![]() 2 It was estimated by the United Nations that just a third of that amount (USD 10.667 billion) would be enough to overcome the extreme poverty of 16 Latin American countries. ![]() The states were ordered to disburse USD 33.638 billion. Nearly two thirds of the 206 claims resolved favoured investors, either awarded by an arbitral tribunal or by agreement between the parties. Victims of abuses by TNCs have no similar mechanism to bring their claims before justice.īy the end of 2001, 327 ISDS claims were known to have been made against countries in the LAC region. Higher cost of investment–state arbitration costs over rulings by national courts. Lack of transparency in arbitral procedures.Ībsence of impartiality and independence by arbitrators. ISDS has been subject to widespread criticism from scholars, professionals, and civil society for, among other reasons: This is so because these claims are based on clauses established in BITs, investment protection treaties centred on the investor’s legal rights, rather than on human, labour, or environmental rights.Ĭases brought before arbitral tribunals are usually decided by three arbitrators, often lawyers working for the private sector and heavily biased in favour of investors. ISDS is a one-way mechanism, as only investors are allowed to file a case with an international arbitral court, not the states. There is no obligation to exhaust national legal remedies. The Investor-State Dispute Settlement mechanism, known as ISDS, allows foreign investors, mostly large transnational corporations (TNCs) and investment funds, to bring claims against states before international arbitral tribunals when they find that laws, regulations, court rulings, and other measures taken by a given state violate the safeguards they have under a treaty. This has produced a parallel justice system, 1 whereby investors circumvent national courts and go directly to private tribunals that often favour claimants over the states being sued. These claims, however, are not adjudicated in national judicial systems, because BITs grant investors the power to bring claims before international tribunals through Investor-State Dispute Settlement (ISDS) mechanisms. Yet 30 years later, evidence shows that BITs have been anything but an instrument that contributes to attracting investment, much less of promoting development on the contrary, these treaties have had harmful effects on the countries in the region.Īt present, LAC is the world’s second region in terms of the number of claims brought against various countries before arbitral tribunals on the basis of BITs. LAC countries expected that, by signing these investment protection agreements (known as Bilateral Investment Treaties, or BITs), they would boost foreign direct investment. These include the right of investors to sue states in international courts when investors consider their profits to have been affected in some way by government actions. During the 1990s, the countries of Latin America and the Caribbean (LAC) signed hundreds of international treaties safeguarding foreign investment and granting foreign investors unprecedented rights.
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