ISDS Courts Award Billions in Public Money to Private Interests

A facility for building the Keystone Pipeline in Nebraska from 2015. Zuma

More than $100 billion of public funds have been granted to private investors through investor-state dispute settlement (ISDS) courts, according to a new analysis. The ISDS system, which allows corporations to sue governments over decisions impacting their profits, operates largely behind closed doors with some judgments kept confidential. The newly launched global ISDS tracker reveals that $114 billion has been paid out to investors so far, equivalent to the climate aid provided by wealthy nations in 2022.

Fossil fuel companies have been the primary beneficiaries of these corporate panels, receiving $80.2 billion since 1998. The tracker predicts that an additional $48 billion will be disbursed to settle ongoing cases. Critics argue that ISDS is being used as a tool by fossil fuel companies to challenge climate laws and hinder government efforts to address climate change.

The recent withdrawal of EU countries from the energy charter treaty, a major source of investor-state claims, has raised concerns about the future of the ISDS system. Despite this, ISDS remains a prominent feature in modern international investment agreements, allowing foreign investors to sue states for damages when their profits are affected by public policies like environmental regulations.

The tracker highlights 1,362 ISDS cases filed to date, with investors seeking a total of $857 billion from national governments. Noteworthy cases include TC Energy’s $15 billion lawsuit against the US government over the canceled Keystone XL pipeline, Ruby River Capital’s $20 billion claim against Quebec for canceling a natural gas plant, Zeph Investment’s $200 billion case against Australia for a disrupted mining project, and Avima Iron Ore’s $27 billion claim against the Republic of the Congo for revoked mining licenses.

Critics argue that the ISDS system disproportionately benefits corporations from Europe and North America at the expense of countries in the global south. Calls for reform and the discontinuation of ISDS in trade agreements have been growing louder, with organizations urging governments to prioritize fair and sustainable practices over investor interests. The debate over the future of ISDS continues as its implications for global governance and environmental protection remain contentious.