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)

Reuters | 25-Sep-2020
Vodafone won an international arbitration case against the Indian government, ending one of the most high-profile disputes in the country involving a $2 billion tax claim.
Lexology | 3-Sep-2020
For the first time, an ISDS tribunal has qualified project finance as a foreign investment protected under an investment treaty.
SSRN | 20-Aug-2020
Recent jurisdictional decisions suggest that sovereign debt will be subject to bilateral investment treaties for the foreseeable future.
Webmanagercenter | 5-Aug-2020
Deux nouvelles réunions viennent d’être programmées avec le Centre international pour le règlement des différends relatifs aux investissements, afin de poursuivre l’examen de l’affaire de la Banque Franco-tunisienne.
Korea Times | 24-Jun-2020
The government is apparently baffled by Lone Star Fund’s attempts to use Korean news outlets as a means of putting itself in a dominant position in its $4.68 billion legal battle against Seoul.
World Commerce Review | 11-Jun-2020
Arbitration cases due to COVID emergency measures would exacerbate the challenges that public budgets are already facing due to the need for stimulus measures and the difficulty in collecting government revenue.
Pulse | 5-Jun-2020
US private equity firm Lone Star Funds suggested it was open to “amicable and sensible” out-of-court option to settle the longstanding dispute with the Korean government.
Basta! | 19-May-2020
Les cabinets juridiques spécialisés dans les conflits entre investisseurs et États étudient d’éventuelles plaintes contre les mesures suspendant les activités économiques, instaurant un moratoire des loyers ou rendant accessible à tous un futur vaccin.
TNI | 19-May-2020
As governments take action to fight the COVID-19 pandemic and prevent economic collapse, they could face multi-million dollar lawsuits.
New Straits Times | 14-Apr-2020
Axiata said the payment was made under protest and will seek remedies including restitution of sums already paid in the international arbitration proceedings.

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