The Swedish Trade Union Confederation (Sw. LO) is arguing that ISDS is “characterized by a lack of transparency, high costs, un-justified lawsuits and also carry the risk that human rights are violated.”
The arguments once again illustrate the careless treatment of facts in the ISDS-debate. This is what LO failed to mention.
ISDS is becoming more transparent than courts
In 2013, UNCITRAL adopted transparency rules for ISDS. ISDS-proceedings under the new UNCITRAL Transparency Rules will be more transparent than proceedings in domestic court. For example; (i) information about the case will be promptly made available as soon as the case has been initiated; (ii) the public will as a general rule have access to all documents from the proceeding; (iii) non-disputing parties will be allowed to file submissions; (iv) hearings may be open to the public, including through video link.
Governments have also agreed to more transparency, even before the adoption of the UNCITRAL Transparency Rules. As a result, documents from ISDS proceedings can easily be accessed online now, including almost 300 ISDS decisions.
ISDS is not more costly than proceeding in domestic court
Any dispute can be costly, depending on the complexity of the case, and complex cases naturally will result in higher legal counsel fee. A study by the OECD has found that legal counsel fees and experts is the largest cost component in ISDS, estimated to average 82% of the total cost of a case.
Legal fees being the decisive factor, costs would not necessarily be lower in a public court proceeding. It is more likely that they run higher. This is so because litigation in domestic court can be subject to one or two stages of appeals. In such cases, counsel fees will triple. In contrast, international arbitration is a one instance procedure.
ISDS is not characterized by unjustified lawsuits
The statement that ISDS is characterized by un-justified lawsuits is completely unsubstantiated. There is not support for such statement from any of the institutions or organs involved in investor-state dispute settlement.
In a democratic society, any person who is of the opinion that its rights have been violated should be entitled to initiate a legal procedure to defend this right. This is an inherent element of rule of law.
It is for the arbitration tribunal to decide whether the claim bears merit, depending on the evidence presented, i.e. exactly the same as for litigation in domestic court.
The character of lawsuits does not define a system. The quality of the awards does.
ISDS does not increase the risk of human rights violations
The protection of human rights is an important element of international law. It is defined for example by the European Convention of Human Rights, and alleged human rights violations are decided by the European Courts of Human Rights.
The European Court of Human Rights received 65,900 applications – in 2013 alone. As of 31 January 2013, there were a total 568 known ISDS cases – in the last 20 some years.
Risks of human rights violations are very high in some parts of the world, illustrated not least by the applications to the European Court of Human Rights in one year only. This is of course worrying.
The ISDS system however is designed to enforce rights in accordance with international law. These rights will in most cases include the protection against expropriation and non-discrimination, rights also protected under the European Convention of Human Rights.
Risks of human rights violations should always be mitigated. But removing the one mechanism which truly enforces treaty rights under international law is not the way forward.