In this column, Martin Khor, executive director of the South Centre, writes that a growing number of countries are cancelling trade treaties that allow foreign investors to sue governments and claim billions of dollars in compensation.
Recently, Indonesia has given notice that it will terminate its bilateral investment treaty (BIT) with the Netherlands, and says it will cancel all of its 67 bilateral investment treaties.
Indonesia joins South Africa, which last year announced it was ending all its BITS.
Several other countries are also reviewing their investment treaties. This was prompted by increasing numbers of cases being brought against governments by foreign companies which claim that changes in government policies or contracts affect their future profits.
Many countries have been asked to pay large compensations to companies under the treaties. The biggest claim was against Ecuador, which has to pay a U.S. oil company 2.3 billion dollars for cancelling a contract.
The system empowering investors to sue governments in an international tribunal, thus bypassing national laws and courts, is a subject of controversy in Malaysia because it is part of the Trans-Pacific Partnership Agreement (TPPA) which the country is negotiating with 11 other nations.
The investor-state dispute settlement (ISDS) system is contained in free trade agreements (especially those involving the United States) and also in BITS which countries sign among themselves to protect foreign investors’ rights.
http://www.ipsnews.net/2014/05/investor-treaties-trouble/
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