Ever heard of a Bilateral Investment Treaty (BIT)? What about Investor State Dispute Settlement (ISDS) tribunals? No? I'm not surprised, it's a bit esoteric for most people but it might not be soon. This article HERE from 2017 explains that these arrangements are about enabling organisations or people who invest in a territory to be reassured that the government of that territory won't take an action that negatively impacts their "legitimate expectations" when the investment was made. Sounds a bit remote doesn't it? What's it got to do with Brexit?
The writer of the article, Ioannis Glinavos is a Senior Lecturer at Westminster Law School, and he suggests that this would perhaps be a legal means by which companies might obtain redress for any detrimental impacts of Brexit.
The article specifically mentions Spain because they have had to pay considerable compensation to a British energy company following a reworking of the regulatory framework for clean energy generation. The company won a payout of 128 million Euros, a not insignificant sum and 31 other companies also have claims.
"In these Spanish cases investors claim that, amongst other violations, Spain did not afford them fair and equitable treatment as required to by its treaty obligations. The ECT, under which these claims are brought, demands that states shall encourage investment and create ‘stable conditions’ and ensure ‘fair and equitable treatment’ (FET) of investors. Investments ‘shall also enjoy the most constant protection and security’ while ‘unreasonable or discriminatory measures’ are strictly forbidden
Spain eliminated a favourable regulatory regime previously extended to the investors to encourage their investment in its territory, and replaced it with an unprecedented and wholly different regulatory approach, based on wholly different premises.
An example in the UK might be Nissan (I don't suggest Nissan would even contemplate it but it's a very good example - other manufacturers are available as they say) who invested here on the explicit understanding (the legitimate expectation) that we would remain in the EU customs union and the single market.
Now if the government succeeds in taking us out of the single market when they don't actually need to in order to fulfil the result of the referendum, which as we know was just to leave the EU. The government would perhaps be seen as taking deliberate, unilateral action that impacted companies who invested here as a base from which to export to the rest of the EU. In other words they did not provide "stable conditions". I would imagine there would be a lot of possible candidates. Not all of them would want to take legal action, but some perhaps would.
Of course none of this would apply if we stayed in the CU and the SM or something that offered similar benefits. But the writer says the financial services sector is almost certainly going to lose passporting whatever happens and I would venture that some, particularly the US ones, would be very likely to take up the opportunity of winning back some of their losses.
Interesting eh? The cost of Brexit gets higher every week.
