It comes out that Argentina is thought never to have paid an ICSID award, though firms keep suing the country. Why sue countries that won't pay?
The answer is easy. Home governments are more justified in exacting punishments on behalf of their firms when those firms have institutionalized, legal claims. Home governments, like it or not, are actors in the investor-state dispute game.
The system in investor-state disputes stands in contrast to that at the World Trade Organization, where home governments must choose to file on behalf of their aggrieved firms. When firms have grievances related to investment, they can sue governments without the approval of their home government. Heck, the home government may not even know that its firms are exercising their (bilateral) treaty rights to sue.
In the WTO, aggrieved firms don't win awards when WTO decisions go their way. Far from it. Instead, home governments win the right to retaliation, which may or may not repair the damage done to the particular firms involved in the action. What about investor-state disputes? Direct awards were thought to be the mechanism of repair. But if governments aren't paying...awards might work because they grant firms more leverage to get their home governments to back their claims.
Thus, the investor-state dispute system may be coming around to resemble the WTO after all. Even though firms bring the suits and do the lawyering to win their awards, it may be that those awards aren't the primary mechanism to punish offending (and especially non-paying) states. It comes down to diplomacy and issue linkage. President Obama suspended Argentina from trade preferences in response to Argentina's non-payment of two arbitral awards. Even as Repsol sues Argentina over the nationalization of YPF, Spain is threatening action on "diplomacy, trade, industry, and energy." Home governments getting involved in their multinational corporations' disputes - before or after awards are issued - is not the wave of the future. It is already here.
The answer is easy. Home governments are more justified in exacting punishments on behalf of their firms when those firms have institutionalized, legal claims. Home governments, like it or not, are actors in the investor-state dispute game.
The system in investor-state disputes stands in contrast to that at the World Trade Organization, where home governments must choose to file on behalf of their aggrieved firms. When firms have grievances related to investment, they can sue governments without the approval of their home government. Heck, the home government may not even know that its firms are exercising their (bilateral) treaty rights to sue.
In the WTO, aggrieved firms don't win awards when WTO decisions go their way. Far from it. Instead, home governments win the right to retaliation, which may or may not repair the damage done to the particular firms involved in the action. What about investor-state disputes? Direct awards were thought to be the mechanism of repair. But if governments aren't paying...awards might work because they grant firms more leverage to get their home governments to back their claims.
Thus, the investor-state dispute system may be coming around to resemble the WTO after all. Even though firms bring the suits and do the lawyering to win their awards, it may be that those awards aren't the primary mechanism to punish offending (and especially non-paying) states. It comes down to diplomacy and issue linkage. President Obama suspended Argentina from trade preferences in response to Argentina's non-payment of two arbitral awards. Even as Repsol sues Argentina over the nationalization of YPF, Spain is threatening action on "diplomacy, trade, industry, and energy." Home governments getting involved in their multinational corporations' disputes - before or after awards are issued - is not the wave of the future. It is already here.
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