V.’s arbitration case against the Philippine government on Malampaya gas project’s corporate income tax issue.

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