Investment and COVID-19

The Covid-19 crisis has had a terrible impact on our world, most immediately in the form of a tragic loss of life, but in the long term, the crisis will also have a significant impact on people’s livelihoods. The ILO predicts severe job losses, while people in many countries are falling into poverty, reversing over a decade of progress in poverty reduction. As a result of this, the G20 countries are implementing a standstill on sovereign debt servicing in 2020 for the world’s poorest countries, and further extraordinary relief will likely come after that.

Debt relief is only part of the picture, however. Another economic concern for States, arising out of the Covid-19 crisis, is the complex web of international investment agreements between States which grant extraordinary (and arguably disproportionate) protections to foreign investors. At the present time, over 3000 of these agreements are in force and awards for breaches of these agreements can amount to hundreds of millions or even billions of dollars. A recent study has shown that the net ISDS losses of some states can amount to as much as a years’ worth of total government spending, a figure that is truly extraordinary.

As foreign investors may attempt to bring ISDS claims against States for actions taken to combat the Covid-19 pandemic in order to claim compensation or damages, or even in an attempt to change government policies for their benefit, relief against ISDS proceedings must also be part of any response plan to the Covid-19 crisis. This is particularly so given the experience of Argentina during its economic crisis in the early 2000s, which resulted in over 60 awards being rendered with costs in the billions of dollars.

As a result of the above, the CCSI is calling for an immediate moratorium on all ISDS claims and a permanent restriction on such claims relating to government measures taken in order to moderate the health, economic and social consequences of the crisis. 

Additional resources on COVID-19 and ISDS: