#272 “Oligarchs and Coal Companies: How ‘Corporate Courts’ Undermine Progressive Policies” (English)

00:00:00: Welcome to this two hundred seventy second edition of Europe Calling.

00:00:06: I just explained, or to our German-speaking guests how access the interpretation but since we are speaking most English today you won't need it.

00:00:14: So my name is Maximilian Freis and I'm the managing director for Europe Calling And i will be hosting evenings event A special welcome to out guest Rob Davis and Leah Sullivan You already see here.

00:00:26: Thankyou very much for taking your time And you will get, of course a proper introduction later by my co-host tonight which is Fabian Flues from PowerShift.

00:00:35: with him and other great partners who many are here today.

00:00:38: We organized this webinar.

00:00:40: Thank You all for the great teamwork!

00:00:44: It's also not our first time that we speak about the role of Corporate Courts and ISDS in a Europe Calling Webinar.

00:00:51: Four years ago, exactly one hundred thirty-six webinars.

00:00:56: We discussed the Enfamous Energy Charter Treaty and right after our webinar four years ago actually The orderly exit of you from this treaty began with a vote in the European Parliament.

00:01:06: So that is four years.

00:01:08: so I'm very happy.

00:01:09: today we're coming together for an update on all the many brothers and sisters of the Energy Charter Treaty, that have a huge but mostly unnoticed influence especially in progressive climate-friendly politics.

00:01:26: We are we're just beginning or Fabian will say more about this Global Days Of Action on ISDS.

00:01:33: so there'll be lot talk about this and let Fabian get to it at some point.

00:01:38: But before we dive in, let me start with just a very few announcements.

00:01:43: First of all special thanks to our one thousand one thousand nine hundred seventeen patrons.

00:01:48: We have now that keep us hundred percent funded by the people.

00:01:52: no grants No advertising Just People Powered Women Us.

00:01:55: So do join this wonderful community post link In The Chat And as always with Europe Calling, you can ask your questions and vote the question of other people.

00:02:05: So you can decide which questions will be asked.

00:02:08: With over a thousand registrations That's the best way to make sure we will discuss what do think matters most.

00:02:16: so please Do that also?

00:02:17: The chat Will have the link for that As well.

00:02:21: right now And as always, your calling will be recorded and then posted online on YouTube.

00:02:46: to recap where we are and look forward how can make changes on ISDS and the corporate courts.

00:03:04: I'm Fabian Fluss, from Power Shift.

00:03:06: We're an organisation based in Germany but work with partners in Europe and across the world.

00:03:13: so we have been tracking these ISDS cases more than fifteen years now, first during the times of TTIP and CETA.

00:03:25: The trade agreements with the United States end with Canada and then more recently on the Energy Charter Treaty.

00:03:33: And there is also another co-host tonight it's an organization from the UK called Global Justice Now that is also campaigning on issues of corporate power Free Trade Agreements Big Tech the power of big tech and climate change, they're doing a lot amazing work on ISDS in United Kingdom.

00:03:57: As Max said this webinar is happening just before we start Global Days Of Action.

00:04:03: tomorrow.

00:04:04: at the end you will find some ways how to get involved with these global days of action.

00:04:12: Now I'd like to introduce our two speakers.

00:04:18: Leah is a campaigner for the Climate Action Network Europe and she leads their work on ISDS.

00:04:24: Leah previously coordinated the European Trade Justice Coalition, which is based in Ireland.

00:04:30: And then secondly we will hear from Dr Rob Davis who has been an activist at South Africa's anti-apartheid movement most of his life.

00:04:42: he was South Africa minister portrayed an industry between two thousand nine and two thousand nineteen which is the crucial period that we will be discussing today on South Africa's experience with ISDS.

00:04:55: And he is now a honorary professor at University of Cape Town, so I hand over to Nia and she'll put up this slide.

00:05:11: thanks Fabian it was really great.

00:05:15: I'm going to jump right in.

00:05:37: and to European sanctions policy, then just review what civil society demands are around ISDS at the moment.

00:05:59: stands for investor-state dispute settlement, it's a provision in trade and investment agreements that enables foreign investors to sue countries over policies that affect their profits or even their potential future profits.

00:06:12: So under ISDS, Investors seek compensation not for supposed breaches of their rights in the context of an investment in a foreign country.

00:06:23: so this means In the event that government policy changes, an investor can sue a government over the impact that policy change has on their profits.

00:06:33: It's included in more than two thousand six hundred free trade agreements and bilateral investment treaties between countries all over the world.

00:06:42: um it is highly controversial.

00:06:48: so its been called the most toxic acronym in Europe by former Trade Commissioner Cecilia Malmstrom and Litigation Terrorism, by Joseph Stiglitz.

00:07:01: And so a brief overview of why it's so controversial is that these privileges are exclusive to foreign investors.

00:07:09: they're not something that national investors can avail off.

00:07:16: They are clipped in secrecy.

00:07:20: There's no obligation for these cases to necessarily be made public.

00:07:23: That is why when we talk about ISTS cases, we talked about known cases as opposed to having definitive numbers of cases that we know off and they fundamentally undermine the sovereignty of governments to decide policies in the public interest.

00:07:43: They can result in astronomical awards into the billions of euro that affect the state's ability to fund other parts of a public budget.

00:07:59: And they're enforceable anywhere, so states have to comply with arbitral awards and if they resist... The award could be enforced by courts almost everywhere around the world by seizing those assets elsewhere.

00:08:12: Investors get a lot money through these cases and using their evaluation methods that are used, they're highly favorable to investors.

00:08:25: The project how much money an asset might have generated over a certain period of time say fifty years Using calculations quite favourable for the investor.

00:08:36: And there's also treaties in which these ISDAS Closes exist, also often have sunset clauses which means that even if a state decides to cancel its membership of the treaty or council.

00:08:50: There are clauses in there saying that the ISGS provisions can remain in place for a set number of years say five ten even twenty years after this treaty has been terminated.

00:09:05: It is also the basis for a lucrative business, For third-party funders who can effectively gamble on The possibility that A case might be successful.

00:09:17: And it's also there secondary markets popping up around the sale of the awards and they can then be Reaped by other actors.

00:09:31: So in terms Of the broad trends That we see In ISDS cases from around there being six known treaty cases globally in nineteen ninety-five.

00:09:41: Today we know of over one thousand four hundred uh, cases.

00:09:45: today you can sort of um ignore the two shades of blue that you see on this chart just to see the overall trend.

00:09:53: so even though the number of cases is going down slightly you'll see on the size of ISDS awards is growing.

00:10:06: So, the extent which governments are on the hook for these huge sums it's not necessarily decreasing and actually what leading to growth in the size at the awards our awards to fossil fuel investors.

00:10:18: so next slide you can see some big figures we have around ISDS Awards though investors have attempted claim one thousand one hundred and seventy seven billion from states and they've been successful in claiming.

00:10:32: at least a hundred twenty three billion has been awarded from investors to uh, From the public purse across the world And the vast majority of that um.

00:10:43: At least eighty-three billion have been awarded to investors in fossil fuel cases.

00:10:49: Um seven of the top ten largest awards have been Uh They're all over one hundred one billion dollars involved fossil fuels.

00:10:58: On the next slide A little overview are the situation in Europe.

00:11:02: So, Europe has one of the densest networks of treaties with ISDS and number countries have a very high number bilateral investment treaties And fifty-five percent all ISDS cases come from investors based in Europe.

00:11:21: It's seen by some countries as something strategic advantage.

00:11:26: The EU is sort of leading ISDS reform, which isn't necessarily a positive thing because a lot of these reform efforts are really fundamentally maintaining this imbalance of power against the public interest and really cosmetic changes to the system.

00:11:48: But as has been referenced already ISDS is quite a dynamic area, so the European Commission didn't want to see European countries suing each other.

00:12:01: Although I think we've probably all heard of some of the big cases against European countries.

00:12:06: but the broader picture is that global south countries face majority of all ISDS claims and there has been the termination of inter-EU bilateral investment treaties.

00:12:19: The effect of that necessarily is not always there, which is a different issue but yet there has been some termination of inter-EU ISDS.

00:12:30: Another positive thing as the EU and majority of EU countries in some other European countries decided to leave the Energy Charter Treaty Which was the most used treaty for ISDS And specifically protected investments into energy sector.

00:12:46: And there's also a new wave of cases around sanctions against Russia, which is challenging the positioning of some European countries.

00:12:57: The entrenchment of different European countries in ISDS is highly variable in terms of their exposure as home states and investors.

00:13:07: PowerShift, Count Europe and some others published a scorecard earlier this year that ranks European countries against a range of indicators measuring involvement in ISDS.

00:13:16: And here you can see some of the countries that top that list.

00:13:20: I want to talk about ISDS as a barrier to climate justice.

00:13:24: so along with the ECT, it's become increasingly relevant in the context of an emerging conversation about the need to phase out fossil fuels.

00:13:32: And I wanted to give an example of the kind of case that we see as exemplifying that barrier.

00:13:37: one such case is that of rock hopper against Italy which in this case a UK investor.

00:13:46: Rockhopper sued Italy over a ban on drilling near the coast.

00:13:51: so there was a proposed oil drilling site near Abruzzo, close to the coast.

00:13:58: There was a huge public outcry.

00:14:00: you can see an image of protest against that proposed development.

00:14:07: they succeeded in pushing national government to change the law to ensure those kind of oil developments had happened twelve nautical miles away from the coast and this is on rock-hopper investor took a claim against Italy for around €三 hundred and fifty million which was about nine times what they had invested.

00:14:34: They ultimately were awarded two hundred ten, sorry to have different currencies here, two hundred and ten million British pounds plus interest around seven times of what was originally invested that Italy had left the Energy Charter Treaty.

00:14:53: So these large sums are just one of the ways in which my STS acts as a prior to climate justice, another way and possibly less easy-to-measure way is that of regulatory chill where governments halt, weaken or delay policies over fear being sued.

00:15:09: so we don't even necessarily know what impact on regulatory chill is but do have some indications this happens.

00:15:19: I'm running out of time here, so i'm going to go on the next slide.

00:15:22: But another aspect of ISDS today and should mention that ISDS claims can be taken against any area policy not just climate environmental policies but public health measures in tax policy a recent phenomenon which has been used by ISDS claimed under sanctions policy.

00:15:45: Here we see sanctions policies introduced by the EU against Russian investors are being targeted by Russian investors that are claiming these violations of their rights under investment treaties and suing states over them.

00:16:04: prominent example of this is that of Mikael Friedman who sued Luxembourg for sixteen billion dollars for freezing his assets over the inclusion of Friedman on EU sanctions list.

00:16:18: He successfully campaigned, he kind of acknowledged Luxemburg's positive role in recent lifting So that some have suggested an indication of this chilling policy, the impact of ISDS.

00:16:41: Finally what are we asking states to do on ISDS?

00:16:46: We are asking states not to include ISDS in new treaties, and any of its forms.

00:16:51: To terminate a withdrawal from treaties that includes it including neutralising these sunset clauses that continue create the basis for cases.

00:17:01: we would love countries take plurilateral action groups come together to terminate their treaties with ISDS between each other.

00:17:10: Longer term, ultimately a multilateral termination treaty of all treaties that include ISDS would be the goal.

00:17:18: And yeah I'm going to finish up there because i am out of time.

00:17:22: There is another slide here which has some resources and links for action that Fabian will speak about later.

00:17:36: Thank you very much Leah.

00:17:38: we'll share those links in chat as well.

00:17:44: We'll pass on to Rob Davies now.

00:17:46: And, Rob before we start the presentation I just wanted to check with you if there was anything You want it add.

00:17:53: in general about ISDS Adding what Lea has said already kind of describing this system and The problems and dangers as it poses.

00:18:08: Yes i will but think can put up their slide six to start but I'll speak before i get on to the slide, just a few things.

00:18:16: So first of all thanks very much for inviting me and for The Opportunity And uh...I think that this campaign is Is A Very Important One!

00:18:26: I want To Just Say A Couple Of Things.

00:18:28: I'm Going To Speak About Uh...The Experience During My Time In Government During The Previous Decade.

00:18:36: Uh...I'm Not Speaking For The Positions Of The President Government Although decisions and the structures that we put in place are still in pause.

00:18:47: I can't speak to their decisions or guarantee that they're decisions will be as our decisions were during my time, And i should think i should also say is that the correlation between paces dealing with matters of climate and fossil fuel related institutions during my time.

00:19:13: So I want to say just generally that, um...I think there are at least three ways in which investor-state dispute settlement came into various agreements.

00:19:27: so

00:19:29: one of them was a treaty like the energy charter Treaty where ISDS provisions were put investment chapters in the so-called twenty first century, high quality mega regionals as they were called.

00:19:51: And so the proposed agreement between European Union and North America which didn't conclude at also in the Transpacific Partnership that had investment chapters.

00:20:07: That was another route.

00:20:08: But we didn't, as South Africa experienced SDS through either of those.

00:20:15: it was the third root which I think is actually that has the most agreements behind it.

00:20:21: It's in form of bilateral investment protection agreements and the Investment Protection Agreements very, very widespread and were really developed during the heydays of hyper-globalization and neoliberalism in the nineteen nineties.

00:20:45: two thousands so on.

00:20:47: And then model that really many countries including South Africa got involved with was what is called a standard OECD Model.

00:20:58: So That's What We Signed.

00:21:02: I'm saying here, to start with and now the speech of this slide that they were signing significant numbers after South Africa's transition into democracy in nineteen ninety-four.

00:21:14: They will almost a routine diplomatic event.

00:21:17: so when South Africa had its democratic elections and President Mandela was in charge there flurry of opening up relations with all kinds of countries, all over the world.

00:21:31: And whenever there was an incoming or upcoming high level diplomatic engagement that it was a desire to have something signed.

00:21:40: and then something was usually double taxation agreement in a bilateral investment promotion agreement on these things I said were signed in great numbers And they've also sold, and this is the norm now.

00:21:53: This what's expected.

00:21:55: foreign direct investors are going to look can see where you got one.

00:22:00: if I see your Got One there we look favorably on You.

00:22:03: when they're gonna rush in They're Gonna come want to help us too go and transform our economy with that.

00:22:09: so That was What happened?

00:22:11: So many Many of them were signed Now.

00:22:15: The most Of Them had a provision that they were valid for ten years.

00:22:22: A few of them, for fifteen years and then would have an automatic renewal.

00:22:29: if neither party gave any notice it intended to lapse them They automatically renewed the ten or fifteen years whatever case may be.

00:22:41: And also other thing was If you did give notice to lapson There was a survival clause, which meant that the existing investors had another ten years of protection.

00:22:55: And so after period time and really about two thousand nine but little bit before that when I got into office reviewer already started these things.

00:23:09: what are we getting out them?

00:23:12: And given that a number of them were due for renewal, unless we indicated.

00:23:18: We thought we'd better have look at then and make some assessment.

00:23:26: I think the review that we made... The conclusions were several conclusions.

00:23:36: First one is there was no correlation between existence or non-existent of a bilateral investment protection agreement and actual flows have been there.

00:23:47: So South Africa never had a bilateral investments, protection agreements with either the United States or Japan but we had significant investment flows from both those countries And on the other hand We had signed them With many many countries including Many individual European Union Countries.

00:24:06: at that time These were the purview of nations, national states.

00:24:12: And so they was signed bilaterally with different National States and there was no real appreciable difference in a number of cases including some European countries between having signed one and ten years later any appreciable investment flows.

00:24:27: I think it says all sorts things about what does and what doesn't attract The kind of investment that you actually want to develop your productive sectors as distinct from all sorts of other things, more speculative things which also included in the definition by the way a foreign direct investment.

00:24:45: So there was no correlation between signing these things and getting any investment.

00:24:51: And then I think that we saw that they were this broad an expansive clauses In the standard bilateral investment protection agreements.

00:25:04: I once went to an investment, a global investment conference in Xiamen and China.

00:25:11: And i heard this dialogue of the depth between some of the actual panel members of ISDS panels uh...and um..some governments.

00:25:23: The argument was whether it was content agreements or whether it was the decisions of the panel, there's a problem.

00:25:32: The panellists were trying to say its these treaties you signed.

00:25:35: and I think that answer is actually both because they way those things are crafted.

00:25:43: And i did have slide on this.

00:25:44: but i want just read out one of them Because most egregious clauses Are clause which is the definition of expropriation and the provisions against that because they include both what's called direct, and also indirect expropriation.

00:26:07: So I'm just going to read this as a standard OECD model.

00:26:11: I'm actually just reading from now lapsed South Africa-German bilateral investment protection agreement.

00:26:18: so it said investments by nationals or companies shall not be expropriated nationalized or subject to any other measure, the effects of which could would be tantamounted to expropriation and nationalization.

00:26:34: So it's not just what you understand by nationalization or expropriations It is actually other things that will be tantammount.

00:26:45: so its indirect expropriateon And this was really used support claims by investors against policy changes, which they deemed were going to impact on not only their actual profits but their expectations of profits in the future.

00:27:07: that rights-to-regulate needed to be tempered by not undermining the perceived intrusion into the expectations expropriate, you were supposed to pay compensation without delay at the full market value of the investment before the event.

00:27:36: And this was subject to unqualified right-to-transfer abroad.

00:27:41: so that's what you got.

00:27:43: and then of course the ISDS thing is that the investor had the rights support them in taking up a case under these investment protection agreements with panels constituted and managed through the World Bank ISD assistance.

00:28:06: That was the model that we had, so... We looked at this and said they're not actually supporting an inflow of foreign investment but there are some serious risks and risks to the right to regulate.

00:28:24: So most of the actual cases, or threats of litigation against South Africa because for many years there wasn't much.

00:28:31: I think Lear's graphs already showed that.

00:28:36: but some years they were not many cases.

00:28:39: their other case started picking up And South Africa itself didn't face a huge number of cases mainstream foreign investors that came in and established factories or ran productive sector activities.

00:28:58: They were by peripheral investors, nuisance claimants.

00:29:03: so many of them we're actually from Europe but I think I have a slide later on which i'd like to show you how that while Europe is in some sense are victim.

00:29:13: fossil fuel cases Many European companies African countries on a range of issues.

00:29:26: We had another country at the time that exited the ISD system with Ecuador, and mining rights were an issue in South Africa.

00:29:42: we changed the mining rights from actual upright ownership to leaseholds who didn't want to go through the motions of the line.

00:29:55: And it was just went and took up a nine steps pace, said that change in the regime amounted to expropriation, indirect expropriations.

00:30:07: There is a scandal attached with this.

00:30:10: when one of the lawyers took a bribe there were another European investor from Switzerland who was a victim of crime.

00:30:21: There were clauses about physical protection, which they assume meant that you shouldn't be acting like anybody else and insuring your own security if you weren't a victim at crime.

00:30:36: the statement is just paying out what she doesn't do to domestic investors.

00:30:42: And then there's one other one.

00:30:44: I've been able to persuade some of my colleagues in Treasury and the Reserve Bank about this, because we had a German citizen who...we have our reserve bank where private shareholder was permitted.

00:31:03: He bought shares from his reserve bank.

00:31:06: We had views on monetary policy which he didn't manage.

00:31:12: And then when he couldn't use his shield to influence the monetary policy, we wanted to sell out and claim a share of the reserves for the country.

00:31:24: The German government was not in support with this claim but it was a threat that would take the Reserve Bank into an ISDS case.

00:31:32: So those were some of the policies faced by South Africa.

00:31:36: But next slide please.

00:31:39: We were also aware of more serious cases, which are faced by others.

00:31:45: And one of the ones because we were quite pioneers in many ways on smoking legislation under health considerations and wanted to move into plain packaging regulations on tobacco products.

00:32:06: And there were cases against Uruguay and Australia under ISDS, I don't know if you're aware of those.

00:32:14: The tobacco companies.

00:32:15: they didn't win in this particular case but the cost of litigation, delays on litigation and effect it had as Leah said earlier regulatory chill was quite profound that they were claiming.

00:32:30: and then there was Ecuador on mineral rights.

00:32:38: And so the other thing being as we were looking at increasing frequency in cost of litigation, I mean this is a bit later than i'm talking about but the number of cases increased from rose to about eight million dollars and the awards at that time were reaching a level of half-a-billion US dollars.

00:33:13: So, I think all these...

00:33:20: Rob just for you know we've got five minutes left is it okay?

00:33:25: Okay sure.

00:33:30: Nia has already given figures so I won't beat them except I do want which is that African countries have faced about a hundred and eighty-two ISDS cases.

00:33:40: A hundred eight of them had come from European investors, And they've claimed at least two hundred and thirteen billion in various claims and awards are five point six billion to be made.

00:33:54: so here's the range of things In addition To The Climate Policy Issues Which Have Not Been That Prominent For Reasons I think you'll understand in African countries, but regulations to promote generics.

00:34:09: In health smoking, land and mineral rights policies on recognition of indigenous communities minimum wage laws as well as changes in taxation and efficacious environment rules as well.

00:34:24: so next slide please.

00:34:27: So all of this led us to conclude if we can go the So.

00:34:36: we concluded that there were few, if any benefits deriving from these beepers.

00:34:42: And since we had the immediate challenge of deciding whether these are going to roll over and if did nothing they would rollover We then decided actually lapse those The ones who came up first with some European Union to lapse these.

00:35:03: So the next slide please.

00:35:05: and what happened was we got enormous pushback from The European Commission, um...and then Trade Commissioner who is very aggressive And uh..we were warned that there's going to be an investment flight, investment European investors.

00:35:24: We're not gonna invest.

00:35:26: it wasn't only in Europe dire warnings about what was going to happen as a result of that.

00:35:34: And there was actually talk against investment on the grounds for decision we had taken, but I wanted say no actual discernible impact on investment flows in productive activities.

00:35:53: because the definition of foreign direct investment includes mergers and acquisitions, includes all sorts of other speculative activities.

00:36:04: I can't say that any of those were not deterred but what i can say is that in very month we lapsed a treaty with Germany made what was then the largest investment in the automotive sector in South Africa.

00:36:21: So it didn't seem to deter BMW from making a significant investments, so I think that we found out this is reality!

00:36:33: One last thing before I stop because i won't go into some of my other stuff but let's get on with our next slide... Some of the reason that I think we were able to cushion a potential backlash was that, We introduced a domestically crafted investment protection act which remained an active general application.

00:36:59: So as i said already didn't have it with everybody but United States Japan and others.

00:37:06: so he just made it applicable.

00:37:14: more carefully craft the clauses on the rights of investors.

00:37:18: So they were accorded rights equivalent to those national investors in like circumstances, because if we wanted to affirm black-owned companies try and promote equity... We didn't want them claiming that they had a right for all of these incentives or decisions.

00:37:37: so it's said in like circumstance Security obligations became best endeavor commitments.

00:37:45: rights were explicitly balanced against the right of state to regulate.

00:37:50: Expropriation provisions where referred to the clauses in the Constitution, which provided for just an equitable compensation, which actually the constitution overrides in international agreement.

00:38:03: So they would have shaped it anyway.

00:38:06: so its not necessarily market rate depends on what was acquired and invested etc.

00:38:15: The dispute settlement we offered a mediation service short of litigation then required to go through all domestic legal processes And only under certain circumstances would we accept state-to-state.

00:38:31: So the State had to take up the case, but we've never had any case that's gone through this and ended up there.

00:38:40: so maybe I should just stop here have a few other points about some alternative ideas of auto filtered into the investment protocol which is attached.

00:38:56: And I think that, um...I would suggest the shaping and framing of that because quite a lot is also relating to sustainable investments.

00:39:09: But it only covers investment among members of the AFCFTA African investments by African companies in other African countries and not all the external ones.

00:39:22: But I think that there's some of the crafting, I did include it in the slides.

00:39:27: if anyone could look at it... ...I would recommend as something of an alternative that has emerged because of our various about this standard ISDS but is not only the dispute part a bit CW reasons that include ISDS.

00:39:49: So let me stop there, thank you very much for your attention.

00:39:53: Thank you very much for both of your talks.

00:39:57: This was super interesting and we've got quite a few questions from the audience, so that's great!

00:40:03: And when I try to get through most of them maybe just a comment.

00:40:08: it is really interesting.

00:40:09: Rob what would you say?

00:40:11: That basically there are little benefits in terms of productive investments, speculative investment yes but they have very little benefit.

00:40:20: And it's really amazing to see that we're still talking about this.

00:40:28: We have so many, and then we also need find and get rid of them.

00:40:34: Then Fabian will say more.

00:40:38: what is in there for the action days?

00:40:40: So I want go into questions here.

00:40:43: And so we have Kai Schlegelmil here.

00:40:46: He asks which countries are positive examples avoiding those ISDS and what their experience is, how can they move more in that direction?

00:40:55: I think it's a bit like... We just had one of these examples from South Africa moving into different directions.

00:41:04: Maybe Leah Fabian Can you help Kai with the question What kind of examples are there besides?

00:41:10: maybe South Africa or explaining also why from the outside, as of Africa is a good example.

00:41:15: And yeah how can we move more in that direction?

00:41:20: Yeah very happy to it's as having taken positive steps away from ISDS or countries that just never signed up to ISDS in the first place.

00:41:34: So Brazil is a country that has never signed-up to bilateral investment treaties, they have high degrees of foreign investment.

00:41:43: There's a number of countries that have terminated or renegotiated their bilateral investment treaties to contain ISDS, including Ecuador, South Africa, India Indonesia and Tanzania.

00:41:54: To various degrees in different ways A number of country has withdrawn from ICSID which is the most used forum for ISDS cases.

00:42:04: We had an example of EU with withdrawing from energy charter treaty.

00:42:08: along with member states Australia committed to exclude ISDS from trade deals and is now renegotiating a lot of its bilateral investment treaties including with the European countries, to remove ISDS clauses.

00:42:25: And in terms There are conversations emerging within the processes of transitioning away from fossil fuels process, and on the margins that countries joining working groups to discuss how to approach ISDS as a barrier for just transition.

00:42:52: So we would encourage states support those efforts.

00:43:02: You showed that graph, right?

00:43:03: Of the number of cases.

00:43:06: Are we there?

00:43:09: Now at a peak, is it going down now or just getting flatter after ECT and all the others that have been counseled on Africa has been handled.

00:43:20: Is this the curve?

00:43:21: if you look at twenty-six, twenty-seven, twenty eight – are they already a downward trend in terms of challenges to keep steady and make that steeper down or still an upward situation?

00:43:36: I'm not sure if i have a perfect overview of that, but uh...I can try.

00:43:42: That graph looked at treaty-based ISDS.

00:43:45: so there may be other avenues that investors attempt to use through contract based ISDS to still pursue cases and as mentioned the awards of ISDS are getting bigger, but then there's also new frontiers opening up for potential claimants all the time.

00:44:07: So we're seeing an increase in cases around critical minerals that could be emerging increasingly with energy transition and these kind of new areas cropping up around sanctions policy.

00:44:23: perhaps Fabian wants to jump into it as well.

00:44:26: Let me just say a couple of things.

00:44:29: I was on another webinar like this, just after the exit from the Energy Charter Treaty by European Parliament and there were number of European parliamentarians... The point that was made about them is exiting energy charter treaties not enough because they are many bilateral investment protection agreements that European countries because these were grandfathered over.

00:45:01: I think the figure was in triple digits, so it's over a thousand which are still avenues for challenges on various fronts.

00:45:11: and also point out energy charter treats itself as its last membership is now trying to find new members on the African continent.

00:45:20: And they found some, not South Africa but they've found others and that's another in Africa overwhelming.

00:45:29: the ISDS came through bilateral investment protection agreements But this has become an other avenue for the entry of ISDS As I pointed out my figure there.

00:45:43: the awards that are being awarded against African countries, they're very significant and there's a large number of potential cases in the pipeline.

00:45:53: And if you want to be consistent as I said earlier, lion share those or European companies?

00:46:02: Well maybe also handing over two Fabian and Fabian giving one question here from our audience with more basic questions but it is rather good to give people another impression.

00:46:16: Also, who actually sits on those arbitration courts panels?

00:46:21: On this corporate courts and how are they selected?

00:46:25: what you need to be on that panel and how their paid right.

00:46:30: so in terms of him a bit more undercourts because I think we only touch these.

00:46:36: And for me the second question then is If they are kind of private courts, right?

00:46:41: What actually you know?

00:46:42: what happened if states or all the world would just say we're not paying.

00:46:48: Right so whatever... You know everyone just didn't pay.

00:46:51: well will happen.

00:46:52: So I've got two questions.

00:46:54: maybe this first one is easy and then second one may

00:47:03: be Investor that is suing the other one by the state.

00:47:13: That's defending the case.

00:47:15: and then the third one either chosen By the other two arbitrators or buy The to putt there this date in the investor.

00:47:25: But I already shows the investor has a huge influence on the composition of those panels, and There are some arbitrator set up well known for choosing an almost all cases very investor-friendly Interpretations of the treaties and so they're picked again to represent the investor in that case.

00:47:47: And some other really outrageous cases we've seen.

00:47:51: some of those arbitrators were sitting on them.

00:47:54: most of them are private lawyers, So it means their work both as arbitrator but there also works simultaneously as lawyer's in others cases.

00:48:05: They might write a decision one case Again, and then pick up that decision in another case.

00:48:12: And argue with that decision for their client.

00:48:15: so they are huge conflicts of interest.

00:48:17: That's one problem.

00:48:18: the other problem is a lot of money is involved also for the arbitrators into law firms because those cases as Rob also said very expensive and particularly profitable for the big law firms.

00:48:34: There's an incentive for law firms to also encourage investors, so they can take in the fees.

00:48:44: So yeah this area is a minefield of conflicts and interests.

00:48:53: A little bit has been done now but not nearly enough.

00:48:58: And then sorry, your second question was on

00:49:01: the.

00:49:01: why not?

00:49:01: Why just not pay.

00:49:03: So what kind of legal leeway do those panels actually have if they're just randomly in a way selected by the investor and the state where you have to pay?

00:49:11: Actually What happens If You Don't?

00:49:13: Do you want To Come In There Rob?

00:49:15: Yeah I Was Just Gonna Say That First Of All The Agreements Themselves.

00:49:21: They Say that The Decision At The Paddle Is Binding.

00:49:25: There's No Appeal.

00:49:26: So whatever they say is, it goes.

00:49:29: And the treaty itself says that you're obliged to pay.

00:49:35: so well if you decided not do then he would be in violation of international law.

00:49:43: You could be subject to action against by the host country If I felt like it.

00:49:50: all sorts of sanctions embargoes and things Like That.

00:49:53: It's The Same as I think the moral case and actual power relations are two different things.

00:50:03: It's the same with debt, what happens if you default on your debt for a country?

00:50:12: Maybe morally there is very good case of doing so but if do then whole banking system everyone will come down to top view And I think that's essentially the same thing would happen if you just refuse to make these awards.

00:50:29: Yeah,

00:50:32: thank you.

00:50:33: and maybe one example we've seen increasingly in Europe now.

00:50:39: so The European Court of Justice has ruled and the European Commission has held this position for a long time that cases between investors from EU against other EU countries are not legal.

00:50:53: And so countries say that this is illegal, and then they refuse to pay because the European laws as those cases are not link to the Spanish government or Italian cultural centers, have been confiscated by investors also in European countries.

00:51:30: Or they go to jurisdictions outside of Europe to do the same.

00:51:34: but obviously other countries are even more on the receiving end of this.

00:51:38: so we had Tanzania's national airline and had their airplanes seized And so there is a real tool to seize assets that are linked with the state.

00:51:53: That often makes countries pay if they don't want to lose those assets or afraid of being less able to act at international stage as an estate.

00:52:06: I personally find it really dystopic, you cannot appeal and then your assets get seized over basically sovereign government.

00:52:16: Well, it's really... This topic always surprises me that this is actually possible.

00:52:22: Actually, that's also reflected in the questions somebody said here.

00:52:26: they're like methods used by mafia states and calling them like that.

00:52:31: I just leave it here.

00:52:32: Markus says that as his own opinion so probably there something to do with It!

00:52:38: I want go into the alternatives because we have a direct question for Rob.

00:52:44: Somebody asked, unfortunately he hasn't given a name.

00:52:47: Do you have any examples of when under your domestic alternative dispute arose and it was settled in away where the investor was happy with the outcome?

00:52:57: But it wasn't an unjust and disproperate payout for company.

00:53:02: so does actually work?

00:53:04: that's the question.

00:53:06: I don't think...I'm not aware if anyone has used the domestic route Because I think that most of the cases we faced, as I said they were peripheral or marginal investors.

00:53:21: They are not mainstream people who were discontented.

00:53:25: actually you know investment environment legal framework and everything in South Africa is generally quite investor friendly.

00:53:33: so i don't.

00:53:38: But I have this thing about providing this mediation before any kind of litigation.

00:53:46: This was, we drew from some Asian countries and I was aware that some them had considerably diffused a lot issues.

00:53:59: I'm not aware that it's been used in South Africa, but it was there for the reason.

00:54:04: There is a possibility of finding a modus vivendi on the rational parts of any dispute.

00:54:11: But as i said you know The Rational Part isn't only part and this sort of damocles of ISD singing over You Is A Big Chilean Fact.

00:54:23: On Regulation And I don't think we've introduced plain packing regulation to this day, the chill from that time has regulatory chill is persisted.

00:54:38: I can imagine Lea have one question here maybe for you And Marcos asks, what about Waffenfald's claim before the International Center for Settlement of Investments Disputes at The World Bank seeking billions in compensation from Germany over the nuclear phase-out?

00:55:01: Leo can you sentence some of those orders?

00:55:03: or Fabian has a question that is well liked.

00:55:07: Fabian might be more up on details

00:55:13: Then probably go.

00:55:14: Yeah, so this is a really interesting case of parallel litigation.

00:55:19: so.

00:55:20: Button files suit under ICDS against Germany for the nuclear exit but they also went to German courts and to the German constitutional court.

00:55:30: So they pursued both tracks simultaneously And off course there were only company that could do that.

00:55:37: The german nuclear companies had their domestic route.

00:55:43: Wartenfall won a couple of cases in the German courts.

00:55:49: And then, the ISDS case was close to being finished so that hearings had happened and it We know from government spokespeople that Wartenfall was demanding six to seven billion euros in that case at the end, including interest.

00:56:12: So compensation plus interests and that was a moment where government decided to find settlement with the company.

00:56:22: so instead of waiting for the tribunal to potentially give very large compensation because no one knew how Tribunal would decide they settle with the company.

00:56:35: and battenfall got a payout still of one point four billion euros.

00:56:40: so it was a massive pay out.

00:56:43: They had the right to receive some money under German law but yeah there is strong suspicion.

00:56:50: that amount they received was influenced by as Rob said, the pending decision by the ISDS tribunal.

00:57:05: Sounds bad,

00:57:07: right?

00:57:08: This isn't really not a clumi topic.

00:57:10: so maybe Fabian you can now when we are closing give us some hope on what we actually can do together if you find this whole thing as outrageous.

00:57:23: I do.

00:57:24: So Fabian What Can We Do in The Next Global Days of Actions?

00:57:27: Yeah NGOs, civil society organizations.

00:57:33: We're doing a lot of work talking to politicians researching the topic trying to get into the media Trying to organize meetings where people can learn from experiences like the ones that Rob had in South Africa policy makers and Europe as well.

00:57:50: But we also wanted to do something that's a bit more public facing and where everyone can participate, not just experts who got the time.

00:57:57: And then the knowledge to do this?

00:57:59: We started having global days of action happening from tomorrow until Saturday... ...and anyone can participate!

00:58:10: I don't know if i could share links in chat with all of you or else i would ask Max to share the link.

00:58:17: A simple thing that just takes a minute is signing a petition.

00:58:22: So we started in new petitions, We heard it both from Rob and from Leah That Europe really at the center of this problem.

00:58:29: It's European investors that sue more than anyone else In particular countries on global south.

00:58:35: And so were calling on european governments to act To start cleaning up their own mess and exiting those those treaties.

00:58:45: and there is a petition that was recently launched, maybe Max can share it in the general chat.

00:58:51: That's easy for anyone to sign!

00:58:56: We are also organizing photo action challenge ISDS, that there is also popular opposition to it and kind of normal people can participate in this.

00:59:14: show their face.

00:59:16: There are also... I'll share with you some instructions on how you can participate.

00:59:22: for the photo action It's basically taking a photo yourself or something like sign which shows that your oppose ISDS and what we want to do with these photos is use them later in a video on social media, people from across the world showing their faces against ISDS.

00:59:43: So we're encouraging everyone here but also other countries and continents to participate.

00:59:49: And then there are more activities happening.

00:59:54: This was last thing I share In particular in the UK, but also in Vienna and Lisbon Brussels Geneva.

01:00:05: There are actions happening over the next few days so we're trying to get it simultaneously into media and politicians and public attention countries across Europe.

01:00:20: So those other things that happen in a couple of days if you could participate this would be great because we're trying to build up more of a kind of popular movement that opposes these special courts or corporate courts and broaden our movements.

01:00:42: so it's not just... A few have the privilege on a permanent basis but also normal people can participate.

01:00:53: Wonderful!

01:00:55: I think that this is the best way to close those.

01:00:57: This, it's just the action.

01:00:59: you got all the links.

01:00:59: who will send your older links in the presentations afterwards in the next days, along with recordings.

01:01:06: So you're fully informed.

01:01:07: so if you learn something new today then pass it on to your friends and family and send them links too!

01:01:15: The bigger movement is better.

01:01:18: I'd like everyone to thank Rob Lea Fabian for this very interesting evening update.

01:01:26: i hope we don't wait another four years until our next updates but let's see.

01:01:31: I wish you all a very nice evening and keep up the good fight.

01:01:34: Bye bye!