Bolivia, Venezuela and Nicaragua to World Bank: "Go away"
Bolivia, Venezuela and Nicaragua have announced that they are pulling out of the World Bank's International Center for the Settlement of Investment Disputes (ICSID). Under the investor-state procedures set up under NAFTA and similar agreements, foreign companies are allowed to sue sovereign nations at ICSID if they feel their "expected future profits" are endangered by domestic policy.
Perhaps the most infamous ICSID case is the Bolivia water case, in which privatization of the water system in the city of Cochabamba led to massive rate hikes, violent protests, the repeal of watter privatization legislation, and then the company in question suing Bolivia in the ICSID for $25 million in lost future profits.
Obviously not wanting to expose themselves to further such cases in this undemocratic body, these three countries are considering a proposal from Bolivia's President Evo Morales that would "emphatically reject the legal, media and diplomatic pressure of some multinationals that ... resist the sovereign rulings of countries, making threats and initiating suits in international arbitration."
Given that Nicaragua is party to the Central America Free Trade Agreement (CAFTA) signed in 2005, which includes investor-state provisions that allow foreign companies to utilize ICSID, it'll be interesting to see how the United States responds to this move.
"documents how private investors have used [investor-state] right[s] to demand compensation for government actions that diminish their potential profits, including public interest regulations. The report summarizes ten of the most controversial suits, including one pending against the U.S. government over California state measures to reduce environmental damages from a Canadian-owned gold mine. "