Categories: Finance

UN Report on International Investor Disputes

Foreign investors are increasingly resorting to investor-State arbitration to settle investment disputes, with a record number of cases filed last year, according to a new report released on April 10th by the United Nations Conference on Trade and Development (UNCTAD).

The report, “Recent Developments in Investor–State Dispute Settlement (ISDS)”, showed that 62 new cases were filed in 2012, of which 68 per cent of respondents were from developing or transition economies.

“Recent developments have amplified a number of cross-cutting challenges that are facing the ISDS mechanism, which gives credence to calls for reform of the investment arbitration system,” said James Zhan, Director of UNCTAD’s Division on Investment and Enterprise, which published the report.

Foreign investors challenged a broad range of government measures, UNCTAD reported, including revocations of licences, breaches of investment contracts, irregularities in public tenders, changes to domestic regulatory frameworks, withdrawal of previously granted subsidies, direct expropriations of investments and imposition of taxes.

Nine decisions in 2012 awarded damages, including the World Bank’s International Centre for the Settlement of Investment Disputes (ICSID), which ordered Ecuador to pay $1.77 billion to Occidental Petroleum Corp as compensation for taking over its assets in 2006. The monetary award was the highest in the history of Investor-State Dispute Settlement (ISDS).

In addition, for the first time in treaty-based ISDS proceedings, an arbitral tribunal affirmed its jurisdiction over a counterclaim lodged by a respondent State against the investor.

“By the end of 2012, the total number of known cases reached 518, and the total number of countries that have responded to one or more ISDS claims increased to 95, according to UNCTAD.”

The overall number of concluded cases reached 244, out of which approximately 42 per cent were decided in favour of the State and 31 per cent in favour of the investor. Approximately 27 per cent of the cases were settled.

“The ISDS mechanism is already a source of considered reflection in numerous bilateral and regional IIA negotiations. However, a multilateral dialogue on ISDS could prove more effective in bringing about a harmonized approach to reform,” Mr. Zhan said.

CFI

Recent Posts

Otaviano Canuto: The US Elections Will Have Global Economic Impact

On Tuesday, US voters will decide who will control the White House, the Senate, and…

19 hours ago

Latin America’s Wave of Innovation: Fintech Revolution and Social Impact

The region famed for its diverse cultures and rich history now has new ideas for…

3 days ago

Diversifying Economies via Tech Hubs: Middle East on the Ascent

The region, long linked with abundant energy resources, is undergoing a tremendous shift… Recognising the…

4 days ago

Technology Giants and the Emerging Disruptors: Asia Pacific’s Powerhouse

The region is now regarded as the global epicentre of innovation. The Asia Pacific region,…

5 days ago

Pioneering Sustainability and Tech Integration in Europe

Europe’s got the pedal to the metal, and we can expect to see ground-breaking inventions…

1 week ago

EY: Argentina Publishes Decree Implementing Incentive Regime for Large Investments (RIGI)

The Argentine government sets detailed guidelines for the long-awaited RIGI, outlining tax and customs benefits…

1 week ago