World Bank Court Undermines Argentina’s Citizens

2007-08-23

Contact:
Maj Fiil-Flynn or Erin Greenfield
(202) 797-6550

World Bank Court Undermines Argentina’s Authority to Protect Citizens

This week the World Bank-based investor arbitration court demonstrated how multilateral and bilateral trade agreements give unprecedented power to corporations over sovereign governments in low-and-middle-income developing countries. The International Center for the Settlement of Investment Disputes awarded $105 million to French media conglomerate Vivendi and its subsidiary, Compania de Aguas Del Aconquija, in a decade-long dispute over a water utility contract in Tucuman, Argentina.

Citizens in Tucuman, Argentina organized a payment boycott against Compania de Aguas Del Aconquija after CAA raised rates by 104% in the first year of service and a lack of investment in water infrastructure by the company resulted in brown water at Tucuman taps. When the contract failed, investor protections allowed Vivendi to demand this financial settlement from the country it failed to serve.

Low- and middle-income countries have little recourse against investor dispute arbitration. Many of these suits involve companies with investor revenues greater than the gross domestic products of the countries they are suing. More than 30 cases have been filed against Argentina with ICSID, which has ruled in favor of the investor and ordered the government to pay compensation in nearly 70 percent of cases.

"In a growing body of cases, powerful firms have exploited these rules to undermine democratic processes, often at the expensive of vulnerable communities and the environment," said Food & Water Watch Executive Director Wenonah Hauter. "The good news is that countries, in Latin America especially, are questioning ICSID and the trade agreements that bind them too it."

The Argentine General Attorney of the Treasury has asked for an annulment of the Vivendi decision, citing the arguments as confusing and incomprehensible. However, a successful appeal is unlikely due to the narrow appeals mechanism currently in place under ICSID.

In April, Bolivia, Venezuela, and Nicaragua announced plans to withdraw the World Bank’s ICSID Convention.

More information about ICSID can be found at: http://www.foodandwaterwatch.org/water/pubs/reports/corporate-investor-rule/.

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World Bank Court Undermines Argentina’s Citizens

2007-08-23

World Bank Court Undermines Argentina’s Authority to Protect Citizens


Take Action Expel the hormones from school milk! Explore Further In the News Press Releases Publications Contact the Press Room RSS feed Help Us Grow	World Bank Court Undermines Argentina’s Citizens 2007-08-23 Contact: Maj Fiil-Flynn or Erin Greenfield (202) 797-6550 World Bank Court Undermines Argentina’s Authority to Protect Citizens This week the World Bank-based investor arbitration court demonstrated how multilateral and bilateral trade agreements give unprecedented power to corporations over sovereign governments in low-and-middle-income developing countries. The International Center for the Settlement of Investment Disputes awarded $105 million to French media conglomerate Vivendi and its subsidiary, Compania de Aguas Del Aconquija, in a decade-long dispute over a water utility contract in Tucuman, Argentina. Citizens in Tucuman, Argentina organized a payment boycott against Compania de Aguas Del Aconquija after CAA raised rates by 104% in the first year of service and a lack of investment in water infrastructure by the company resulted in brown water at Tucuman taps. When the contract failed, investor protections allowed Vivendi to demand this financial settlement from the country it failed to serve. Low- and middle-income countries have little recourse against investor dispute arbitration. Many of these suits involve companies with investor revenues greater than the gross domestic products of the countries they are suing. More than 30 cases have been filed against Argentina with ICSID, which has ruled in favor of the investor and ordered the government to pay compensation in nearly 70 percent of cases. "In a growing body of cases, powerful firms have exploited these rules to undermine democratic processes, often at the expensive of vulnerable communities and the environment," said Food & Water Watch Executive Director Wenonah Hauter. "The good news is that countries, in Latin America especially, are questioning ICSID and the trade agreements that bind them too it." The Argentine General Attorney of the Treasury has asked for an annulment of the Vivendi decision, citing the arguments as confusing and incomprehensible. However, a successful appeal is unlikely due to the narrow appeals mechanism currently in place under ICSID. In April, Bolivia, Venezuela, and Nicaragua announced plans to withdraw the World Bank’s ICSID Convention. More information about ICSID can be found at: http://www.foodandwaterwatch.org/water/pubs/reports/corporate-investor-rule/.