ISDS is India’s nightmare at RCEP talks
July 18, 2017: Foreign Investor rights to sue governments is a hot button issue at the RCEP (Regional Comprehensive Economic Partnership) talks underway in Hyderabad, India, on July 17-28, 2017.
India’s Mohdi government wants to be a champion of globalisation and free trade, and India wants more Foreign Direct Investment. But India is hurting from cases already mounting against it.
Investment arbitration suits of at least $7,000 million have been filed against the central and state governments since 2011.
In December 2016, the investment authority of Ras Al-Khaimah, a member of United Arab Emirates (UAE), filed a suit of $44.71 million against the central government and the government of Andhra Pradesh because Andhra Pradesh cancelled an approval for a bauxite mine.
This claim is dwarfed by the UK-based Vedanta group suing for $3 billion in 2016, and Devas multimedia suing for $1 billion in 2015.
Australia, New Zealand, Japan, Singapore and South Korea are pushing hard for the foreign investor right to sue government (ISDS) and so India is looking for support from Indonesia, Malaysia, Laos, Cambodia and Myanmar, to get more safeguards against these huge claims.
India has proposed a new model Bilateral Investment Treaty which requires that the national judicial system be exhausted before an investor could take an ISDS action. This is likely to be its proposal on ISDS. This might slow down, but would not prevent future cases. The Philip Morris tobacco company proceeded with its ISDS case against Australia’s plain packaging law despite having lost in the Australian High Court.