CCSI | 6 May 2020

Call for ISDS moratorium during COVID-19 crisis and response

CCSI and partner organizations are working on potential legal solutions for implementing this call. Further details will be posted on this page. Those who are interested in adding their names to this sign-on can express their interest in doing so here.

Extraordinary times call for extraordinary measures. The COVID-19 pandemic is the greatest threat to humanity since World War II. The fate of billions of people, and potentially millions of deaths, hang in the balance, particularly in the developing world. The United Nations Secretary General has recognized that COVID-19 is “the fight of a generation.” For this reason, the global community has taken and continues to take extraordinary and necessary actions. More than half of the world economy is locked down and related economic fallout generates major stress in fragile economies. Economic hardship is on the rise. Much of the world economy is in lockdown and 191 countries have closed schools, affecting 91% of all learners globally. The ILO is predicting an enormous number of job losses, while people in many countries are falling into poverty, reversing a decade or more of progress in poverty reduction. The G20 countries are implementing a standstill on sovereign debt servicing in 2020 for the world’s poorest countries, and further extraordinary relief will surely come after that.

In this regard, 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.

There are three reasons for an immediate moratorium.

• First, the necessary business closures and other emergency responses will create unprecedented changes in the business environment that will likely trigger a massive number of unjustified claims. Foreign investors will claim that they have lost their expected profits. And this will be true, but for the vital reason that every business in society will face an unprecedented situation. Governments have the duty to protect their citizens and to stop the pandemic without fear of lawsuits by foreign-owned businesses or foreign shareholders; typically these are claims that cannot even be brought against governments by their own domestic companies.

• Second, governments must direct their attention to the urgent control of the COVID-19 crisis, and not be distracted by foreign companies and shareholders who might take advantage of the crisis using vague investment treaty standards to press their claims.

• Third, awards against governments, frequently in the millions or billions of dollars, which can represent sizable percentages of governments’ budgets, would weigh heavily against the dire budget crises facing developing countries in the context of the COVID-19 pandemic. As the International Monetary Fund has warned, the economic downturn in 2020 will be the most severe since the Great Depression. Governments must ensure that ISDS does not deepen the inevitable fiscal crisis.

We therefore call for a complete moratorium on all ISDS claims until the pandemic has passed and governments have agreed on principles to ensure that future arbitration cases will not hinder countries’ good faith recovery efforts. These principles should recognize the full and clear scope that governments have, and are required, to take all appropriate actions to save lives and fight global emergencies, even when the result is a loss of profits or business opportunities, including by foreign investors. Furthermore, they should ensure that any damages awarded in ISDS cases should respect the dire financial situation facing governments following the COVID-19 emergency. Short of these clear principles, there will be no basis for restarting ISDS processes. In addition, we call for an ongoing restriction on ISDS claims related to measures taken during the pandemic, including those targeting health, economic, or social dimensions of the pandemic and its effects.

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.

– 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

– Jeffrey D. Sachs

University Professor, Columbia University

Director, United Nations Sustainable Development Solutions Network

– H.E. María Fernanda Espinosa Garcés

President of the 73rd Session, UN General Assembly (2018-2019)

Ecuadorean Minister of Foreign Affairs (2017-2018)