UN body supports global call for moratorium on ISDS cases during pandemic

May 7, 2020: Economist Professor Jeffrey Sachs and six other global figures have called for an immediate moratorium on all Investor-State Dispute Settlement claims and a permanent restriction on all such claims related to government action to contain the COVID-19 pandemic.

The other signatories are Phil Bloomer, Executive Director, Business & Human Rights Resource Centre; Juan Pablo Bohoslavsky, Former UN Independent Expert on Foreign Debt and Human Rights (2014-2020); Carlos Correa, Executive Director, South Centre; Olivier De Schutter, UN Special Rapporteur on Extreme Poverty and Human Rights; Kerry Kennedy, President, Robert F. Kennedy Human Rights; and H.E. María Fernanda Espinosa Garcés, President of the 73rd Session, UN General Assembly (2018-2019); Ecuadorean Minister of Foreign Affairs (2017-2018).

“We call on the world community for an IMMEDIATE MORATORIUM on all arbitration claims by private corporations against governments using international investment treaties, and a PERMANENT RESTRICTION on all arbitration claims related to government measures targeting health, economic, and social dimensions of the pandemic and its effects. These investor-state cases (often referred to as “ISDS” cases) empower foreign private companies to challenge government actions that affect narrow corporate interests, and often result in large payouts, sometimes of billions of dollars, to these companies for alleged lost profits. These suits pose an immediate danger to the ability of developing nations, and the global community as a whole, to confront the COVID-19 challenge ...

“We call on individual countries to advance this effort, and the United Nations and specialized agencies, the World Bank Group, the Organisation for Economic Co-operation and Development, and other multilateral organizations to implement it. We similarly call on all people of conscience -- including lawyers who initiate and arbitrators who decide these arbitration cases -- to put the lives of people ahead of corporate interests at this dire moment facing humanity”.

At the same time, the United Nations Conference on Trade and Development has expressed concern at possible Investor-State Dispute Settlement cases being taken against government actions to cope with the Covid-19 pandemic, and acknowledged the calls for a moratorium.

“[International Investment Agreements] concluded 20 to 60 years ago do not reflect today’s global challenges relating to sustainable development, public health or climate change. Broadly drafted provisions found in IIAs resulted in expansive interpretations by arbitral tribunals, which reduced the capacity of host States to regulate, even when such regulations were taken in the public interest,” says UNCTAD’s Investment Policy Monitor for May 2020.

“Concerns have already been expressed in some countries that emergency measures adopted in the context of the pandemic could result in investor–State disputes, and calls are being made for governments to act multilaterally and in a coordinated manner to suspend treaty-based ISDS arbitration for all COVID-19 related measures”.