Part IV – Shareholder Claims: A Fight Over Process and Substance

The treatment of shareholder claims for reflective loss (draft provision 18) continued to spotlight one of the more contentious issues in ISDS reform. Most domestic legal systems and principles of customary international law restrict standing to parties who can demonstrate a direct legal interest in the dispute. ISDS, however, remains an exception—allowing shareholder claims for reflective loss. This has led to duplicative and expansive claims, raising both financial and procedural risks for respondent States.

The question of how to regulate shareholder claims for reflective loss is particularly sensitive for developing countries, many of which have consistently called for structural limits on such claims. Yet the session saw efforts from some delegations and observers to either delay or exclude the proposed reform. Before States had an opportunity to weigh in, the floor was first given to non-State observers, including CCIAG, whose representative has consistently been afforded generous speaking time. His intervention struck a somewhat condescending tone and painted a selective picture of reality—one that conspicuously ignored the systemic risks posed by shareholder claims. But his aim was clear: to push for the elimination of the provision entirely, and he had the backing of the delegations of ICSID, USCIB, as well as Bahrain. This sequence drew concern from delegates, given that the Working Group is explicitly mandated to be “government-led.”

Despite this early framing, many delegations voiced their support for keeping the provision on the table. Nigeria, for instance, highlighted the chaos unleashed when shareholder claims are left unchecked, warning of “endless claims” from marginal shareholders that undermine both corporate accountability and the coherence of the dispute settlement system. India sought clarity on how minority shareholders’ losses would be defined and assessed. Argentina, Brazil, Chile, Colombia, Panama, Spain, and Venezuela also contributed thoughtful interventions that reaffirmed the importance of addressing the issue structurally.

Other States offered more cautious views. Switzerland and Singapore, for instance, argued that limiting shareholder standing would exclude most investors from ISDS altogether, but acknowledged that some limits or procedural safeguards may be appropriate. Canada, which has addressed reflective loss in its own Model Foreign Investment Promotion and Protection Agreement (FIPA), remained largely silent—a notable omission, given its past leadership on the issue. The EU and its Member States were similarly restrained. Though they acknowledged that shareholder claims must be addressed, they were less assertive than in prior sessions. They expressed doubts about the adequacy of a standalone provision but offered little in terms of concrete proposals or political backing. This growing hesitation—particularly from actors once seen as reform champions—may reflect reduced ISDS exposure or changing institutional priorities. But it also risks leaving key reform demands without strong advocates at a critical moment. The United States took a more definitive stance, questioning whether the provision belonged in WGIII’s mandate, describing it as overly complicated and technical, and therefore, not worth pursuing. While some concerns about complexity may be valid, they also risk becoming a proxy for avoiding reform discussions altogether.

Ultimately, the provision survived—for now. It is slated for renewed discussion in January 2026. But the limited engagement with its core content left many delegations concerned that the window for serious reform may be narrowing.

See Part V – The Right to Regulate: Balancing Policy Space and Predictability

Back to Part III – The Denial of Benefits Provision: A Test Case for Real Reform