We are writing to you today to urge you to take a lead in ensuring countries around the world do not face a wave of investor-state dispute settlement (ISDS) cases arising from actions taken to tackle the COVID-19 pandemic and ensuing economic crisis.
Globally, some governments are taking actions to save lives, stem the pandemic, protect jobs, counter economic disaster and ensure peoples’ basic needs are met. The level of these actions has been unprecedented in modern times and the need for these actions has been clear. But the expansive reach of the ISDS system could open such critical government actions to claims for millions in compensation from foreign investors. The numbers of such claims could also be unprecedented and impose massive financial burdens on governments struggling under the burden of devastating health and economic crises.
ISDS in various forms is written into many trade and investment agreements. It allows foreign investors – and foreign investors alone – to sue governments in secretive tribunals outside of the national legal system for amounts far higher than are likely to be available to them in domestic courts.
The lawyers, who profit enormously from the ISDS system, are already fishing for corporate clients interested in using ISDS tribunals to extract large sums from governments over actions they have taken in response to the COVID-19 crisis. Law firms1, trade experts2, UN bodies3, and human rights experts4 have already predicted an imminent wave of ISDS cases. Specialist law journals have peculated that: “the past few weeks may mark the beginning of a boom” of ISDS cases5. Crisis situations in the past, such as the Argentine financial crisis or the Arab Spring, have led to many cases.
Cases could arise from actions that many governments have taken, such as those with the aim of:
• restricting and closing business activities to limit the spread of the virus and protect workers
• securing resources for health systems by requisitioning use of private hospital facilities, putting private healthcare providers under public control, or requiring manufacturers to produce ventilators
• mandating relief from mortgage payments or rent for households and businesses
• preventing foreign takeovers of strategic businesses stricken by the crisis
• ensuring access to clean water for hand-washing and sanitation by freezing utility bills and suspending disconnections
• ensuring medicines, tests and vaccines are affordable
• debt restructuring
The damage from a COVID-19 related wave of ISDS cases could be immense. From among the 1,023 known ISDS cases, thirteen have resulted in awards or settlements of more than US$1billion, including for lost future profits6. By the end of 2018, states worldwide had been ordered or agreed to pay investors in publicly known ISDS cases the amount of US$88 billion7. Some developing countries have billions outstanding in pending ISDS claims.
At a time when government resources are stretched to the limit in responding to the crisis, public money should not be diverted from saving lives, jobs and livelihoods into paying ISDS awards or legal fees to fight a claim. And given that the battle against COVID-19 will continue, a spate of cases now could result in a ‘regulatory chilling’ effect, in which governments water down, postpone or withdraw actions to tackle the pandemic from the fear of such payments, which could be deadly.
In order to prevent this, we urge governments to immediately and urgently take the following steps, before the first cases are brought:
1. Permanently restrict the use of ISDS in all its forms in respect of claims that the state considers to concern COVID-19 related measures.
2. Suspend all ISDS cases on any issue against any government while it is fighting COVID-19 crises, when capacity needs to be focussed on the pandemic response.
3. Ensure that no public money is spent paying corporations for ISDS awards during the pandemic.
4. Stop negotiating, signing, and or ratifying any new agreements that include ISDS.
5. Terminate existing agreements with ISDS, ensuring that ‘survival clauses’ do not allow cases to be brought subsequently.
In light of threats exposed by the pandemic, comprehensively review existing agreements that include ISDS to see if they are fit for purpose.
We urge you to take immediate action to ensure that the duty of governments to regulate in the public interest is safeguarded and put beyond the scope of ISDS claims.
International and regional
3. Africa Europe Faith & Justice Network
4. Amigos de la Tierra América Latina y el Caribe – ATALC
5. Arab NGO Network for Development
6. Asia Pacific Forum on Women, Law & Development (APWLD)
7. Asian Peoples’ Movement on Debt and Development (APMDD)
11. Center for International Environmental Law (CIEL)
13. Committee for the Abolition of Illegitimate Debt (CADTM)
14. Confederación Sindical de trabajadoras/es de las Américas (CSA)
15. DAWN (Development Alternatives with Women for a New Era)
16. Emmaüs International
17. European Attac Network
18. European Coordination Via Campesina (ECVC)
19. European Environmental Bureau
20. European Federation of Public Service Unions
21. European Network Against the Privatization and Commercialization of Health and Social Protection / Réseau européen contre la
privatisation et la commercialisation de la santé et de la protection sociale
22. Focus on the Global South
23. Food & Water Action Europe
24. Friends of the Earth Europe
25. Friends of the Earth International
26. Gender and Trade Coalition
27. Global Alliance on Media and Gender (GAMAG)
28. Global Anti-Aerotropolis Movement (GAAM)
29. Global Policy Forum
32. Health Action International
33. Health Global Access Project
34. IndustriALL Global Union
35. Institute of the Blessed Virgin Mary – Loreto Generalate
36. International Association of
Machinists and Aerospace Workers (IAMAW)
37. International Association of People’s Lawyers
38. International Baby Food Action Network
39. International Corporate Accountability Roundtable (ICAR)
40. International Trade Union Confederation (ITUC )
41. International Treatment Preparedness Coalition
42. International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF)
43. International Women’s Rights Action Watch Asia Pacific
44. Latindadd – Red Latinoamericana por Justicia Económica y Social
45. Médecins Sans Frontières Access Campaign
46. Moana Nui
47. Oxfam International
48. Pacific Network on Globalisation
49. Peoples Health Movement
50. Plataforma América Latina mejor sin TLC
51. Project on Organizing, Development, Education, and Research (PODER)
52. Public Services International – Interamerica
53. Public Services International (PSI)
54. Religious of the Sacred Heart of Mary JPIC / NGO
55. REPEM -LAC
56. RIPESS – Red Intercontinental de Promotion de l’Economia Social Solidaria
57. Social Watch
58. Society for International Development (SID)
59. Soroptimist International
61. Tax Justice Network
62. Third World Network
63. UNI Américas
64. United Methodist Church – General Board of Church and Society
65. UNMGCY (United Nations Major Group for Children and Youth)
66. Urgenci International Community Suppported Agriculture Network
67. WeMove Europe
68. WIDE+ (Women In Development Europe+) gender and trade WG
70. World Rainforest Movement
More information on how to implement these actions and the list of more than 550 National organisation, who have signed on to the letter, can be accessed here.
1 See for example: https://www.alston.com/en/insights/events/2020/04/the-coming-wave-of-covid19-arbitration/, https://www.ropesgray.com/en/newsroom/alerts/2020/04/COVID-19-MeasuresLeveraging-Investment-Agreements-to-Protect-Foreign-Investments,
https://www.reedsmith.com/en/perspectives/2020/05/reed-smith-quarterly-international-arbitrationfocus, https://globalarbitrationreview.com/article/1222354/could-covid-19-emergency-measuresgive-rise-to-investment-claims-first-reflections-from-italy, https://www.acerislaw.com/the-covid-19-
7 Calculation based on the UNCTAD database for cases up to December 2018. Out of the 310
disclosed cases which had been decided in favor of the investor or settled, information on damages
was provided for 213 cases (69%).