The United Nations Conference on Trade and Development (“UNCTAD“) has recently published its report (available here) on investor-state dispute settlement (“ISDS“) cases in 2020 (“Report“). The Report confirms that in 2020, investors initiated at least 68 publicly known ISDS cases pursuant to various international investment agreements (“IIAs“). This marks an increase in the number of ISDS cases since 2018 (although there was a dip in cases in 2019), and brings the cumulative total of known ISDS cases count since 1987 (the year of the first treaty-based ISDS case), to 1,104. The Report contains useful annexes listing (i) all known-treaty based ISDS cases initiated in 2020 and (ii) respondent and home States in known treaty-based ISDS cases between 1987 and 2020.
Respondent States in ISDS cases
In 2020, new ISDS claims were brought against 43 countries. Peru and Croatia were the most frequent respondent States, with six and four known cases respectively. Interestingly, four countries – Denmark, Norway, Papua New Guinea and Switzerland faced their first known ISDS cases in 2020. The Report reveals that to date, 124 countries are known to have been respondents to one or more ISDS claims.
Moreover, consistent with trends from previous years, around 75 percent of the new cases were brought against developing countries and transition economies. In the last 10 years, Spain, Venezuela and Egypt have received the largest share of ISDS claims. Of the 1,104 known ISDS cases from 1987 to the end of 2020, Argentina (with 62 cases), Venezuela (with 54 cases) and Spain (with 53 cases) have been the most frequent respondent States.
Nationality of claimant investors
In contrast, about 70 percent of the 68 known cases initiated in 2020 were brought by investors from developed countries. The highest number of cases were brought by investors from the United States (10 cases), the Netherlands (7 cases), and the United Kingdom (5 cases). Investors from these three States have also filed the largest number of claims in the past 10 years, as well as overall, amongst all the known ISDS cases filed from 1987 to 2020.
IIAs giving rise to ISDS claims
The Report also provides interesting insight on the individual IIAs which have given rise to the most number of ISDS cases in recent times. About 65% of investment arbitrations in 2020 were brought under IIAs signed in the 1990s or earlier. All but two of the remaining cases were based on treaties signed between 2000 and 2011. The 1994 Energy Charter Treaty (“ECT“), was the most frequently invoked IIA with seven cases, followed by the 1980 Arab Investment Agreement and the 1981 Organisation of the Islamic Conference Investment Agreement, each with four cases.
Outcomes of ISDS cases
The number of substantive decisions rendered in ISDS claims also remained high in 2020. ISDS tribunals issued at least 52 known substantive decisions in investor-State disputes, 31 of which were in the public domain at the time the Report was written. Eleven of the public decisions principally addressed jurisdictional issues, with eight upholding the tribunal’s jurisdiction and three declining jurisdiction. The remaining twenty decisions were rendered on the merits, with six holding the State liable for IIA breaches and fourteen dismissing all investor claims.
Since 1987, at least 740 ISDS proceedings have been concluded. Of these, about 37 percent of concluded cases were decided in favour of the State, and around 29 percent decided in favour of the investor, with an award ordering monetary compensation. Approximately 20 percent of cases were settled and the remaining proceedings were discontinued or the tribunal found a treaty breach but did not award any monetary compensation.
For further information, please contact Andrew Cannon, Partner, Christian Leathley, Partner, Arushie Marwah, Associate, or your usual Herbert Smith Freehills contact.