Category Archives: Costs to the public

Who was awarded compensation in past ISDS awards?

Only foreign investors can sue countries in ISDS. So, all ISDS awards involve a transfer of public money from a country to one or more foreign investors.

One way to assess who benefits from ISDS is by examining the types and sizes of foreign investors that received money in ISDS awards. I and Pavel Malysheuski, a civil/ commercial litigation lawyer, examined this question.

We tracked amounts awarded in all known cases to the spring of 2014. We found 45 awards for over US$10 million. We did not include 31 awards for less than $10 million since the total awarded in those cases was relatively small, less than $200 million in total.

In the 45 cases, about USD$5 billion in total was awarded to foreign investors. Adding pre-award (as opposed to less controversial post-award) interest, about USD$6.5 billion in total was awarded.

What types and sizes of foreign investors were awarded this money?

  • About 64% was awarded to companies with over $10 billion in annual revenue.
  • About 29% was awarded to companies with $1 billion to $10 billion in annual revenue or to individuals with over $100 million in net wealth.
  • About 7% was awarded to companies with less than $1 billion in annual revenue or to individuals with less than $100 million in net wealth.

These findings indicate that to date the primary beneficiaries of ordered financial transfers in ISDS awards have been large or extra-large companies and very wealthy individuals (aka tycoons). The figures are approximate and descriptive of amounts awarded sizes in past cases.

Type of foreign investor Size of foreign investor No. of awards (of over $10 million) Total awarded, raw sums only % of total awarded, raw sums only Total awarded, with pre-award interest % of total awarded, with pre-award interest
Extra-large company >$10 billion in ann. rev. 19 $3.218 billion 63.9% $4.178 billion 64.3%
Large company >$1 billion and <$10 billion in ann. rev. 10 $590 million 11.7% $756 million 11.6%
Medium or small company <$1 billion or <$100 million in ann. rev. 7 (incl. 5 where DU for ann. rev $184 million 3.7% $219 million 3.4%
Very wealthy individual >$100 million in net wealth 4 $896 million 17.8% $1.060 million 16.3%
Other individual <$100 million in net wealth 5 (incl.3 where DU for net wealth) $151 million 3.0% $288 million 4.4%
Totals 45 $5.039 billion $6.501 billion

The method of classifying of sizes of foreign investors was determined by Pavel Malysheuski (PM). PM coded claimant types and sizes based on award texts and online information from e.g. SEC, Google, Wikipedia, Bloomberg, and Reuters. Where data was unavailable on claimant size, a corporate claimant was classified as having less than $1 billion in annual revenue and an natural person was classified as having less than $100 million in net wealth. Cases involving multiple claimants were coded based on the largest or wealthiest member of the group including corporate and natural person owners of corporate claimants.

Data on size of awards was collected by Osgoode Hall Law School student research assistants, who collected information based on publicly-available English-language awards up to the spring of 2014. Pre-award interest was calculated based on information on raw sums awarded, pre-award interest rate, and relevant time period in award texts. All amounts were converted to USD based on exchange rates at the time of the award.

The award in France Telecom v Lebanon was not included due to the lack of a publicly-available award to verify reports of a $266 million award in favour of France Telecom, an extra-large company. The $17 million award in Metalclad v Mexico was treated as the raw sum amount and as the raw sum + pre-award interest amount due to the limited information in the award. The ordered adjustment for net taxes in the $29 million award in Achmea v Slovakia was not accounted for due to limited information in the award. Annulments and set asides of amounts awarded were not accounted for. All figures were rounded to the nearest million and are reported in USD.

The data does not include awards decided or becoming public after cut-offs in the spring of 2014. So, it does not include the $50 billion award in the Yukos-related claims against Russia in July 2014. Based on his inferences from online sources, PM classified the claimant size as very wealth individual in these cases, prior to the award being issued. However, this classification may be contentious, so it’s best for readers to make up their own minds about the claimant size in that case and to treat it as an outlier in relation to the descriptive data otherwise presented here.

The data for the above findings is as follows.

Case name Foreign investor type (company or natural person) Foreign investor size Amount, raw sum Amount, with pre-award interest
Occidental v Ecuador No 2 C X-large 1770 million 2358 million
EDF v Argentina C X-large 136 million 205 million
BG Group v Argentina C X-large 185 million 219 million
CMS v Argentina C Large 133 million 151 million
CGE/ Vivendi v Argentina No 2 C X-large 105 million 169 million
Siemens v Argentina C X-large 238 million 278 million
Enron v Argentina C X-large 106 million 142 million
Azurix v Argentina C X-large 165 million 186 million
Sempra v Argentina C Large 128 million 171 million
CME v Czech Republic N Tycoon 270 million 395 million
Stati v Kazakhstan N Tycoon 498 million 498 million
Rumeli v Kazakhstan C Large 125 million 165 million
Micula v Romania N Tycoon 117 million 156 million
National Grid v Argentina C X-large 39 million 54 million
LG&E v Argentina C X-large 57 million 57 million
Occidental Petroleum v Ecuador No 1 C X-large 72 million 75 million
Chevron v Ecuador No 1 C X-large 78 million 96 million
Duke Energy v Ecuador C X-large 5.58 million 28 million
Siag v Egypt N Non-tycoon 75 million 129 million
ADC v Hungary C DU 76 million 76 million
Cargill v Mexico C X-large 77 million 86 million
Impregilo v Argentina C Large 21 million 28 million
El Paso v Argentina C X-large 43 million 66 million
SAUR International v Argentina C Large 40 million 60 million
Saipem v Bangladesh C X-large 6.3 million 11 million
Guaracachi v Bolivia C Small 29 million 36 million
Pey Casado v Chile N DU 10 million 14 million
Eastern Sugar v Costa Rica C X-large 35 million 35 million
Wena Hotels v Egypt C DU 8.82 million 19 million
OKO Pankki Oyj v Estonia C X-large 11 million 14 million
Kardassapoulos (and Fuchs) v Georgia N DU 30 million 90 million
RDC v Guatemala N Tycoon 11 million 11 million
TECO v Guatemala C Large 21 million 23 million
White Industries v India C DU 4.09 million 11 million
Sistem Muhendislik v Kyrgyztan C DU 8.5 million 10 million
Abengoa v Mexico C Large 40 million 42 million
ADM v Mexico C Large 34 million 37 million
Metalclad v Mexico C DU DU 17 million
SGS v Paraguay C Large 39 million 64 million
Achmea v Slovakia C Extra-large 29 million 29 million
Deutsche Bank v Sri Lanka C Extra-large 60 million 70 million
Walter Bau v Thailand C Small 41 million 50 million
PSEG v Turkey C Large 9.06 million 15 million
Desert Line Products v Yemen N DU 25 million 30 million
Funnekotter v Zimbabwe N Non-tycoons 11 million 25 million
C: 36

N: 9

X-large: 19

Large: 10

Below large: 7 (includes 5 DU)

Tycoon: 4

Non-tycoon: 5 (includes 3 DU)

Total awarded: 5,039 million

X-large: 3,218 million (63.9%)

Large: 590 million (11.7%)

Below large: 184 million (3.7%)

Tycoon: 896 million (17.8%)

Non-tycoon: 151 million (3.0%)

Total awarded: 6,501 million

X-large: 4,178 million (64.3%)

Large: 756 million (11.6%)

Below large: 219 million (3.4%)

Tycoon: 1,060 million (16.3%)

Non-tycoon: 288 million (4.4%)

Large awards and costly treaties

Here is a sampling of large awards by investor-state arbitrators against countries and the treaties that made them possible.

Trade and investment treaties allow only foreign investors to sue countries, not vice versa. This is why there are no damages awards against foreign investors in favour of countries.

Ecuador: concluded a bilateral investment treaty (BIT) with the U.S. in 1997.

  • ordered to pay $75 million and then $2.36 billion to Occidental Petroleum in 2004 and 2012. Oxy is the third-largest U.S. oil and gas company, by market capitalization.
  • ordered to pay $28 million to Duke Energy in 2008. Duke is the largest U.S. electric power holding company.
  • ordered to pay $96 million to Chevron in 2011. Chevron is one of the world’s six “super-major” oil companies.

The Czech Republic concluded a BIT with the Netherlands in 1992.

  • ordered to pay $395 million to CME in 2003. CME was owned by U.S. tycoon Ronald Lauder.
  • ordered to pay $25 million to Eastern Sugar in 2007. Eastern Sugar was owned by large sugar producers Tate & Lyle and St Louis Sugar.

Argentina concluded BITs with France, Germany, the UK, and the US in 1993 and 1994.

  • ordered to pay $186 million to Azurix Corporation in 2006. Azurix is an x-large water company.
  • ordered to pay $169 million to Vivendi Universal in 2007. Vivendi is an x-large media and telecommunications company.
  • ordered to pay $278 million to Siemens in 2007. Siemens is the largest Europe-based electronics and engineering company.
  • ordered to pay $219 million to BG Group in 2007. BG Group is an x-large oil and gas company.
  • ordered to pay $57 million to LG&E in 2007. LG&E is an x-large oil and gas company.
  • ordered to pay $54 million to National Grid in 2008. National Grid is an x-large electricity and gas utility company.
  • ordered to pay $66 million to El Paso in 2011. El Paso is an x-large natural gas pipelines company.
  • ordered to pay $205 million to EDF and SAUR in 2012. EDF is the largest global electric utility company.
  • ordered to pay $60 million to SAUR International in 2014. SAUR is a large water company.

Kazakhstan concluded a BIT with Turkey in 1995.

  • ordered to pay $165 million to Rumeli Telekom and Telsim Mobil in 2008. Rumeli is a large telecommunications company; Telsim is a subsidiary of the telecommunications giant Vodaphone.

Mexico signed NAFTA in 1992.

  • ordered to pay $17 million to Metalclad in 2000. Metalclad is a privately-held waste management and asbestos company.
  • ordered to pay $17 million to Marvin Feldman in 2002. Feldman is a U.S. national.
  • ordered to pay $37 million to Archers Daniel Midland and Tale & Lyle in 2007. ADM is an x-large food processing and commodities trading company; Tate & Lyle is a large agribusiness company.
  • ordered to pay $86 million to Cargill in 2009. Cargill is the largest privately-held U.S. company, by revenue.

Canada signed NAFTA in 1992.

  • reportedly agreed to pay $13 million to Ethyl Corporation in 1998. Ethyl is a large fuel additive company.
  • ordered to pay $8 million to S.D. Myers in 2002. S.D. Myers is a medium electric power maintenance company.
  • reportedly agreed to pay CAD$130 million to AbitibiBowater Inc. in 2010. AbitibiBowater was the third-largest pulp and paper company in North America.
  • apparently agreed (through the province of Ontario) to pay CAD$15 million to St Marys Cement in 2013. St Marys was owned by Votorantim Cimentos, a Brazilian company and one of the largest cement companies in the world.

Romania concluded a BIT with Sweden in 2003.

  • ordered to pay $156 million to Ioan and Violrel Micula in 2013. The Micula brothers’ net wealth was approx. $220 million in 2011.

Hungary concluded a BIT with Cyprus in 1990.

  • ordered to pay $76 million to ADC in 2006. ADC is a company of unknown size in the airports industry.

Sri Lanka concluded a BIT with Germany in 2000.

  • ordered to pay $70 million to Deutsche Bank in 2012. Deutsche Bank is a global bank.

Paraguay concluded a BIT with Switzerland in 1992.

  • ordered to pay $64 million to SGS in 2012. SGS is a large customs inspection company.

The explosion of arbitration lawsuits by foreign investors against countries started around 2000, after many treaties allowing the lawsuits were signed with little public attention. There are now more than 500 known investor lawsuits, many ongoing.

Most compensation has been ordered for companies that are large (over $1 billion in annual revenue) or extra-large ($10 billion) or to tycoons (individuals with over $100 million in net wealth), all of whom qualified as foreign investors. An award to a company’s subsidiary or affiliate has been reported as an award to the parent company.

The list is non-exhaustive but includes most large awards up to May 2014. It does not include the more recent award of $50 billion against Russia under the Energy Charter Treaty. Amounts include pre-award but (not post-award) interest as well as principal amounts. Unless otherwise indicated, amounts have been converted to USD based on exchange rates at the time of award, have been rounded off, and are approximate.