630 civil society groups sound alarm over wave of Covid-19 claims in 'corporate courts'
Countries could be facing a wave of cases from transnational corporations suing governments over actions taken to respond to the Covid pandemic using a system known as investor-state dispute settlement, or ISDS. Cases could arise from actions that many governments have taken to save lives, stem the pandemic, protect jobs, counter economic disaster and ensure peoples' basic needs are met. Threats of cases have already been made in Peru over the suspension of charging on toll roads, and law firms are actively advising corporations of the options open to them. 630 organisations from across the world, representing hundreds of millions of people, are calling on governments in an open letter to urgently take action to shut down this threat. The letter below is published today.
We are writing to you today to urge you to take a lead in ensuring countries around the world do not face a wave of investor-state dispute settlement (ISDS) cases arising from actions taken to tackle the COVID-19 pandemic and ensuing economic crisis.
Globally, some governments are taking actions to save lives, stem the pandemic, protect jobs, counter economic disaster and ensure peoples' basic needs are met. The level of these actions has been unprecedented in modern times and the need for these actions has been clear. But the expansive reach of the ISDS system could open such critical government actions to claims for millions in compensation from foreign investors. The numbers of such claims could also be unprecedented and impose massive financial burdens on governments struggling under the burden of devastating health and economic crises.
ISDS in various forms is written into many trade and investment agreements. It allows foreign investors – and foreign investors alone – to sue governments in secretive tribunals outside of the national legal system for amounts far higher than are likely to be available to them in domestic courts.
The lawyers, who profit enormously from the ISDS system, are already fishing for corporate clients interested in using ISDS tribunals to extract large sums from governments over actions they have taken in response to the COVID-19 crisis. Law firms,trade experts, UN bodies and human rights experts have already predicted an imminent wave of ISDS cases. Specialist law journals have speculated that: "the past few weeks may mark the beginning of a boom" of ISDS cases.  Crisis situations in the past, such as the Argentine financial crisis or the Arab Spring, have led to many cases.
Cases could arise from actions that many governments have taken, such as those with the aim of:
• restricting and closing business activities to limit the spread of the virus and protect workers
• securing resources for health systems by requisitioning use of private hospital facilities,
putting private healthcare providers under public control, or requiring manufacturers to produce ventilators
• mandating relief from mortgage payments or rent for households and businesses
• preventing foreign takeovers of strategic businesses stricken by the crisis
• ensuring access to clean water for hand-washing and sanitation by freezing utility bills and suspending disconnections
• ensuring medicines, tests and vaccines are affordable
• debt restructuring
The damage from a COVID-related wave of ISDS cases could be immense. From among the 1,023 known ISDS cases, thirteen have resulted in awards or settlements of more than US$1billion, including for lost future profits. By the end of 2018, states worldwide had been ordered or agreed to pay investors in publicly known ISDS cases the amount of US$88 billion. Some developing countries have billions outstanding in pending ISDS claims.
At a time when government resources are stretched to the limit in responding to the crisis, public money should not be diverted from saving lives, jobs and livelihoods into paying ISDS awards or legal fees to fight a claim. And given that the battle against COVID-19 will continue, a spate of cases now could result in a 'regulatory chilling' effect, in which governments water down, postpone or withdraw actions to tackle the pandemic from the fear of such payments, which could be deadly.
In order to prevent this, we urge governments to immediately and urgently take the following steps, before the first cases are brought:
1. Permanently restrict the use of ISDS in all its forms in respect of claims that the state
considers to concern COVID-19 related measures.
2. Suspend all ISDS cases on any issue against any government while it is fighting COVID-19 crises, when capacity needs to be focused on the pandemic response.
3. Ensure that no public money is spent paying corporations for ISDS awards during the pandemic.
4. Stop negotiating, signing, and or ratifying any new agreements that include ISDS.
5. Terminate existing agreements with ISDS, ensuring that 'survival clauses' do not allow cases to be brought subsequently.
6. In light of threats exposed by the pandemic, comprehensively review existing agreements that include ISDS to see if they are fit for purpose.
More information on how to implement these actions is available in the annex to this letter. We urge you to take immediate action to ensure that the duty of governments to regulate in the public interest is safeguarded and put beyond the scope of ISDS claims.
Notes 1-7: see annex
Update 19 October 2020: The organisations launched a short video about this subject to raise awareness about the ongoing threat.
Read more about this subject
Indigenous communities in Paraguay saw their attempts to regain their ancestral lands thwarted by German investors. In Indonesia, US-based mining companies succeeded to roll back new laws that were meant to boost the country’s economic development and protect its forests. This is the level of impact that investment treaties can have on social, environmental and economic development and rights. Why? Because of the ‘Investor-to-State Dispute Settlement’ clauses that are included in many such treaties.
News / 11 October 2019
In Indonesia, US-based mining companies succeeded to roll back new laws that were meant to boost the country’s economic development and protect its forests. This is the level of impact that investment treaties can have on social, environmental and economic development and rights. Why? Because of the ‘Investor-to-State Dispute Settlement’ (ISDS) clauses that are included in many such treaties.
Investment treaties must be inclusive, sustainable and fair. That means that they must not put the interests of companies before those of people and their living environment.
News / 11 October 2019
Indigenous communities in Paraguay saw their attempts to regain their ancestral lands thwarted by German investors. This is the level of impact that investment treaties can have on social, environmental and economic development and rights. Why? Because of the ‘Investor-to-State Dispute Settlement’ (ISDS) clauses that are included in many such treaties.
International trade agreements often have far-reaching consequences not only for the economy of a country, but also for people and the environment. It is primarily the most vulnerable groups who suffer most from these agreements.
External link / 19 October 2020
Countries might face a wave of cases from transnational corporations suing governments over actions taken to respond to the Covid pandemic using a system known as investor-state dispute settlement, or ISDS. In June 2020, 630 organisations already called on governments to urgently take action to shut down this threat. With this video we invigorate this message, as the threat, unfortunately, has not decreased.
News / 10 February 2020
Over 70 organisations worldwide have signed an open letter to call upon the Dutch government to vote against CETA - the 'Comprehensive Economic and Trade Agreement'between Canada and the EU this week. They have serious concerns about the negative global social and environmental impacts of the CETA trade deal and similar upcoming European Union's trade agreements.
News / 14 September 2017
Remember the widespread protests against trade agreements TTIP and CETA? One of the main worries was the Investor-State Dispute Settlement (ISDS) mechanism these treaties contain. Now the European Commission has proposed to set up a Multilateral Investment Court. Is that good news?
News / 14 October 2016
Both ENDS will join the protest against trade treaties TTIP, CETA and TiSA on Saturday October 22nd in Amsterdam. These treaties will have negative impacts, not only in the Netherlands and Europe, but also - and maybe even more so - in developing countries.
Publication / 21 September 2015
Publication / 7 November 2018
Publication / 4 April 2019
News / 19 June 2018
Today, Both ENDS sent a letter, signed by various civil society organisations, to Sigrid Kaag (Dutch Minister of Aid & Trade) reminding her of an important deadline and to urge her to terminate the Bilateral Investment Treaty (BIT) that exists between the Netherlands and Burkina Faso. The treaty, which can be very harmful for a poor country such as Burkina Faso, will automatically be renewed for the next 15 years if it is not terminated before July 1st this year.
Publication / 19 September 2016
Publication / 10 March 2016
Blog / 28 September 2018
In 2001 Tanzania and the Netherlands signed a treaty only known to a few; a so-called Bilateral Investment Treaty aimed "to extend and intensify the economic relations between them and to stimulate the flow of capital and technology and the economic development of the Contracting Parties". But signing the treaty was in fact mainly a symbolic act which since then has had little if any effect in this respect. In fact, a report by the Netherlands Bureau for Economic Policy Analysis found that BITs have no positive effect on investment in low and lower middle income countries located in Latin America and Sub-Saharan Africa, including Tanzania.
Blog / 12 May 2020
Post-corona economy: five recommendations for the Dutch government on achieving the SDGs and the goals of the climate agreement
By Daniëlle Hirsch and Maria van der Heijden
The social debate on the Netherlands' role in the global economic crisis is now in full swing. At the centre of the debate is the question: how can we compensate for the setbacks affecting the Dutch economy without losing sight of efforts to make international trade and production chains more sustainable? We – Both ENDS and MVO Nederland (CSR Netherlands) – are particularly concerned about what we hear in these discussions about human rights, climate and the environment. That these are 'luxury problems' which we have no time to address at this time of crisis. And this, while the Corona crisis is showing us just how closely our current economy is irrevocably intertwined with the pollution of the planet and is making people all around the world more and more vulnerable. In short, we have to make our economy more resilient to such shocks. And that means committing ourselves to achieving the Sustainable Development Goals (SDGs) and the goals of the Paris climate agreement. We therefore address ourselves first and foremost to the government.
News / 11 December 2015
Nairobi, Kenya's capital city, will be the epicenter of international trade from 15 to 18 December 2015. The representatives of the World Trade Organisation (WTO), which currently has 162 member countries, will come together to negotiate. The different countries tend to have very different and often conflicting interests, which makes it difficult to reach agreements. Burghard Ilge of Both ENDS travels with Minister Ploumen as an official adviser and mediator from civil society. His role is to inform the Minister about the views and interests of civil society organisations around the world, in order for her to take these positions into consideration during the negotiations. We asked Ilge some clarifying questions.
News / 21 January 2019
Today an alliance of more than 150 organisations, trade unions and social movements in countries across Europe is launching a joint programme against unfair trade and investment agreements, and especially against the controversial Investor-to-State-Dispute-Settlement (ISDS) mechanism. Under ISDS, investors can bring complaints against states whose social and environmental legislation pose a threat to their profits.
Blog / 16 April 2020
In this time of crisis-driven reflection we can read telling analyses of past and present on all sides which are being translated into agendas for action. Many of the analyses address issues like inequality, climate, the financial sector, health care, education and women’s rights. They talk about ‘what’ and much less about ‘who’ or ‘how’.But a different future can only be built together with everyone, young and old, men and women. This future will not simply happen to us; we ourselves have a hand in it. It is time for new faces around the table, with new voices. It is time for a new future.