GLobaL Isds Tracker
This page allows you to get a deeper understanding of how ISDS works: its neocolonial origins, the major profiteers, and where the resistance is coming from.
ISDS cases are heard by a panel composed of three arbitrators chosen by both the investor and the state. They are mostly lawyers from Europe or North America who are paid on a case-by-case basis - not independent judges. The panel of arbitrators decides if a state has breached the Treaty and if it has to pay compensation to the investor - usually a large corporation, wealthy businessman or a financial investor. If they can't reach a consensus on the case they decide by majority. This means the arbitrator nominated by the state can easily be overruled.
Social and environmental considerations, for example if a government action was aimed at protecting the climate or local communities, are usually not taken into account. All that matters is if a state has broken the vague and far-reaching terms of an investment deal or free trade agreement.
How ISDS works
Investment treaties enabling corporations to use ISDS were introduced during the decolonization period after WWII. Countries in the Global North sought to safeguard the assets of their companies in newly independent nations. ISDS cases began emerging in the late 1990s and proliferated in the 2000s as law firms and investors recognized their potential for substantial profits.
As of now, the number of known cases has reached a staggering 1362. However, the actual number is likely higher, as cases can be kept entirely secret.
In the graph below you can see the explosion of ISDS cases since the early 1990s.
The neocolonial origins of ISDS
An increasing number of countries worldwide have been subjected to ISDS claims. Yet, when examining the data, certain patterns emerge:
- The countries most frequently sued are middle-income countries experiencing significant foreign investment, with the state actively shaping their development.
- Countries are often sued at their most vulnerable, particularly during moments of severe economic crisis, such as Argentina following the economic collapse of 2001 or Spain in the aftermath of the global financial crisis.
Investors initiating ISDS cases predominantly originate from the Global North, particularly Europe.
Some European countries that specialise in attracting mailbox companies, such as the Netherlands, Luxembourg, or Cyprus, have witnessed remarkably high numbers of "their" investors initiating ISDS cases against other nations.
Interestingly, not a single investor from a low - income country has ever initiated a treaty based ISDS case. Reflecting its origins as a "safeguard against decolonization," ISDS remains predominantly a tool utilized by corporations from the Global North against countries in the Global South.
Arbitrators, investment lawyers, and the law firms specializing in ISDS are among the main profiteers of the system. They make enormous amounts of money from the increasing number of cases—whether representing investors or states. And they seem unburdened by concerns around the climate.
While the rest of the world sees climate change as the major threat to humanity, ISDS lawyers and arbitrators see it as a major financial opportunity. Surveys among lawyers show that the implementation of the Paris Agreement is expected to become one of the main drivers of future ISDS cases in the energy sector, with the oil and gas sector being seen as the most promising for generating new cases.
Law firms are already advising fossil fuel companies to restructure their investments to maximize their ability to use ISDS. Unless we get serious about ending ISDS, the system will continue to imperil badly needed climate action and transfer public resources into the pockets of lawyers and fossil fuel shareholders.
Law firms - The business of profiteering
"ISDS is likely to be an increasingly important avenue for the resolution of climate change disputes. Companies in industries most affected by States' climate change obligations (e.g., fossil fuels, mining, etc.) should audit their corporate structure and change it, if needed, to ensure they are protected by an investment treaty."
-Law firm Jones Day