Abdullah Al-Haqim 
An investigation of the British Guardian newspaper reveals that governments paid about 84 billion dollars to fossil fuel companies in the case of disputes settlement, and paid more than $ 120 billion in public funds for private sector investors in all sectors since 1976. The average compensation paid for fossil fuel demands was $ 1.2 billion.
This system prompted states to give up or amend their environmental policies. The 2023 United Nations report reveals that Denmark, New Zealand and France have limited its climate policies due to the threat of the mechanism of settling disputes between investors and countries, while the Spanish government stated that it slowed down the pace of fossil fuels “for fear of prosecuting a foreign investor.” The report stated that this threat has become a “major obstacle” in front of countries that seek to address the climate crisis.
Last March, former Irish president, Mary Robinson, stated that there was “an increasing number of lawsuits filed by fossil fuel companies on governments wishing to take measures to address the climate crisis,” noting that these companies seek to obtain financial compensation from countries that decided to address the nature and climate crisis.
The Minister of Climate, then Dan Jurgen, stated that the Danish government set a final date to stop exploring fossil fuels by 2050, instead of 2030 or 2040, because it would have had to pay “very high compensation” to companies, in addition to losses in treasury revenues.
And within the issues that amounted to more than 1400 cases, analyzed by the Guardian newspaper from within the system of settlement settlement between investors and countries (ISDS) – a group of private courts that allow companies to prosecute states of billions of dollars – fears will prevail that the system of settlement settlement between investors and countries is “organizationally”, as the legal risks frighten the governments of governments from taking measures related to the protection of nature and a crisis Climate.
The Guardian investigation indicates that some issues cost countries a large part of their total annual budgets. For example, in 2015, Oxidental Petroleum received compensation of $ 1.1 billion from the Ecuadorian government. In 2016, the country’s budget amounted to $ 29.8 billion. The country faces 11 lawsuits, one of which is required for compensation equivalent to 30% of the country’s gross domestic product.
Toby Lando, a pioneering lawyer in the field of arbitration for 30 years, told Guardian that the work according to the Paris Agreement may result in heavy demands for countries, adding that “this matter is very important due to the climate emergency that we are going through, we are binding under the Paris Agreement to move quickly and firmly.”
Lando points out that there are two opposing systems, which are the Paris Agreement, which (generally) requires the gradual disposal of fossil fuels, and the system of dispute settlement between investors and countries, which provides guarantees for investors that protect their investments even if they are in fossil fuels.
Excessive costs
“The international arbitration is very costly … thousands of millions of dollars demanded as compensation is exaggerated,” says Manuel Diaz-Galias, the Prosecutor of Honduras, who has filed lawsuits calling for $ 18 billion in compensation.
Gallias emphasizes that the effects of the mechanism of dispute settlement between investors and countries are large, especially for countries such as Honduras, which suffer from high poverty rates and limited budgets.
For his part, Rob Davis, Minister of Trade and Industry in South Africa, between 2009 and 2019, says that South Africa withdrew from a number of treaties that include items related to the mechanism of settlement settlement between investors and countries starting in 2013, stressing that “this mechanism poses a great danger to government legislation.”
Davis believes that fossil fuel companies are finally exploiting the provisions of the dispute settlement mechanism between investors and countries “to thwart the regulations related to the green transformation.” He pointed out that this negatively affected the developing countries.
The report of the International Environmental Protection Policies of 2022 on climate change. “Many researchers pointed to the possibility of fossil fuel companies to use the mechanism of settlement of disputes between investors and countries to obstruct national legislation that aims to gradually get rid of the use of their assets.” The United Nations, the Council of Europe, and the European Parliament have raised similar concerns about delaying or weakening climate work due to the mechanism of settling disputes between investors and countries.
“There may be exorbitant costs related to these issues,” says Kayla Tainhara, a participating professor at the Faculty of Environmental Studies at Queens University in Canada. And you add Tainhara Countries are afraid to implement environmentally friendly policies because they are unable to bear the cost of the dispute settlement system between investors and countries. “Governments do not even have the necessary funding to deal with this issue from the ground up,” she added.
The World Bank established the system of settlement settlement between investors and countries in the 1960s to help companies protect their investments abroad. This system allows companies to prosecute states from the missing profits resulting from government measures, including corruption, confiscation of assets, or the application of health and environmental policies. It was aimed at giving companies confidence to invest in poor countries, but this system turned into a problem for countries that want to abandon projects harmful to the environment and climate.
