To Governments:

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 focused 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.

Signed,

International and regional

  1. ACAFREMIN
  2. ActionAid
  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)
  8. AWID
  9. BEACON
  10. bilaterals.org
  11. Center for International Environmental Law (CIEL)
  12. CIDSE
  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
  30. GRAIN
  31. Greenpeace
  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)
  1. International Association of People’s Lawyers
  2. International Baby Food Action Network
  3. International Corporate Accountability Roundtable (ICAR)
  4. International Trade Union Confederation (ITUC )
  5. International Treatment Preparedness Coalition
  6. International Union of Food, Agricultural, Hotel, Restaurant, Catering, Tobacco and Allied Workers’ Associations (IUF)
  7. International Women’s Rights Action Watch Asia Pacific
  8. Latindadd – Red Latinoamericana por Justicia Económica y Social
  9. Médecins Sans Frontières Access Campaign
  10. Moana Nui
  11. Oxfam International
  12. Pacific Network on Globalisation
  13. Peoples Health Movement
  14. Plataforma América Latina mejor sin TLC
  15. Project on Organizing, Development, Education, and Research (PODER)
  16. Public Services International – Interamerica
  17. Public Services International (PSI)
  18. Religious of the Sacred Heart of Mary JPIC / NGO
  19. REPEM -LAC
  20. RIPESS – Red Intercontinental de Promotion de l’Economia Social Solidaria
  21. Social Watch
  22. Society for International Development (SID)
  23. Soroptimist International
  24. SumOfUs
  25. Tax Justice Network
  26. Third World Network
  27. UNI Américas
  28. United Methodist Church – General Board of Church and Society
  29. UNMGCY (United Nations Major Group for Children and Youth)
  30. Urgenci International Community Suppported Agriculture Network
  31. WeMove Europe
  32. WIDE+ (Women In Development Europe+) gender and trade WG
  33. WoMin
  34. 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.

You can also access the text in French and Spanish.

Notes:

  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-pandemic-and-investment-arbitration
  2. https://www.iisd.org/library/investor-state-claims-amidst-covid-19
  3. https://unctad.org/en/PublicationsLibrary/diaepcbinf2020d3_en.pdf
  4. http://ccsi.columbia.edu/2020/05/05/isds-moratorium-during-covid-19
  5. https://www.law360.com/legalethics/articles/1261213/third-party-funders-business-is-boomingduring-pandemic
  6. https://investmentpolicy.unctad.org/investment-dispute-settlement
  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%).

June 30th, 2020


Reprinted from the website of the Asia Pacific Forum on Women, Law and Development

APMMD