Ever heard of the investor-state dispute- settlement? Clauses of the international trade and investment agreement include the investor-state dispute-settlement which acts as a shield to the foreign investors as it gives them the right to seek compensation in case a dispute arises with the host government.
ISDS has proven to be a stonewall to some of the issues that arise due to globalisation. Take, for example, if a government wants to pass a law to curb carbon emissions due to the high rise of environmental pollution, they must also take into consideration the ISDS. The reason is that ISDS protects foreign investors from expropriation and arbitrary discrimination from the government.
ISDS may defeat the government’s commitments to protecting the environment as some of the measures that the government may put, are expected to be reasonable and justifiable even as they aim to protect the environment. Therefore, the government is expected to give a strict observance on any laws that may affect the foreign investors. Reforms of ISDS are to be made during this week in Vienna by the United Nations group, which is under the International Trade Law.
This is because it has been observed that ISDS is a contentious issue. The meeting is also as a result of the European Union trying to renegotiate the Energy Charter Treaty signed by the EU and other 52 National governments.EU major concern is that with the ISDS provisions, the ECT will be considered as a threat to the climate of EU domestically and internationally.
It is a major concern that many national governments may face arbitration procedures which are lengthy as a result of wanting to close down polluting industries which will bring crippling compensation bills.EU has threatened to withdraw as Japan is resisting the reform.ISDS has greatly contributed to the pollution of the environment as governments fear to pass laws that may be in contravention with ISDS as dissatisfied investors will put the governments through litigation.