Investment Law and Intra-National Inequality

Contrary to SDG 10, which aims to combat inequality both within and among countries, levels of intra-national inequality in particular are on the rise in many countries. It is therefore timely and crucial to examine what factors are causing these gaps, and how they might be reduced.

CCSI is examining the role of investment treaties in this respect, and has identified a number of mechanisms through which investment treaties – and, in particular, the ISDS mechanism – may be generating and exacerbating within-country disparities in economic, political and legal power. More specifically, five different ways through which ISDS produces unequal rights and/or unequal outcomes as between different intra-national stakeholders are by:

1. Providing stronger substantive legal rights to a certain class of actors that in turn strengthen the legal force of their economic rights and “expectations”, with potentially negative impacts on the competing rights and interests of other stakeholders;
2. Providing unequal procedural rights to a certain class of actors, easing their ability, through ISDS, to challenge regulatory measures negatively impacting their economic interests, while other individuals and entities continue to face relatively high legal and practical barriers to using litigation to protect and/or enhance public interest objectives;
3. Providing unequal remedies with a focus on economic rights and expectations that require governments to pay significant financial compensation to “property” holders for interference with these rights while violations of competing rights (economic as well as non-economic rights and interests) of other stakeholders can be perpetrated without the same financial consequences for governments;
4. Entrenching parallel but unequal systems of justice as between those who have access to ISDS and those that do not, and hindering the ability of domestic institutions (including courts and legislators) to address the inequalities in actionable legal rights; and
5. Creating disparities in the ability of different actors to shape relevant rules through domestic and international institutions and processes.

This PowerPoint briefly outlines and illustrates the five channels, while channels 1 and 2 are discussed in the book chapter “Investment Treaties, Investor-State Dispute Settlement and Inequality: How International Rules and Institutions Can Exacerbate Domestic Disparities” (in José Antonio Ocampo, ed., International Rules and Inequality: Implications for Global Economic Governance (Columbia University Press), 2019) and the Working Paper adapted from it.