Applications are heard in top secret ad hoc tribunals before a panel of three judges. Often, it does not appear that a matter is brought before the committee meeting.
Law firm Alston & Bird used a recent webinar to predict that the UK will be sued over Sadiq Khan’s decision to shut down Crossrail construction sites during the pandemic. The move was at odds with the government’s policy of allowing the sites to operate for the duration of the lockdown, an inconsistency they say paves the way for a legal challenge.
Law firm Reed Smith predicted that measures taken by governments to deal with the crisis affect investments “directly and significantly and could give rise to substantial claims.”
And Ropes & Gray issued an alert advising clients to view actions brought under investment treaties as “a powerful tool to recover or prevent losses resulting from government actions related to Covid-19.”
Complaints against governments of developing countries give rise to particular concerns.
More than 600 civil society groups in 90 countries have written an open letter sounding the alarm. The signatories are Oxfam, Friends of the Earth, the International Trade Union Confederation (ITUC), SumOfUs and Global Justice Now. They warn that at a “time when government resources are depleted to respond to the crisis, public money must not be diverted from saving lives, jobs and livelihoods to paying ISDS rewards or legal fees. to fight against a complaint ”.
And they predict that a wave of cases could now result in a “regulatory cooling effect, in which governments dilute, postpone or withdraw actions to fight the pandemic for fear of prosecution.”
Countries like El Salvador and Bolivia have allowed citizens to delay payments for services such as water and electricity. Law firm Hogan Lovells has issued a client alert suggesting that foreign utility companies could sue for lost revenue in such cases.
“Obviously, companies shouldn’t sue countries for emergency measures aimed at saving lives in a global pandemic, and we shouldn’t sign trade deals that allow them,” said Sondhya Gupta, manager. campaign in the UK at SumOfUs. “We know that low-income countries have the hardest time containing the virus. The threat of wealthy corporations to intimidate them with much-needed public funds to “compensate” them for lost profits will further hamper efforts to fight the virus and increase the burden on future generations.
Jean Blaylock, head of campaigns and policy at Global Justice Now, said the company courts that heard the claims often awarded far higher prices than national courts. Of more than 1,000 cases of ISDS known to have been brought before the pandemic, 13 resulted in compensation or settlements of more than US $ 1 billion.
By the end of 2018, a host of governments around the world had been ordered, or agreed to pay investors in publicly known ISDS cases a total of $ 88 billion.
But there are now fears that Covid-19 will trigger a windfall of claims that will benefit large law firms both in the claims and in defending them. “We have already heard of the threat of a case in Peru where the government has ordered toll roads to stop charging tolls,” Blaylock said. “The government feared that the act of taking money could be a way to spread the pandemic.”
Blaylock added, “Why would a company sue? It sounds so unreasonable, but when you read the documents from the law firms, it is quite normal for them and they expect it to happen. They recognize that there are some incredibly valid public health needs, but they also understand that these courts are designed only to consider the interests of investors.