First ISDS case over COVID-19 pandemic regulation lodged against Chile
September 15, 2022: The first known Investor-State Dispute Settlement (ISDS) claim concerning COVID-19 pandemic-related regulation was registered by French airport operating companies ADP International and Vinci Airports in August 2021 against Chile. The companies are arguing that Chile’s decision to close its borders during the height of the pandemic cost them US$37 million. A decision by a panel of international investment lawyers on this ISDS claim, made under the France-Chile investment treaty, is expected in 2023 or later.
Peru had also been threatened with an ISDS case. In April 2020 in Peru, the Congress passed a law to suspend payment of tolls on highways to ease the financial stress on citizens due to the pandemic. When foreign tollway investors threatened ISDS claims, the Peruvian government flipped, and persuaded the Constitutional Court to declare the law unconstitutional in August 2020. This is an example of the “policy chill” effect of ISDS threats.
The Chilean government may face more ISDS claims, this time because it legislated in April 2021 for citizens to be able to withdraw 10 per cent of funds placed with private pension funds. Three foreign-owned insurers ON Global Holdings, Consolidated Life Insurance and Metlife (which is currently also involved in an ISDS claim against Argentina) are now negotiating with the Chilean government: if the negotiations fail, those ISDS threats could become reality.
According to Bettina Müller of the Transnational Institute, there may be more ISDS cases related to COVID-19 waiting in the wings, as many investment treaties require a cooling off period of negotiations before a formal ISDS claim is registered; and as government pandemic support to businesses winds down business losses may emerge to trigger ISDS claims. Read her full article here.