The protests roiled the country for months and forced the national government to cancel the contract, returning water services to public control. But after the consortium filed a legal claim against the Bolivian government in 2002, seeking up to $50 million, the popular uprising transformed into a broader fight against the legal system that allowed this. Investor-state dispute settlement, or ISDS, lets foreign companies bypass national courts and sue governments before international panels of arbitrators.
These tribunals have awarded hundreds of millions or even billions of dollars to companies, even in cases where they flouted national laws, polluted the environment or were accused of violating human rights. Most of these cases have been filed by companies from wealthy nations against developing countries, prompting critics to say ISDS acts like a form of modern-day colonialism. Bolivia wanted out of the system. Within a few years, it started a movement that has spread around the globe. From the United States to Europe, Colombia to Indonesia, governments are re-examining a cornerstone of international trade and investment that has held strong for decades. Many elected leaders, activists and legal experts from the political left and right have come to see ISDS as a threat to government policymaking and national sovereignty.
The system has also emerged as a hurdle for climate action: Australia, Canada, Germany, Italy, Slovenia, Spain, the Netherlands and the United States have collectively faced billions of dollars in claims prompted by policies to limit fossil fuels or promote renewable energy. “ISDS is highly problematic, to put it mildly,” said Surya Deva, United Nations special rapporteur on the right to development. “An investor telling a government, ‘We will bring an arbitration case if you try to protect a local community or give them access to water or limit our mining operations,’ that is crippling.” Yet even as opposition to ISDS has spread, the system is not going anywhere soon. In some cases, wealthy nations have started to eliminate foreign investor protections among themselves while insisting that poorer nations maintain them. Many business groups and some academics continue to advocate for ISDS, saying it helps drive foreign investment, especially to small and politically unstable countries like Bolivia. In these places, investor-state settlement protections serve as a guardrail, said Monica de Bolle, a senior fellow at the Peterson Institute for International Economics. Its presence, she said, sends a signal to prospective investors: “They have ISDS, so if something goes wrong, I’m protected.”
Research on this question has been notoriously inconsistent. Analyses of dozens of studies show no conclusive evidence that these protections increase investment. Any nation seeking to extricate itself from investor-state arbitration faces an uphill battle: The protections are built into more than 2,600 treaties and countless contracts that would need to be renegotiated or canceled, a daunting task. Bolivia spent more than a decade snipping the threads tying it to those legal agreements. And yet, it’s still not quite free.
“We Want Partners, Not Bosses”......Like many developing countries, Bolivia bound itself to ISDS in the 1980s and 1990s. The nation was emerging from a period of military dictatorship that had left debilitating debt and hyperinflation. When the civilian government looked for help overseas, World Bank officials and other global financiers promoted a set of policies, known as the “Washington Consensus,” that included market-friendly reforms like privatization, deregulation and lower taxes. Investor-state arbitration, the officials said, would attract foreign investment, which in turn would lead to prosperity. Bolivia signed 22 investment treaties with ISDS clauses from 1987 to 2002. The policies brought down inflation and stabilized the economy. But they did little to improve people’s standards of living or reduce inequality. For the majority of Bolivians still living on less than $2 a day, prosperity never came. It was those Bolivians’ formidable social movements that in 2005 propelled an outsider to the presidency who promised to “end the colonial state and the neoliberal model.”
Evo Morales, a former coca farmer who’d stood with water protestors in Cochabamba years earlier, pledged to renationalize natural resources and disentangle the country from Washington, D.C. “We want partners, not bosses,” became his tagline. The government took control of oil and gas and other industries. On his 100th day in office, Morales led a military contingent to a gas field operated by a Brazilian-Spanish consortium in southern Bolivia to announce that foreign companies had six months to renegotiate their contracts........read on https://insideclimatenews.