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).

Photo: Maalokki / CC BY 2.0

(March 2020)

Nikkei Asia | 11-May-2023
Japanese investors will soon file a request for arbitration regarding Credit Suisse’s Additional Tier 1 bonds, under the economic partnership agreement between Japan and Switzerland.
Reporterre | 9-May-2023
Perenco, un pétrolier franco-britannique, refuse de payer ses ex-salariés équatoriens. Et impose au pays une amende de 374 millions de dollars. Son tort ? Avoir promulgué une loi sur les superprofits.
Yonhap | 9-May-2023
An international tribunal has accepted the South Korean government’s request and reduced the damages it has to pay to the U.S. private equity firm Lone Star Funds by about US$450 million, the justice ministry said
Zone Bourse | 17-Apr-2023
La société d’investissement mexicaine JLL Capital, dont les activités au Honduras sont bloquées depuis 2018 dans le cadre d’un litige local, réclame quelque 380 millions de dollars au pays d’Amérique centrale dans le cadre d’une procédure d’arbitrage.
Reuters | 17-Apr-2023
Mexican investment firm JLL Capital, whose Honduran operation has been blocked since 2018 in a local dispute, is seeking some $380 million from the Central American country in arbitration proceedings.
Kapitalis | 27-Feb-2023
Les autorités tunisiennes ont cru avoir enterré définitivement le litige qui les oppose au fonds d’investissement néerlandais ABCI, à propos de Banque franco-tunisienne (BFT), en décidant la liquidation de cette banque. Or, il n’en est rien…
Le Soir | 9-Jan-2023
Un tribunal arbitral a condamné la Corée du Sud sur un volet du dossier l’opposant au fonds d’investissement Lone Star mais a confirmé que le montage fiscal réalisé par le fonds américain avait pour unique objectif d’échapper à l’imposition.
KBS | 17-Oct-2022
Should the claims be accepted, the amount the South Korean government has to pay to Lone Star would be reduced to a little over 216 million U.S. dollars.
Pulse | 3-Oct-2022
The South Korean government is found to have spent nearly $40 million in litigation expenses for its decade-long legal dispute against US private equity firm Lone Star Funds.
Médias24 | 16-Sep-2022
Le Maroc et Carlyle ont trouvé un accord qui réduirait les prétentions du fonds d’investissement américain à 14 millions de dollars contre plus de 400 millions initialement réclamés.