GLobaL Isds Tracker
As some governments are belatedly starting to get more serious about climate action and stemming the accelerating biodiversity loss, they are encountering resistance from the fossil fuel and mining industry. The resistance has come in many forms, but there is one instrument that is increasingly being used: secretive corporate tribunals. They enable big polluters to attack climate measures and any other policy that could reduce their profits.
This website tells a story through data, of how a little known legal mechanism is enriching fossil fuel corporations with public money, delaying climate action and threatening our future. This mechanism is called Investor-State Dispute Settlement (ISDS)
How Corporate Courts Threaten Our Future
ISDS in short:
ISDS is a mechanism commonly included in investment and free trade agreements. It enables foreign investors to sue countries for multi-million dollars of taxpayers’ money in secretive corporate tribunals when they believe their profits have been harmed by a public measure. In many cases, they attack legislation that aims to protect the climate, the environment, or local communities.
As some governments are belatedly starting to get more serious about climate action and stemming the accelerating biodiversity loss, they are encountering resistance from the fossil fuel and mining industries. The resistance has come in many forms, but there is one instrument that is increasingly being used: secretive corporate tribunals. They enable big polluters to attack climate measures and any other policy that could reduce their profits.
This website tells a story of how a little known legal mechanism is enriching fossil fuel corporations with public money, delaying climate action and threatening our future. This mechanism is called Investor-State Dispute Settlement (ISDS).
How Corporate Courts Threaten Our Future
How much public money is at stake?
Our data reveals a concerning trend: there's been a sharp increase in billion-dollar cases. A total of 129 claims have been filed seeking $1 billion or more. Overall, investors have attempted to claim $856.74 billion from states through ISDS, of which a staggering $113.87 billion has been awarded to investors.
This exceeds the total climate finance provided and mobilized by developed countries for developing countries in 2021.
What public policies are being challenged?
ISDS has already been used to challenge governments on important environmental regulations, including water pollution controls, fracking bans and regulations on mining or oil and gas exploration. In particular, corporations active in the fossil fuel, mining and the electricity sectors have sued governments using ISDS.
This is a big obstacle to a just transition. The number of ISDS cases challenging public measures crucial for achieving a just energy transition is on the rise.
Click on the bubbles for each sector below and see the claimed and awarded amounts involved.
Fossil fuel corporations cashing in
The stakes in fossil fuel ISDS cases are incredibly high. The total compensation claims across all fossil fuel cases is $327 billion USD. The total claimed in non-fossil fuel cases is $485 billion USD - despite there being five times more of these cases.
It's the fossil fuel cases that can devastate public budgets or even bankrupt a country - and thus where governments are most likely to give in to the investor's demands. With fossil fuel assets worth trillions protected by ISDS, the threat of arbitration poses a serious obstacle to the transition to a fossil-free world.
The graph below illustrates a consistent increase in fossil fuel-related cases over the past three decades, amounting to 261 in total.
Fossil fuel companies, such as Shell, were among the first proponents of the ISDS system. For decades, they have opposed governments attempting to regulate them or seeking a larger share of fossil fuel revenues. With the acceleration of the energy transition, an expanding array of fossil fuel companies are resorting to ISDS to contest climate laws or various environmental regulations.
Fueling profits
and the climate crisis
The chart below illustrates a significant trend: among the top 20 most expensive awarded cases, the majority are related to fossil fuels (dark purple).
The Canadian company Transcanada is suing the United States for USD 15 billion in compensation for the refusal to grant a permit for a pipeline carrying highly polluting tar sands oil to the US coast. The US government withdrew a permit for the pipeline after massive protests by indigenous groups, farmers and climate activists. An impact assessment showed that the construction of the pipeline would accelerate climate change. Through the ISDS case, the company is trying to get all the hypothetical profits it could have made from the pipeline from American taxpayers.
Transcanada vs USA: Disregarding communities and climate impact.
Case studY
British oil company Rockhopper made a killing from an ISDS case. In 2014 it acquired a company that owned an oil exploration license on the Italian coast. Oil drilling has become hugely controversial in Italy, because of its impact on the environment, the local fishing industry and tourism. It has also been linked to causing earthquakes. After massive protests, the Italian parliament banned oil drilling in coastal waters. Rockhopper started an ISDS case claiming damages as a result of this legislation and was successful. After acquiring the concession for allegedly USD 30 million, the company was awarded at least USD 250 million. Now, it wants to invest the money in more oil drilling, further fueling the climate crisis.
Rockhopper vs Italy: How an oil company could cash millions with wells it never built
Case studY
The mining sector exemplifies the neocolonial origins and continued practice of ISDS. The vast majority of ISDS cases in the mining sector are directed against countries in the Global South, in particular in Latin America. The mining companies are usually headquartered in (and the profits flow to) the Global North. Mining companies use ISDS to bulldoze their way through local opposition and environmental regulation or to avoid paying taxes.
Because mining activities often take place in ecologically sensitive areas and near indigenous communities, they have a particularly devastating impact. When a local community is resisting a mining project, mining companies often resort to ISDS to try to compel the state to push aside local concerns or win a large payout. This can include the demand to repress local and indigenous movements that oppose mining projects.
Clearly visible on the map are the countries in Latin America marked in dark shading, which host the majority of mining cases.
Mining for profits
The increase in demand of minerals and materials for the energy transition will also mean a rush into opening new mining projects. This also means that there will be a higher risk of facing multi-million dollar lawsuits in cases related to so-called transition minerals. This will once again change the balance of power against local communities in favour of mining companies and their shareholders. Ironically, this process could create a backlash against a globally just energy transition.
Click on the graph to explore detailed information about the mineral involved in each case.
The Canadian-Chilean joint venture Tethyan Copper managed to secure one of the largest awards in ISDS history. As the result of two arbitrations, Pakistan was ordered to pay more than USD 11 billion for its refusal to grant a mining license to the company. Local communities had vociferously opposed the project. This case is particularly shocking for several reasons: the arbitration panel reached that conclusion despite Pakistan's surpreme court ruling that the intial agreement that Barrick Gold had made with a regional government was illegal, because it exceeded that government's authority. The court awarded Tethyan many billions in compensation, despite the company having supposedly invested only USD 150 million in exploration. In fact, the award was so large that it would have bankrupted the Pakistani state. In the end, the companies extortionate approach was successful: To avoid paying the multi-billion dollar compensation, Pakistan handed a mining license to Tethyan.
Tethyan Copper vs Pakistan: A costly outcome for communities opposing a mine
Case Study
Glencore, the Swiss mining giant, is suing Colombia after the Colombian Constitutional Court ruled in favor of Indigenous communities in La Guajira, protecting the Bruno River from plans to expand Cerrejón, the largest open-pit coal mine in Latin America. Glencore argued the decision was discriminatory and arbitrary and has filled a lawsuit for an undisclosed amount to pressure the Colombian government and challenge the highest Court's decision. While the case is still pending, Glencore has already altered the natural course of the Bruno River, causing severe droughts in the community.
Glencore vs Colombia. David vs Goliath: Indigenous communities stand up against a mining giant
Case Study
There are at least 117 ISDS cases where either a social movement or a protest group were involved. Social movements and affected communities are often the first ones to challenge destructive projects. They rally the public, put pressure on decision makers and use courts to ensure that there is a proper debate if an investment project should go ahead and what conditions it should follow. This is democracy in action.
However, ISDS is often used by corporations to fight back against the successes of social movements and local communities. ISDS cases can be used to threaten governments to not give in to popular demands. They can also be used to extract huge amounts of "compensation" when a social movement is successful. In effect ISDS is an insurance of the rich and powerful against democracy and social progress.
ISDS vs social movements
Even the use of violence against local communities can pay off for investors. After local communities resisted a mining project, the company Copper Mesa hired thugs and paramilitaries to intimidate and shoot at villagers and community leaders. When the company failed to complete an environmental impact assessment for the project, the Ecuadorian government terminated Copper Mesa's concession agreement, which was upheld by Ecuador's supreme court. Even thought the ISDS tribunal acknowledged Copper Mesa had engaged in “reckless escalation of violence" against local communities, the company was still awarded USD 24 million in compensation.
Copper Mesa vs Ecuador. Rewarding mining coporations for human rights violations
Case Study
The case Foresti vs. South Africa shows how investment protection treaties can obstruct governments from expanding opportunities for historically disadvantaged peoples and promoting international human rights. In 2007, European investors, who controlled some 80% of South Africa’s stone exports, sued South Africa over its Black Economic Empowerment Act. The legislation was enacted to address the socio-economic inequalities created during the apartheid regime. It required mining companies to sell 26% of their investment to historically marginalised and disadvantaged South Africans. The dispute was discontinued in 2010, but only after South Africa agreed that the investors could receive new licenses, requiring a much lower divestment of shares. Companies were now allowed to transfer only 5% of their ownership to black South Africans – a move that went against the spirit of post-apartheid reparations in South Africa.
The case Foresti vs South Africa: The Impact on Equality
Case Study
The fight to end ISDS
The threat of ISDS has not gone unnoticed. Social movements around the world are calling for action. Since 2017, more investment treaties - which enable companies to use ISDS - have been terminated than new ones have been concluded. Led by countries in the Global South, there has been push back against ISDS. Now countries in the Global North are starting to catch up and there are many active campaigns against ISDS, such as the call for countries to leave the harmful 'Energy Charter Treaty'.
But the fight is not over - there are thought to be at least 3000 active treaties which contain ISDS and new cases are being brought all the time. As we face one of the biggest challenges of our generation - the battle against climate change - governments urgently need to hear from citizens about the risks of ISDS.
Keep exploring the risks associated with ISDS:
- Learn more about ISDS
- Use the Global ISDS Tracker to find cases that affect your country
- Share this website with your friends
Photo credits:
Transcanada v. USA. Disregarding communities and climate impact: Stephen Melkisethian/Flickr/CC BY-NC-ND 2.0 DEED
Rockhopper v Italy. How an oil company could cash millions with wells it never built: Enrico Pighetti/Flickr/CC BY 2.0 DEED
Tethyan Copper v Pakistan: A costly outcome for communities opposing a mine: Michael Foley/Flickr/CC BY-NC-ND 2.0 DEED
Glencore v Colombia. David vs Goliath: Indigenous communities stand up against a mining giant: Diego Delso/CC-BY-SA 4.0
Copper Mesa v Ecuador. Rewarding mining coporations for human rights violations: Carlos Zorrilla
The case Foresti vs. South Africa: NJR ZA / CC BY-SA 3.0