ISDS in Numbers — Guatemala Overview of the transnational investment protection regime that undermines water, territories and self-determination

Over the last ten years, Guatemala has received a series of million-dollar international arbitration claims from mining and energy companies that sought to establish projects in the territory of indigenous peoples and campesino communities. These companies had state support to impose their projects against the self-determination of the affected peoples, leading to social and environmental harms and big conflicts that have involved threats, efforts to discredit and intimidate the affected people, as well as criminalization, militarization, assassination attempts and murders. These have had serious impacts for the communities in resistance.

In their attempt to impose these projects, the Guatemalan state collaborated with the companies to enable their investments to proceed, first, ignoring the decisions that affected communities and peoples had made widely known through good faith consultations, resistance camps, and other acts to demonstrate their self-determination and to reject a development model that destroys water and territory, while putting community health at risk. In addition to facilitating permits or allowing projects to advance despite irregularities, the state also participated in processes of repression or militarization in favor of  investments.

Even with much in their favor, when transnational investors were unable to move forward with their investments, they resorted to the Investor-State Dispute Settlement System (ISDS) to file million-dollar claims against Guatemala in an attempt to pressure the state, or recuperate their investment and generate profits by this means.

Often, people acting to defend their water, territories and lives are accused of being responsible for these claims, as a new way to discredit and criminalize their legitimate struggles. Others may conclude that these claims result from institutional weaknesses to regulate and manage large investments. However, it is important to ask why corporations are able to sue sovereign states in the first place, and whether it is fair that they enjoy such recourse.

The transnational investment protection system, or ISDS, is part of extractivism and a global system of corporate impunity that has been imposed over the last fifty years to facilitate corporate control over the commons in indigenous territories and in the Global South.

In Guatemala, the neoliberal development model has been in place since the signing of the Peace Accords in 1996. In addition to the mining law reforms passed to attract transnational investment, and the privatization of the electricity system and installation of energy megaprojects to serve big energy consumers and the regional energy market, almost thirty Bilateral Investment Treaties (BITs) and Free Trade Agreements (FTAs) have been signed. These treaties enable transnational corporations to sue the country when they believe that government regulations or other measures affect their investments.

Recourse to ISDS deepens asymmetries between investors and the people affected by their investments. Peoples’ right to self-determination is regularly denied. In addition, communities lack effective access to justice and reparation for harms to their lands and territories from these projects, or for the serious human rights violations they face. Meanwhile, corporations enjoy access to this powerful mechanism (ISDS) with which to pressure state institutions to reach a settlement that suits their interests, or to otherwise be awarded millions of dollars at great cost to the public purse.

This is an unjust system. As the former UN Special Rapporteur on Human Rights and the Environment, David Boyd, reported, “While ISDS is a powerful tool for foreign investors, it has become a catastrophe for the development, implementation and enforcement of environmental laws, regulations, policies and permitting decisions needed to address the planetary crisis.” However, this system is not inevitable. But, first, it is necessary to identify the legal instruments that enable it in order to, then, find a way out.