FAQ: What is Investor-State Dispute Settlement and What Does it Mean for Climate Action?
Boston University Global Development Policy Center
A controversial legal process known as investor-state dispute settlements (ISDS) is making it difficult for governments to mobilize finance for ambitious climate action.
When assets are protected by international investment treaties, like the Energy Charter Treaty, legal claims can be brought against countries by investors who feel they are negatively impacted by government policies. For example, Italy was recently ordered to pay UK-based oil/gas company Rockhopper more than €190 million for the Italian government’s refusal to grant an offshore oil concession. A May 2022 study in Science found potential ISDS claims globally could total as much as $340 billion.
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