Cases are brought to ad hoc private tribunals of arbitrators, which are paid huge sums on a case-by-case basis. Because cases can only be brought by investors, the system builds in a financial incentive for arbitrators to reach investor-friendly verdicts. Very little is known about the operations of these tribunals as there is little to no transparency. What we do know, however, is that an “inner mafia” of just 15 arbitrators have decided 55% of all known cases, according to the Transnational Institute.

Arbitrators have no obligation to consider any factors external to trade and investment law, such as human rights or environmental protection. There is no mechanism for representing the concerns of communities affected by the investors and policies in question. And governments have no right to appeal verdicts.

While ISDS was initially invented solely to protect against the expropriation of foreign investors' assets, vague definitions of “investment” within trade and investment deals allow cases to be brought to challenge all manner of policies. Cases have been brought, for instance, in opposition to fracking bans, sugar taxes, plain cigarette packaging, caps on water rates - the list goes on.

Lydian is by no means the first mining firm to be utilising ISDS. Canadian-based Gabriel Resources, for example, are currently suing the Romanian government for $5.7 billion over what could, if approved, be Europe’s largest open-cast gold mine: Roşia Montană. This is the site of a heroic 20-year battle waged by local residents, who recently won a case in the Romanian courts that revoked the firm’s permit to mine - a decision now being challenged in a corporate court.

Or take the case of Infinito Gold, who in 2014 launched a $94 million lawsuit against Costa Rica following a decision to revoke their permit for the Las Crucitas open-cast gold mine on environmental grounds. In this instance, Infinito folded its operations as a mining enterprise, re-orientating their entire business around the ISDS case.

Ransom note

What, then, of the Lydian case? After the community blockade at Amulsar began, Lydian established two subsidiary companies in the UK and Canada. Both countries hold investment treaties with Armenia that include ISDS provisions. In March 2019, the company “formally notified” the Armenian government of a dispute it was bringing under both of these investment treaties. This formal notification is the first step investors must take to initiate ISDS proceedings, offering governments the chance to resolve the dispute before the case goes to arbitration.

Whether or not this threat has now been realised, we do not know. Investors have no legal obligation to publicly announce if and when arbitration has begun - further testimony to the opacity of the system. Nor, indeed, have Lydian confirmed what the precise grounds of the case are. All Lydian themselves will say is that the dispute has been brought “in connection with the ongoing blockades of road access to the Amulsar Gold Project”.

Reporting in the investment press offers a little more detail, noting that “they [Lydian] believe the country’s failure to remove road blockades cutting off access to the Amulsar gold project violated its investment treaties with the U.K. and Canada.” When campaigners from Global Justice Now and War On Want wrote to Lydian to request confirmation that this reporting was accurate, no response was forthcoming.

Short of formal confirmation, however, matters seem fairly clear. Lydian’s dispute notice functions as a ransom note to the Armenian government: forcefully remove the blockade at Amulsar or face a possible $2 billion lawsuit, according to numbers reported in the Armenian press.

People power vs corporate power

A year on, and the future of Armenia’s 2018 revolution remains to be seen. As the new government’s response to the protests at Amulsar illustrates, political freedoms have no doubt been expanded in the past year. Yet, at the same time, the signs are that the Pashinyan administration’s scramble to welcome foreign investment might lead to a doubling-down on pro-business and pro-market policies, irrespective of the human and environmental costs.

Amulsar, then, makes for the new government’s first major test. Will Pashinyan side with the people that brought him to power, or else bow down to powerful investors? As yet, matters seem too close to call.

It seems that Lydian’s threat of ISDS is intended to bully the Armenian government into taking a side. How remarkable that a little-discussed clause within unknown investment treaties could undermine years of bitter struggle on the part of the Armenian people. What a damning indictment of this anti-democratic shadow legal system, in which the future of a country's water system can be seen as nothing short of irrelevant.

Canada, South Africa, India, Ecuador, Tanzania, Indonesia and New Zealand have all taken steps to review, limit or end trade deals including ISDS and are refusing to sign new ones. And now, Armenia is becoming the latest flashpoint in the global struggle against corporate courts. If this country’s recent history tells us anything, it’s that however bleak circumstances may seem, it’s always worth taking a stand.

"More Precious Than Gold" is a new short documentary film about the threat of corporate courts in Armenia, produced by Global Justice Now and War On Want. You can watch the film here.