Dossier

Rights for People, Rules for Corporations – Stop ISDS!

Indigenous communities in Paraguay saw their attempts to regain their ancestral lands thwarted by German investors. In Indonesia, US-based mining companies succeeded to roll back new laws that were meant to boost the country’s economic development and protect its forests. This is the level of impact that investment treaties can have on social, environmental and economic development and rights. Why? Because of the ‘Investor-to-State Dispute Settlement’ clauses that are included in many such treaties.

Hampering social and environmental laws

Currently, more than 3,000 bilateral investment treaties (BITs) and other international investment agreements (IIAs) are regulating international investment flows. These agreements and treaties were intended to promote foreign investment and to boost sustainable development in low and middle income countries (LMICs). However, very little has come of this promise. On the contrary, investment treaties continue to cause serious damage to those countries and their people.

Particularly problematic is the ‘Investor-to-State Dispute Settlement (ISDS) mechanism. This give foreign investors who believe that their operations – and ultimately their profits – are affected by host state policies, the possibility to file claims at an international court of arbitration, bypassing the country’s domestic laws. Losing a case can easily cost a state billions of dollars. It is no surprise therefore that many governments of developing countries are cautious not to harm the interests of foreign investors. As a result, they are often reluctant to impose regulations that protect local communities and the environment. They are simply too afraid that such new regulations will lead to claims filed against them.

No VIP rights for multinationals!

For several years now, Both ENDS has been drawing attention to the uneven balance of rights and responsibilities between foreign investors and host countries – and the repercussions for poverty reduction and sustainable development. We do this together with partners in the Netherlands and worldwide. The good news is that our message is being heard: organisations and civilians across the world are increasingly speaking out against ISDS. The time has now come to radically change the international system of investment treaties. That is why this week, a coalition of Dutch organisations is drawing extra attention to European wide campaign called ‘Rights for People, Rules for Corporations – Stop ISDS!’. We call for a new international policy framework and rules for investment in which human and environmental rights take precedence over profit.

To illustrate the far-reaching impact that ISDS can have on people’s rights to land, on agrarian and industrial reform policies, and on the protection of the natural environment, we highlight the cases of Paraguay and Indonesia.*

*The case of Paraguay was originally discussed in Right to Food Quarterly Vol.2 No.1 (2007). Both cases were also presented in the 2015 publication ‘To change a BIT is not Enough’ by Both ENDS.