Investment Policy Options for Facing COVID-19 Related ISDS Claims
By Daniel Uribe and Danish
Developing and least developed countries have undertaken a number of measures to fight against the multidimensional impacts of the COVID-19 pandemic. Such measures and those that may be adopted in the context of the recovery efforts are, however, susceptible to challenges by foreign investors using investor-State dispute settlement mechanisms.
This policy brief first considers the kinds of measures States have adopted to limit the spread of COVID-19, protect their strategic sectors and promote economic recovery, including through foreign investment aftercare and retention. It then addresses how the investor-State dispute settlement system (ISDS) has been used by investors in times of crises, based on the analysis of the awards in several cases brought against both developed and developing countries.
Against this backdrop, the brief elaborates on the different options and initiatives States can take for preventing ISDS claims at the national, bilateral, regional and multilateral levels. It concludes with some policy advice for developing and least developed countries to face possible COVID-19 related ISDS claims in the future.
Emerging Trends in FTAs and Public Health: Investment Agreements and Intellectual Property
Friday, 28 May 2021 – 16:00-17:30 (CET)
The inclusion of TRIPS-Plus provisions in developing country IP laws, as a result of negotiations of free trade agreements (FTAs) continues to be of concern. In addition, there are various emerging areas that require attention from developing countries, where accumulated knowledge and institutional learning are more limited. These include investment agreements that include ‘intellectual property’ as a category of investment – with subsequent ISDS mechanisms, as well as competition and investment chapters or agreements that may restrict the policy space, such as the China-EU Comprehensive Investment Agreement. There are several important developments to consider for the upcoming years. New negotiations in the period of Covid-19 crisis, when countries are in dire financial situations, may lead to even more unbalanced negotiations. The UK is pursuing new agreements after Brexit with developing countries, while the USA has signaled renewed attention to multilateralism and at the same time is continuing to make use of Section 301 of its trade law to advance reforms in third countries. The AfCFTA negotiations of the intellectual property chapter are set to start this year. Moreover, the RCEP Agreement is to be implemented via national law amendments and attention must be given in particular to the process for Least Developed Countries (LDCs) and the technical assistance offered.
In this context, the South Centre is holding a series of webinars on emerging trends related to free trade agreements (FTAs) and investment agreements that impact public health. In this first session, we will discuss the topic of investment agreements and intellectual property, including varied angles to the issue, such as perspectives for post Covid-19 agreements, the legal construction of IP as a category of investment, the challenges of ISDS and policy reform options, and the analysis of a concrete case.
Could COVID-19 trigger ‘localizing’ of international investment arbitration?
By Danish
In light of the challenges and travel restrictions due to the COVID-19 pandemic, many developing countries have been unable to effectively participate in international investment arbitration proceedings, traditionally held in locations like Washington D.C. and The Hague. To ease the heavy burdens currently being placed on States and ensuring investor confidence, this Policy Brief argues for the ‘localization’ of investor-State dispute settlement (ISDS) proceedings in host States and regions where the investment is actually located. It highlights the various advantages that localizing ISDS can bring, and the different regional initiatives already working towards this purpose. The brief also considers relevant legal and policy aspects, and seeks to provide concrete suggestions for the localization of ISDS as a small step towards the holistic reform of international investment arbitration.
Countries’ Policy Space to Implement Tobacco Packaging Measures in the Light of Their International Investment Obligations: Revisiting the Philip Morris v. Uruguay Case
By Alebe Linhares Mesquita and Vivian Daniele Rocha Gabriel
This Policy Brief aims to provide a concise analysis of the international investment dispute involving Philip Morris subsidiaries and the Republic of Uruguay. It depicts the main legal and political background that preceded the case, analyzes the decision reached by the arbitral tribunal, and assesses the award’s major regulatory and policy implications. It intends to contribute to the discussions on how and to what extent States can adopt tobacco control measures without violating their international obligations to protect the investment and intellectual property of tobacco companies. The main lesson that can be learned from the analysis of the Philip Morris v. Uruguay case is that investors rights are not absolute and can be relativized when there is a clash between private and public interests, such as in the case of public health. As a result, claims such as indirect expropriation and fair and equitable treatment can be dismissed. Finally, one of the main consequences is the progressive change in the design of international investment treaties, containing more provisions related to the right to regulate.
South Centre’s Submission to the 3rd Intersessional Meeting for Dialogue and Cooperation on Human Rights and the 2030 Agenda for Sustainable Development
Strengthening human rights for fighting inequalities and building back better
The COVID-19 pandemic has caused a global crisis without precedent in modern history. Its effects have not been felt equally among all countries as it has exacerbated the profound economic and social inequalities affecting the most vulnerable. In light of the lessons, we have learned – and are still learning – from the fight against COVID-19 pandemic, the 3rd Intersessional Meeting for Dialogue and Cooperation on Human Rights and the 2030 Agenda serves as a vital opportunity to understand the needs and realities of those who are still ‘left behind’.
South Centre Statement to the 2nd Session of the Expert Mechanism on the Right to Development
The 2030 Agenda for Sustainable Development recognizes the commitment of the international community to make the right to development (RtD) a reality for everyone, leaving no one behind, and building peaceful and inclusive societies on the basis of the respect of human rights.
The right to development becomes prominent during and in the aftermath of facing the COVID-19 pandemic. The creation of favorable conditions for international, economic, scientific and technological cooperation, including technology transfer and know-how, is part and parcel of the right to development through the promotion of the well-being of all peoples, the improvement of the economic conditions of the developing countries and bridging of the economic gap.
South Centre Semester Report, 1 January to 30 June 2020
This Semester Report summarizes the activities undertaken by the South Centre during the period 1st January to 30 June 2020. It is intended to provide information, organized by themes, about recent developments in the areas covered by the Centre’s Work Program, meetings organized or co-organized by the Centre to examine particular issues or provide analytical support for negotiations taking place in various international fora, and conferences and other meetings where the Centre has participated. It also informs about publications made.
The Covid-19 Pandemic and Liability under Investment Treaties
By Muthucumaraswamy Sornarajah
COVID-19 can increase liability for countries under international investment treaties. Professor M. Sornarajah, Emeritus Professor at the National University of Singapore, discusses in this SouthViews the imminent challenges faced under such treaties by developing countries. The text isbased on his presentation at the South Centre webinar on “Responsible Investment for Development and Human Rights: Assessing Different Mechanisms to Face Possible Investor-State Disputes from COVID-19 Related Measures” held on 30th July 2020. The recording of the webinar is available here: https://www.youtube.com/watch?v=yXPswKuywvA
Responsible Investment for Development and Human Rights: Assessing Different Mechanisms to face Possible Investor-State Disputes from COVID-19 Related Measures
Developing and least developed countries (LDCs), particularly in Africa, are especially vulnerable to the unfolding effects of the COVID-19 pandemic. According to UNCTAD, foreign direct investment flows will drop drastically up to 40% during 2020-2021. A number of developed and developing countries, including LDCs, have introduced a number of measures aimed at limiting the effects of the pandemic, protecting domestic industries for strategic sectors (e.g. health industry, energy sector, telecommunication, food production, etc.), and safeguarding the real economy, particularly by offering bonds or bailouts for companies and the public in general.
Law firms and risk managers are already advising foreign investors about the possibility of initiating investor-State dispute settlement (ISDS) claims against host States on the grounds of the alleged breach of their investors’ rights, based on provisions such as : (i) full protection and security; (ii) fair and equitable treatment; (iii) national treatment and most-favoured nation treatment; and (iv) unlawful expropriation.
Designing an International Legally Binding Instrument on Business and Human Rights
By Daniel Uribe and Danish
The present document is substantially based on the background materials prepared by the South Centre (authored by Kinda Mohamadieh, Daniel Uribe, and Danish) for various sessions of the Open-Ended Intergovernmental Working Group on transnational corporations and other business enterprises with respect to human rights (OEIGWG), established by Resolution 26/9 of the Human Rights Council, held since 2015.
The objective of this document is to provide support material for State delegations and other stakeholders for the negotiation of a binding international instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises. The document considers a number of issues and technical details that have been addressed during the different sessions of the OEIGWG.
The ISDS Reform Process: The missing development agenda
By Nicolás M. Perrone
The foreign direct investment (FDI) governance agenda is centred on the reform of international investment agreements (IIAs) and investor-state dispute settlement (ISDS). The proliferation of IIAs and ISDS has contributed to narrowing the FDI agenda. A key policy question is whether this fragmented approach remains consistent with the 2030 Sustainable Development Goals (SDGs). Current FDI discussions point at the need for a holistic approach in this policy area, quite the opposite of a regime primarily aimed to protect foreign investors through treaty standards and international arbitration. The realisation of the SDGs depends on multi-stakeholder partnerships to combat poverty and provide clean water and energy to the world population. Crucially, these partnerships will require more cooperation and coordination than IIAs and ISDS can promote and nurture.
Reforms to Investor-State Dispute Settlement (ISDS) are being discussed in the United Nations Commission on International Trade Law (UNCITRAL) Working Group III. One possible reform is the development of an appellate mechanism, either as part of the proposed two-tier standing investment court, or as a stand-alone appellate mechanism. From the perspective of developing countries as host states that face possible claims from investors, how appealing is an appellate mechanism in ISDS?
