As if the amount of money leaving the continent through illicit financial flows is not enough, the new monster haemorrhaging governments in the region is the Investor-State Dispute System (ISDS) that are enshrined in trade and investment agreements.

Under this system, multinational companies have the right to sue States if policy initiatives such as wage increases, public health protection, environment protection, remunicipalisation or tax reforms threatens their rights to make profits, or poses risk to their investments. They have the rights to sue States in international tribunals, often based in Washington or the Word Bank, without recourse to States legal institutions. The arbitrators to these courts are private lawyers. The cost to States is in the form of penalties levied against them by multinational companies, and legal charges.

A meeting, conducted in partnership with FES[1], was held in Casablanca, Morocco on 1-3 October 2019. It brought together 37 participants from PSI affiliates and Civil Society Organizations in Africa and the MENA region, to call for a complete eradication of ISDS in investment and trade agreements, and a discontinuation of the Multilateral Investment Court (a reform proposal of the EU, to the ISDS) in the UNCITRAL Process.

The meeting also expressed its solidarity with the striking airport workers at Casablanca from the PSI affiliate UMT. It condemned the jailing of five trade union leaders and urged the government to release them and settle the dispute.

PSI Assistant General Secretary, Daniel Bertossa said “These workers do difficult work under tough conditions – all they ask is that they share in the rewards of their labour and are treated with dignity. Nobody should be jailed for exercising their human right to strike.”

On average, legal costs for an ISDS case amount to US$4.9 million for states. Between 2013 and 2018, there has been an unprecedented boom of claims against African countries. Twenty-eight (28) of them have been sued by investors at international arbitration tribunals. These claims amount to about $55.5 billion, since 1993. The highest amount ever paid by an African country as a result of a single investor claim was the US$2 billion paid by Egypt to Veolia[1].

The fear of being sued by these investors who are mostly from Europe, have impeded countries from making the necessary policy changes to provide quality services to their citizens, increase wages of workers, improve climatic and environment conditions and improve the livelihoods of their citizens.

Having realised the threats, countries like Tanzania have terminated its Bilateral Treaty with the Netherlands due to ISDS, South Africa have terminated 10 Bilateral Investment Treaties due to ISDS cases.

[1] This meeting was organised in partnership with FES, Friends of the Earth and Transnational Institute (TNI)

[2] Veolia signed an investment contract with Egyptian Electricity Holding Company to build water and wastewater treatment plants

For more information, find PSI background paper on Overview of international trade and Africa: