Investor-state dispute settlement
Also called: ISDS · Topic: International Trade Policy, WTO and Intellectual Property · NCERT: Beyond NCERT
Meaning
Investor-state dispute settlement (ISDS) lets a foreign investor sue the host country's government before an international arbitration tribunal instead of in local courts. The investor must claim the government broke an investment treaty. It aims to reassure investors, but critics point to "regulatory chill". This means governments hold back on health, environment or tax rules because they fear costly claims.
Example
Foreign investors used ISDS against India in White Industries (2011), the first award against India, and in the Vodafone and Cairn disputes over retrospective taxes. In response, India ended most old investment treaties in 2016–17. Its Model BIT 2015 now requires investors to use Indian remedies for 5 years before going to arbitration.
Don't confuse with
- WTO dispute settlement: in WTO disputes, only governments can sue each other. In ISDS, a private investor sues a state.
Related concepts
- GATS
- Modes of supply of services
- TRIMS
- Local content requirement
- Bilateral investment treaty
- Digital trade
- E-commerce moratorium
- Data localisation