UK Faces Renewed Risk of Costly Lawsuits as Government Pursues Investor-State Dispute Settlement
London – The UK government is facing mounting criticism for reportedly seeking to include Investor-State Dispute Settlement (ISDS) mechanisms in new trade treaties, despite evidence suggesting the provisions offer little benefit to attracting foreign investment while exposing the country to possibly billions in lawsuits from foreign corporations. The move comes as concerns grow that ISDS chills climate action and undermines democratic governance, prompting calls for renewed public mobilization against the policy.
ISDS allows foreign investors to sue governments in private arbitration tribunals, bypassing domestic courts, over policies that they claim harm thier investments. critics argue this system disproportionately favors corporations and discourages governments from enacting progressive policies.
Recent examples demonstrate the potential consequences. France,Denmark,and New Zealand have reportedly scaled back climate ambitions fearing legal challenges,and numerous other nations likely face similar pressures. A 2020 meta-study found international investment agreements, which often include ISDS, have “so small as to be considered zero” effect on encouraging foreign investment. A 2013 UK government-commissioned report similarly concluded ISDS was “highly unlikely to encourage investment” and “likely to provide the UK wiht few or no benefits.”
Despite this evidence, sources indicate the current Labor government, led by Keir Starmer, is attempting to incorporate ISDS into its investment treaty negotiations with India and other ongoing trade deals. These negotiations are being conducted in secrecy, with the government refusing to engage with campaigners or provide further data, raising concerns about a lack of transparency.
This isn’t the first time the UK has faced opposition to ISDS. Public movements previously defeated attempts to implement the provisions through the Multilateral Agreement on Investment and the Transatlantic Trade and Investment Partnership. activists are now preparing to mobilize once again, arguing the government prioritizes the interests of foreign corporations over its own citizens.
