Labour

Under investor-state dispute settlement (ISDS) provisions found in trade and investment agreements, many laws for the protection of workers’ rights can be threatened, if a foreign investor argues they have a discriminatory effect on their interests.

Corporations could deem unfair any change of policy that improves workers’ rights and conditions, if they see it as a violation of their “legitimate expectations”, - their expected profits. Foreign companies consider they have a right to a stable regulatory context, and governments should not alter laws or regulations, even if public interest objectives such as fundamental labour rights are at stake.

If a state did enact new social and labour rights such as collective agreements, equal pay or decent minimum wage, companies could use the ISDS mechanism to challenge them.

Likewise, any reform favouring local companies or workers could potentially be the target of ISDS disputes.

The most well-known cases include:

• Piero Foresti & others vs. South Africa: in 2007, Italian and Luxembourg investors lodged an investor-state arbitral claim against South Africa for US$350 million because a new mining law contained anti-discrimination rules from the country’s Black Economic Empowerment Act, which aims to redress some of the injustices of the apartheid regime. The law required mining companies to transfer a portion of their shares into the hands of black investors. The dispute was discontinued in 2010, after the investors received new licenses requiring a much lower divestment of shares (Italy-South Africa and Belgium-Luxembourg-South Africa BITs invoked).

• Véolia (France) vs. Egypt: in 2012, the multinational utility corporation launched a dispute against Egypt, demanding US$110 million following changes to Egypt’s labour laws leading to an increase in minimum wage. Case pending (Egypt-France BIT invoked).

• Abitibi-Bowater (US) vs. Canada: the US paper corporation challenged the decision of Newfoundland and Labrador, a Canadian province, to confiscate various timber, water rights and equipment held by Abitibi-Bowater after the corporation closed a paper mill in Newfoundland, putting 800 employees out of work. Case was settled in 2010 for US$122 to the investor (NAFTA invoked).

(November 2015)

The American Prospect | 5-Apr-2019
USMCA bears many resemblances to NAFTA, which has been cited as a driver of low-wage corporate outsourcing.
Jeune Afrique | 16-Jan-2019
En mai, le Cirdi a débouté Veolia mais le groupe français assure vouloir poursuivre son action au Caire afin que sa filiale puisse être dûment indemnisée.
Washington Post | 3-Jan-2019
Investment treaties with ISDS provisions make it hard to tax foreign firms and worsen human rights and labor practices.
Radio Canada | 17-Dec-2018
Le 16 décembre 2008, la province de Terre-Neuve-et-Labrador exproprie la papetière AbitibiBowater qui vient de fermer son usine dans sa zone de compétence.
IIED | 8-Nov-2018
Many SEZs have been associated with compressions of land, labour and human rights. Investment treaties protect investments against adverse regulatory change, including in SEZs. To date, investors have brought at least 20 arbitrations to challenge diverse aspects of SEZ regimes.
Chile Mejor sin TLC | 26-Oct-2018
Luciana Ghiotto expuso sobre los mitos de los Tratados de Libre Comercio modernos, destacando en su presentación los peligros de los capítulos sobre asuntos no arancelarios, es decir, los llamados temas regulatorios.
Financial Review | 12-Oct-2018
Crossbenchers are ramping up pressure on Labor at the 11th hour to reject the Trans-Pacific Partnership free trade agreement, drafting amendments that would force opposition senators to vote against the party’s policy.
Manila Times | 3-Aug-2018
Labor unions and workers’ rights advocates fear that the secretive RCEP agreement will further erode workers’ rights in the Asian region, while strengthening the hands of investors who may be able to sue governments for changing laws such as setting minimum wages, that would erode their profitability.
AFTINET | 4-Jun-2018
Veolia has finally lost its claim against Egypt over a waste management contract dispute in which they claimed compensation for an increase in the minimum wage under a new labour law.
EconoMex | 26-Feb-2018
El pasado 24 de enero, 11 países de la Cuenca del Pacífico alcanzaron un acuerdo para firmar un resucitado Tratado Transpacífico (TPP), pero ahora con el nombre de Acuerdo Global y Progresivo para la Asociación Transpacífico (CPTPP por sus siglas en inglés).

0 | 10 | 20 | 30