Dear Members of the World Investment
Network,
I am pleased to share with you our information
note on investor-State dispute settlement (ISDS)
cases involving the United States (US) or European Union (EU) Member States,
or their investors.
Investors' use of and countries' exposure
to ISDS cases vary. Understanding patterns of ISDS activity can help achieve
best possible solutions when designing dispute settlement mechanisms in
negotiations of international investment agreements (IIAs). Below are the
highlights:
The IIA networks of the US and of EU
Member States are large, but patchy.
· The
US currently has IIA relationships with 57 countries, which cover 21 per
cent of US outward FDI stock. The majority of EU Member States as well
as large emerging economies are currently not covered by US IIAs.
· EU
Member States have 1,228 IIA relationships with non-EU countries. The number
of treaties varies significantly by Member State, with Germany having 114
extra-EU BITs in force while Ireland does not have a single one.
· BITs
are in place between the US and nine "new" EU Member States;
they cover one per cent of US FDI stock in the EU and 0.1 per cent of the
EU FDI stock in the US.
US and EU investors are active users
of the ISDS mechanism, together accounting for 75 per cent of the global
number of known ISDS claims.
· Investors
from the "old" EU Member States, including the Netherlands, the
UK, Germany, France, Italy and Spain, are claimants in three quarters of
all EU claims.
On the defensive side, exposure to ISDS
cases varies.
· 16
cases have been initiated against the US to date, among those not a single
one originated from an investor from a EU Member State.
· EU
Member States have been respondents in 117 known cases, of which almost
a quarter faced by one country (the Czech Republic). Several EU countries
(e.g. Austria, Denmark or Finland) have faced no known ISDS claim to date.
· 88
of the 117 cases are intra-EU disputes.
To date, there are few (nine) known
claims in the EU-US relationship.
· All
of them were filed by US investors, constituting about seven per cent of
all ISDS claims filed by US investors.
· The
nine cases also represent close to eight per cent of all cases faced by
EU Member States (or close to one third, if intra-EU disputes are disregarded).
· All
nine cases were brought against “new” EU Member States.
Known disputes relate to all sectors
of the economy.
· They
include oil and gas, mining, forestry, agriculture, construction and management
of infrastructure, telecommunications, generation and distribution of energy,
financial services, tourism, the provision of water, waste management,
and media.
A broad range of governmental measures
been challenged in these disputes.
· They
include the revocation of licences, direct and indirect expropriations,
alleged breaches or unilateral terminations of investment contracts, economic
measures taken to combat financial crisis, environmental and public health
measures, taxation measures, privatisation-related measures, sectoral economic
reforms and conduct of national courts.
The patterns of won and lost cases differ
among countries.
· Of
the nine concluded cases where the US was the respondent, the Government
has not lost a single case.
· EU
Member States won half of the concluded cases brought against them and
settled another quarter.
· On
the offensive side, investors from the US and EU Member States won about
a third of the concluded cases and settled another third.
The awards rendered in US and EU ISDS
cases vary highly.
· The
lowest known amount awarded by an arbitral tribunal was 0.46 million USD
and the highest 1.8 billion USD.
As the underlying IIA regime is undergoing
a period of reflection, review and reform, UNCTAD's forthcoming 2014 World
Investment Report - to be launched next week - will identify four broad
paths that are emerging regarding actions for reforming the international
investment regime. The IIA Conference at UNCTAD's World Investment Forum
(WIF), scheduled for 13-16 October in Geneva, could provide a platform
for discussing them.
I hope that you find our information
note useful; please feel free to share it with your colleagues and networks.
With kind regards,
James
James Zhan
Director, Investment and
Enterprise
UNCTAD
Palais des Nations, Geneva
Tel:+41229175797
www.unctad.org/diae
www.unctad.org/wir
(World Investment Reports)