To date, it has mostly been poor countries that had to pay compensation to internationally established companies. Why?

Arbitration courts have already been used in the past to settle disputes at international level, especially between companies and states. The idea is that, in this way, foreign investments and international business activities are protected to a certain extent. In Pakistan, for example, the government had to pay almost six billion dollars to an Australian investor after they refused him a license to mine gold and copper. In Spain, more than 50 investors have already filed arbitration claims against the government as expected subsidies in the solar energy sector have declined significantly from 2009. In more than 1,000 ISDS to date, it was mostly poor countries that had to pay compensation to internationally established companies. Why? The answer is quite simple. The arbitrators are regularly appointed for the specific case. One for, and by, each of the two parties, one jointly agreed upon. This means that, for example, lawyers may represent an interest group in one case and shortly afterwards, in a similar case, they themselves may pronounce judgement. Independence is therefore hardly possible. Arbitrators and interest representatives have a financial interest in the fact that legal action is taken. An engagement is only possible if the outcome is satisfactory and many lawsuits are filed, and investors only sue if they also believe they will win. Thanks to external financing, this process is even relatively risk-free for companies. On the other hand, governments are under massive pressure. It therefore seems an unsuitable means of settling international disputes. The question therefore arises as to why this path is open to foreign investors but not to domestic ones. The result is an unequal relationship that leads to discrimination. Finally, it must also be borne in mind that the judgments are incontestable and globally enforceable, which makes it an extremely powerful tool. So why should arbitration tribunals be an appropriate means in terms of socio-economic rights? Jernej Letnar Černič in his book "Corporate Accountability under Socio-Economic Rights" also sees the problem that companies can be acquitted of violations of rights too easily. However, there would be outside stakeholders who could enforce rights. Access to justice, which Černič views very critically on an international level, would thus be made much easier for victims. It illustrates the core problems that would be involved in such a procedure and raises the question of whether victims would waive their right to enforce their claims before national courts by means of arbitration. In view of the unequal treatment of foreign and domestic parties and the fact that the proceedings are not subject to appeal, this is not at all unimportant. Černič thus correctly recognises that although arbitration courts could make proceedings more efficient, there are still some disadvantages which must be compensated for by appropriate precautions. However, whether this can be achieved remains questionable.