<html><head><meta http-equiv="Content-Type" content="text/html charset=utf-8"></head><body style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space;" class=""><div class=""><b class=""><i class="">Organizations should sign this (much stronger) open letter on ISDS and COVID-19:</i></b> <a href="http://s2bnetwork.org/sign-the-pen-letter-to-governments-on-isds-and-covid-19/" class="" style="font-family: Optima, serif; font-size: 15px; color: purple;">http://s2bnetwork.org/sign-the-pen-letter-to-governments-on-isds-and-covid-19/</a><span style="font-family: Optima, serif; font-size: 15px;" class=""> </span></div><div class=""><br class=""></div><div class=""><br class=""></div><div class=""><div dir="ltr" class="gmail_attr"><a href="https://thehill.com/opinion/international/501872-why-we-need-a-moratorium-on-trade-disputes-during-covid-19" target="_blank" class="">https://thehill.com/opinion/international/501872-why-we-need-a-moratorium-on-trade-disputes-during-covid-19</a><br class=""></div><div class=""><h1 id="m_-1754583347929219396page-title" class="">Why we need a moratorium on investment disputes during COVID-19 </h1><div class="">By James Bacchus and Jeffrey Sachs, opinion contributors — 06/09/20 05:00 PM EDT<div class="">The views expressed by contributors are their own and not the view of The Hill <br class=""></div><div class=""><br class=""></div><div class=""><p dir="ltr" class="">Extraordinary times call for extraordinary measures. On April 1, 2020, UN Secretary-General Antonio Guterres declared the COVID-19 epidemic the world’s greatest challenge since World War II. The wellbeing of billions of people, and potentially millions of deaths, still hang in the balance, especially in the poorer countries of the developing world.</p><p dir="ltr" class="">We call on the international investment community to rise to this unprecedented challenge by supporting all nations to fight the epidemic effectively. Specifically, we call for a moratorium on investor-state arbitration cases and clarity of legal principles to ensure that governments have the policy space to protect their citizenry and combat the epidemic.<br class=""><br class="">The gravity of the global crisis is without a doubt. Confirmed COVID-19 cases now exceed <a href="https://www.reuters.com/article/us-health-coronavirus-casualties/global-coronavirus-death-toll-exceeds-300000-reuters-tally-idUSKBN22R04Z" rel="noopener noreferrer" target="_blank" class="">5 million and deaths exceed 300,000</a> and continue to rise rapidly. The epidemic has been slowed through extraordinary policy measures, including government actions to shut down a substantial proportion of economic activity worldwide. The International Monetary Fund (IMF) predicts the economic downturn will be the worst since the Great Depression and the UN foresees soaring rates of poverty and hunger. <br class=""><br class="">Governments everywhere are under great strain. There is an urgent need to mobilize tax revenues and other financing in extraordinary ways to curb the pandemic, enable the survival of the citizenry, and begin to restore economies. </p><p dir="ltr" class="">Each part of the world must contribute to solutions. Creditor nations have taken the extraordinary step of issuing a moratorium on the debt servicing of poor countries. The IMF is introducing many extraordinary financing measures for its member states. These are important early steps. More will be needed.</p><p dir="ltr" class="">In this unique context, we are deeply concerned that <a href="http://ccsi.columbia.edu/2019/06/03/primer-international-investment-treaties-and-investor-state-dispute-settlement/" rel="noopener noreferrer" target="_blank" class="">investor-state arbitrations</a> — legal cases in which foreign investors or their shareholders sue host governments for loss of expected profits — pose a threat to the ability of governments to confront the COVID-19 challenge.</p><p dir="ltr" class="">Governments fear that urgent actions needed to contain the pandemic, including shutdowns of economic sectors, restrictions on workplace activities, suspensions or cancellation of projects in view of the economic crisis, or changes in regulations and taxation to meet extraordinary fiscal needs, could trigger legal claims by foreign direct investors, claiming that the emergency measures deprive them of expected profits. Such claims are likely to arise under a variety of international investment agreements. </p><p dir="ltr" class="">The costs of contesting the filing by foreign investors of such new legal claims in investor-state dispute settlement (ISDS) at this time would potentially frustrate the fulfillment of core functions of government in confronting a public emergency of unprecedented depth and scale in modern history. Moreover, the threat or actual litigation of such legal claims would be a massive distraction of governments when all attention must focus on the extraordinary measures to contain the pandemic and its economic and social consequences.</p><p dir="ltr" class="">For these reasons, we urge international investors and the international arbitration community to act immediately to help ensure that ISDS does not in any way diminish the means for national governments to fight the pandemic and to counter the profound threats it poses to public health, economies, and human wellbeing worldwide.</p><p dir="ltr" class="">In general, we call on the international arbitration community — including investors, counsel, arbitrators, and organizations that host dispute-settlement mechanisms — to ensure that investor-state dispute settlement mechanisms in no way impede the bold and deep actions that governments must take in response to the pandemic. </p><p dir="ltr" class="">Specifically, to encourage and enable governments to take vital, urgent, and deep actions, we call for an immediate moratorium until the end of 2021 on new investor-state arbitration cases by private corporations against governments under international investment treaties and on enforcement of pending judgments in existing cases. We call also for a permanent restriction on all ISDS claims related to government measures targeting the health, economic, and social dimensions of the pandemic and its effects. </p><p dir="ltr" class="">There are four reasons for an immediate moratorium on new ISDS cases: </p><p dir="ltr" class="">First, the necessary business closures and other emergency responses will create unprecedented and far-reaching changes in the business environment and lead to lost income and profits. This requires widespread relief to companies and people. But ISDS provides special relief only for international investors, distorting support schemes and diverting governments’ attention from the needs of individuals and economic actors on the ground. </p><p dir="ltr" class="">Second, ISDS awards to investors from host governments frequently total many millions or even billions of dollars, which can represent sizable percentages of the budgets of developing countries. These legal penalties weigh heavily against the dire budget crises facing these developing countries in the context of the COVID-19 pandemic. The international arbitration community must ensure that ISDS does not deepen the inevitable fiscal crisis.</p><p dir="ltr" class="">Third, the mere threat of suits could chill the taking of crucial and timely regulatory or other governmental action. Governments must be able to fulfill their highest duty of protecting their citizens and halting the spread of the pandemic without fear of facing ISDS claims. </p><p dir="ltr" class="">Fourth, ISDS is not suitable as a remedy for addressing these claims, given the unprecedented nature of the crisis and the unprecedented scale and scope of public actions needed to address the crisis. There are no agreed international guidelines for how to proceed in these circumstances. </p><p dir="ltr" class="">In addition to the moratorium on new ISDS cases, we call as well for a moratorium on the enforcement of pending ISDS judgments, in recognition of the grave and unprecedented fiscal crises assailing governments all over the world. Untold billions of dollars in anticipated government revenues have seemingly vanished while fiscal outlays to stem sharply rising unemployment and poverty have skyrocketed. This means that payments on past awards now directly impede the core and vital functioning of government finances. </p><p dir="ltr" class="">Each part of the international arbitration community can contribute to the global good at this unique juncture. Companies and shareholders should ensure that ISDS in no way hampers the pandemic response. The legal community should refrain at this juncture from seeking and representing new ISDS claims.</p><p dir="ltr" class="">Arbitrators who might be appointed to rule on particular disputes should decline investors’ offers to hear these claims during the period of the moratorium. And the institutions that host ISDS cases should agree to close the door on such cases during the moratorium period and to apply the permanent principle that ISDS claims must not undermine the ability of governments to address this dire global emergency. All members of the community should refrain from lobbying and pressuring governments to undermine such principles. </p><p dir="ltr" class=""><em class="">James Bacchus is a distinguished University Professor of Global Affairs and Director of the Center for Global Economic and Environmental Opportunity at the University of Central Florida and a former Chairman of the Appellate Body of the World Trade Organization. Jeffrey D. Sachs is a University Professor at Columbia University, senior adviser to the Secretary-General of the United Nations, Director of the UN Sustainable Development Solutions Network, and a world-renowned economist, best-selling author, and leader on sustainable development. </em></p></div></div></div></div><br class=""><div class="">
<span class="Apple-style-span" style="border-collapse: separate; border-spacing: 0px;"><span class="Apple-style-span" style="border-collapse: separate; color: rgb(0, 0, 0); font-family: Helvetica; font-size: 12px; font-style: normal; font-variant: normal; font-weight: normal; letter-spacing: normal; line-height: normal; orphans: 2; text-indent: 0px; text-transform: none; white-space: normal; widows: 2; word-spacing: 0px; -webkit-border-horizontal-spacing: 0px; -webkit-border-vertical-spacing: 0px; -webkit-text-decorations-in-effect: none; -webkit-text-size-adjust: auto; -webkit-text-stroke-width: 0px; "><div style="word-wrap: break-word; -webkit-nbsp-mode: space; -webkit-line-break: after-white-space; " class=""><div class="">Arthur Stamoulis</div><div class="">Citizens Trade Campaign</div><div class="">(202) 494-8826</div><div class=""><br class=""></div></div></span><br class="Apple-interchange-newline"></span><br class="Apple-interchange-newline">
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