Services

Utility corporations have used investor-state dispute settlement (ISDS) provisions found in trade and investment agreements to challenge state attempts to regulate privatized public services such as water, social security or other services.

In response to several governments which have tried to lower public services rates for poorer populations or in face of a significant economic crisis, foreign companies have initiated ISDS disputes, claiming they were treated “unfairly”, due to their loss of profits.

Potentially, any significant reforms of standards in relation to major infrastructure or utilities and associated services could be the target of ISDS.

As of end of June 2015, 6% of all ICSID disputes concerned water services issues.

Most well-known disputes include:

• Azurix (US) v. Argentina: US$165 million awarded in 2006 to the investor, a water company. The dispute arose from the contamination of a reservoir, which made the water undrinkable in the area. The firm claimed the government had expropriated its investment and denied the firm “fair and equitable treatment” by not allowing rate increases and not investing sufficient public funds in the water infrastructure (Argentina-US BIT invoked).

• Tampa Electric Company “TECO” (US) vs. Guatemala: the US-based energy company challenged Guatemala’s decision to lower the electricity rates that a private utility could charge. TECO was awarded US$25 million in 2013 (CAFTA invoked).

• TCW (US) vs. Dominican Republic: the US investment management corporation that jointly owned with the government one of the Dominican Republic’s three electricity distribution firms, sued the government for failing to raise electricity rates and to prevent electricity theft by poor residents. Case settled in 2009 for US$26.5 million paid to the investor (CAFTA invoked).

(November 2015)

IPE | 2-Oct-2009
An agreement has been signed between the Polish Ministry for State Treasury and Eureko to pay the insurer an interim dividend in November 2009 worth €1.85bn.
Multinational Monitor | 24-Nov-2008
British water giant Biwater cannot use an investment treaty to make Tanzania pay millions for an abrogated water privatization contract, an international tribunal ruled in July.
| 28-Jul-2008
A British water company thrown out of Tanzania over a bungled privatisation deal has failed in its bid to win up to £10m in damages.
Polaris Institute | 24-Aug-2007
French media and telecoms group Vivendi said on Tuesday it had been awarded $105 million in compensation at the end of a decade-long dispute with Argentinian authorities about a former water concession.
The Guardian | 17-Aug-2007
Tanzania was glad to secure the services of a British-led consortium to run the newly privatised water system in its capital Dar es Salaam. But then the price of water started to rise
Jakarta Post | 17-May-2007
MNCs can always refer to Bilateral Investment Treaty (BIT) to which Indonesia is a party and use the "umbrella clause" in the BIT to transform a problem that was originally a contractual dispute into an international investment dispute.
| 15-Aug-2006
Former Enron Corp. (ENE) water unit Azurix Corp. has been awarded $165 million against Argentina in the latest ruling on dozens of international arbitration claims brought against the country by foreign companies. A person familiar with the situation confirmed Tuesday that both parties were informed Monday of the decision by a tribunal at the International Center for the Settlement of Investment Disputes, or the ICSID.
San Francisco Chronicle | 19-Jan-2006
San Francisco-based Bechtel Corp. has dropped a $25 million dispute against the Bolivian government for canceling a water contract, after major street demonstrations forced a Bechtel-owned subsidiary to withdraw from Bolivia’s third-largest city.
Znet | 16-Jul-2005
Bolivia faces an impending lawsuit for cancelling the water contract with Aguas del Illimani, the private consortium controlled by majority shareholder Suez. Thanks to a bilateral investment treaty signed between France and Bolivia, Suez has the right to sue the Bolivian government for breach of contract.

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