Monday, May 3, 2010

Investor-state lawsuits related to mining and hydrocarbons on the rise in Latin America

The Institute for Policy Studies, a lefty think tank based in Washington, DC, has a new report on international arbitration related to mining and hydrocarbon investments. Mining for Profits in International Tribunals, authored by Rebecca Dreyfus, Sarah Anderson and Manuel Perez Rocha, details how Latin America has been hit the hardest by the rise of investor-state lawsuits.

As the Count told us back in march, international corporations have been increasingly using provisions contained in Bilateral Investments Treaties (BITs) and Free Trade Agreements (FTAs) that allows them to sue governments for policies that might impact their bottom line. In other words, corporations can seek compensation for policies that, say, seek to mitigate the environmental and social consequences of resource extraction. These investor-state provisions allow corporations to bypass domestic courts and sue governments in the secretive and notoriously scummy International Court for Settlement of Investment Disputes (ICSID), housed at (where else?) the World Bank.

Never mind the irony of housing a supposedly unbiased court of law in an institution known for prioritizing corporate interests.

One recent case at ICSID pits tobacco giant Phillip Morris International against the government of Uruguay for strengthening health warnings on cigarette packages. A few months ago Uruguay introduced a new law raising the portion of cigarette packs that had to feature health warnings. Phillip Morris considered this detrimental to its bottom line and took advantage of investor-state provisions in the BIT between Uruguay and Switzerland (where Phillip Morris International is based) to demand compensation for lost profits.

But suing for public health measures is only one example of how investor-state mechanisms are being used to fight public interest policies. According to the report, the last decade has seen an explosion in investor-state lawsuits related to natural resource extraction:
"At the most frequently used tribunal, the International Center for Settlement of Investment Disputes (ICSID), there are 128 pending cases. Thirty-two of these cases are related to oil, mining, or gas. By contrast, ten years ago, there were only three pending ICSID cases related to oil, mining, or gas. There were only 7 such cases filed during the entire decades of the 1980s and 1990s."
What's more, Latin American governments have been disproportionately targeted. The pie chart below shows all mining, oil or gas cases currently pending in ICSID by region. As can be seen, cases against Latin American governments overwhelmingly outweigh every other region of the world.

As the report notes:
"Latin American governments make up about 9 percent of the 155 ICSID member governments. And yet they are the targets of 70 (55 percent) of all ICSID cases and 21 (nearly two-thirds) of the 32 extractive industries cases."
But don't listen to me. Go read the report yourself and find out about loads of more interesting stuff on the subject, including the history of investor treatment in Latin America and a few good case studies worth checking out too.

1 comment:

  1. Thanks for letting us know about the report, interesting to see the long view. One thing -- it's a bit odd to say that Latin America governments are being "targeted" more than others. Seems to me that the increase in arbitrations is because governments in Latin America are becoming more assertive, particularly through debt default (Argentina) and nationalizations (especially Venezuela).