Ostensibly, Investor-State Dispute Settlement (ISDS) provisions in international trade agreements create a necessary judicial mechanism which empowers international investors to bring actions against host states who act arbitrarily, to the detriment of the international investment. ISDS has, however, long been criticized as a non-transparent, privately run judicial system through which wealthy investment entities can extract substantial judgments from hosts states who change their national policies.
A recent article in the Canadian Bar Association’s National Magazine, traces these these historic tensions in North America and Europe ,as well a growing number of states which are pushing on the use of ISDS after being burned by significant judgments.
As new international trade agreements, such as the Trans-Pacific Partnership, are discussed and debated is important that investors understand what recourse they may have when investing abroad and whether the protections they have historically enjoyed will still exists in the coming years and decades.