According to a recent report released by the United Nations Conference on Trade and Development (UNCTAD), at the end of 2011 there were at least 450 active lawsuits brought against governments by companies invoking clauses in bilateral investment treaties (BITs). These are only the known cases; most are kept secret. BITs are treaties that establish the conditions for investment by companies of one country in another nation, and were often forced upon small countries by large countries at the behest of corporations seeking to avoid regulations wherever they do business.

 

Although BITs have been around for years, it was only after the turn of the century that corporations started ramping up their use of them to frustrate regulations they don’t like. In 1999, the total number of known BIT suits exceeded 100 for the first time, and has steadily increased since, usually to the detriment of the nations being sued. Last year, for example, Ecuador was forced to pay fines of $78 million to U.S. oil company Chevron, which claimed the country’s efforts to protect the Amazon from pollution have negatively affected business.

 

Overall in 2011, corporations won 40% of the cases decided, with countries winning 30% of the time, and 30% resulting in settlements. Given the corporations’ rate of success, and the fact that only they may sue under the BITs, while countries may not, it is likely that those settlements were highly favorable to the multinationals.

-Matt Bewig

 

To Learn More:

Corporations Win Big in Battle Against Investment Regulation (by Isolda Agazzi, Inter Press Service)

Latest Developments in Investor–State Dispute Settlement (UNCTAD) (pdf)