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 2019, about 2/3 of all ISDS disputes concerned the services sector at large, including public services but also financial services, telecommunications, transport, construction, etc.

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).

Photo: Aqua Mechanical / CC BY 2.0

(March 2020)

CNN | 24-Feb-2021
An aribtral tribunal ordered Libya to pay the Al Kharafi Group $930 million in damages. The Al Kharafi Group sued the Libyan state in France too, so when Gadhafi’s A340 landed in France, they sought to have it impounded.
Reuters | 24-Feb-2021
Kuwaiti logistics company Agility’s claim to recover more than $380 million it said it lost in Iraq has been rejected by an international tribunal.
Radio Free Europe | 12-Feb-2021
Radio Free Europe/Radio Liberty says Russia is violating a bilateral investment treaty by targeting the organization’s news operations within Russia under its controversial “foreign agent” law.
Interfax | 10-Feb-2021
US Optima Ventures intend to file a lawsuit against the United States seeking compensation of $23 million in response to two civil forfeiture actions targeting their assets in Louisville.
AFTINET | 9-Feb-2021
Google’s Singapore subsidiary could use a controversial ISDS provision in the Singapore-Australia Free Trade Agreement to demand millions in compensation over proposed Australian regulation for payment of news content.
Australian Financial Review | 4-Feb-2021
Google and Facebook could sue the government for billions of dollars over a proposed law to force the digital giants to pay publishers for displaying news content, by seizing on investment clauses in the Australia-Singapore trade agreement.
Le Monde du Droit | 30-Jan-2021
Un tribunal arbitral présidé par Albert Jan van den Berg a octroyé US$218.205,00 en dommages-intérêts à M. El Jaouni alors que le montant des dommages-intérêts initialement sollicités s’élevait à US$1.3 milliard.
Memesita | 22-Jan-2021
Nuevo Pudahuel had asked the Ministry of Public Works to extend the term of the concession contract as a result of the pandemic, but the MOP was closed to changes in the contract.
Mediapart | 21-Jan-2021
Vinci et ADP menacent le Chili d’une procédure d’arbitrage, suite à la pandémie et à la réduction concomitante du trafic aérien. Ils utilisent une justice privée qui coûtera des millions aux contribuables chiliens, indépendamment du jugement.
Aero Naves | 21-Jan-2021
Tras la negativa del Ministerio de Obras Públicas a indemnizar a ADP y Vinci por las pérdidas causadas por la pandemia del COVID-19, las dos empresas francesas iniciaron una demanda contra Chile ante el CIADI.

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