Letter From 220 Economists and Legal Scholars to Colombian President Gustavo Petro Calling for Action on ISDS

Why It Matters

Eliminating ISDS would safeguard Colombia’s climate reforms and reduce exposure to costly arbitration, while signaling a broader shift toward sovereign regulatory freedom in the investment arena.

Key Takeaways

• Colombia faces billions in potential ISDS claims on 129 projects
• ISDS hampers climate policies by allowing corporate challenges
• Brazil thrives without ISDS, showing treaties aren't investment drivers
• Global trend: countries withdrawing from ISDS to protect sovereignty
• Santa Marta conference could launch coordinated ISDS exit coalition

Pulse Analysis

Investor‑state dispute settlement (ISDS) has long been marketed as a shield for foreign investors, yet its practical impact often runs counter to public interest. By granting corporations the right to bypass domestic courts and sue governments in international tribunals, ISDS creates an asymmetrical legal landscape where policy decisions—especially those targeting climate mitigation—can be contested on profit grounds. Empirical studies repeatedly show no clear link between ISDS provisions and higher foreign direct investment, undermining the core justification for these clauses and prompting scholars to label the system a barrier to sustainable development.

In Colombia, the stakes are particularly acute. The country’s ambitious energy transition agenda, which includes halting new fossil‑fuel contracts, is shadowed by 129 oil and gas projects still protected under ISDS clauses, exposing the state to potential claims running into billions of dollars. The timing of the letter coincides with Colombia co‑hosting the First International Conference on Transitioning Away from Fossil Fuels in Santa Marta, offering a diplomatic platform to rally regional partners around a coordinated withdrawal from ISDS. By aligning its treaty renegotiations with other nations, Colombia could mitigate legal risk, preserve policy space for climate action, and set a precedent for emerging economies facing similar pressures.

The momentum against ISDS is already evident worldwide. Nations such as South Africa, India, Indonesia, Ecuador, and Bolivia have terminated ISDS‑linked agreements, while major economies like the United States, Canada, and members of the European Union are scaling back or eliminating the mechanism in new trade deals. This global retreat reflects a growing consensus that sovereign regulatory autonomy outweighs the perceived investment security offered by ISDS. For investors, the shift signals a need to adapt to more transparent, domestic‑court‑based dispute resolution, while governments can pursue climate and social policies without the looming threat of costly arbitration. Colombia’s leadership at the Santa Marta summit could therefore catalyze a broader coalition, reshaping the investment treaty landscape in favor of sustainable development.