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)

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.
Economía Hoy | 7-May-2018
Telefónica y el Gobierno de México han puesto fin al procedimiento de arbitraje que les enfrentaba desde hace más de seis años y por el que la compañía de telecomunicaciones reclamaba el pago de compensaciones estimadas en el sector por 1,017 millones de dólares.
The Straits Times | 7-May-2018
PACC Offshore Services Holdings has filed a notice of arbitration against Mexico under the bilateral investment treaty between the United Mexican States and Singapore governments.
Telecompaper | 7-May-2018
Telefonica Mexico has withdrawn its arbitration claim against the Mexican government in which it had requested compensation amounting to around EUR 850 million after reaching an agreement with the country.
Observatoire des Multinationales | 18-Apr-2018
Le groupe français a décidé une nouvelle fois, après l’avoir fait contre l’Argentine, l’Égypte ou encore la Lituanie, de saisir un tribunal arbitral international.
OMAL | 21-Mar-2018
La UE quiere abrir nuevos mercados con un tratado comercial cada seis meses”: así de avaricioso se expresó recientemente Jyrki Katainen, vicepresidente de la Comisión Europea, ante el Consejo Atlántico en Washington, un lobby corporativo influyente en las relaciones transatlánticas.
Kluwer Arbitration Blog | 13-Mar-2018
CJEU’s decision in Slovakia v Achmea finally bringing justice to the most recent members of the EU.
Ahval | 13-Mar-2018
The claim alleges that Cascade’s investment’s in a media services company were unlawfully expropriated by the Turkish state in the crackdown that followed the coup attempt of July 2016.
IELP Blog | 8-Mar-2018
In this short analysis, I will point out the broader implications for the EU’s investment law and policy.
The Slovak Spectator | 7-Mar-2018
Slovakia will no longer have to compensate Achmea B.V., the shareholder of Union ZP health insurer, for €22 million in damage.