The dispute agreement clauses in the industry agreements allow investors to seek reimbursement of employer closures
First on Saturday, August 15, 2020 14.46 CEST
Governments around the world, the UK, are facing a wave of demands from foreign companies complaining that their profits have been affected by the pandemic.
Webinars and consumer presentations reveal that major global law firms expect governments around the world to soon face court cases about their reaction to the Covid-19 crisis. The movements are conducted under clauses of investor-state dispute agreements (ISDS) that are incorporated into investment and industry agreements and allow foreign investors and corporations to sue governments in other countries.
Programs are heard in very secret ad hoc courts before a panel of three judges. Often, it appears that a case is presented to the committee meeting.
Law firm Alston-Bird used a recent webinar to expect the UK to be sued by Sadiq Khan’s ruling to close Crossrail structure sites during the pandemic. The resolution disagreed with the government’s policy of allowing the sites to operate with closure, an inconsistency they felt opened the door to a legal challenge.
Law firm Reed Smith predicted that governments’ reaction to the crisis will be investments “directly and particularly, and can result in really extensive claims.”
And Ropes-Gray issued an alert warning clients about investment treaty movements as “a difficult tool to recover or save losses from Covid-19-related government movements.”
Complaints that oppose governments in emerging countries raise concern.
More than 600 civil society teams in 90 countries have written an open letter giving the alarm. The signatories are Oxfam, Friends of the Earth, the International Trade Union Confederation (ICC), SumOfUs and Global Justice Now. They warn that at a time when government resources are running out to respond to the crisis, public money will not deviate from saving lives, jobs and livelihoods to pay ISDS rewards or legal fees to combat a claim.”
And they hope that a wave of cases can now lead to a “regulatory cooling effect, in which governments dilute, postpone or withdraw movements to combat the pandemic for fear of prosecution.”
Countries such as El Salvador and Bolivia have allowed citizens to defer water and electricity bills. Law firm Hogan Lovells has issued a consumer alert suggesting that foreign application corporations may simply sue for loss of revenue source in such cases.
“Corporations clearly don’t sue countries for emergency measures to save lives on a global pandemic, and we don’t announce industrial agreements that allow it,” said Sondhya Gupta, UK crusade manager at SumOfUs. “We know that low-income countries have the utmost difficulty in containing the virus. The risk of rich societies intimidating them with the public budget needed to “compensate them for loss of profits will further hamper efforts to combat the virus and increase the burden in generations over the long term.”
Jean Blaylock, global Justice Now’s head of campaigns and policy, said corporate courts that heard the claims granted much higher costs than national courts. Of the more than 1,000 ISDS cases known to have been reported before the pandemic, thirteen resulted in payments or settlements of more than US$1 billion.
By the end of 2018, a multitude of governments around the world had received the order, or had agreed, to pay public knowledge investors a total of $88 billion.
But there are now considerations that Covid-19 will generate a providence of claims that will gain advantages from giant law firms either to record and protect claims. “We have already heard about the risk of a case in Peru where the government ordered toll roads to avoid toll collection,” Blaylock said. “The government said the act of taking cash can only be one way to spread the pandemic.”
Blaylock added: “Why a corporate lawsuit? It sounds so unreasonable, but when you read the documents from law firms, it’s perfectly general for them and they expect that to happen. They recognize that there are incredibly valid public aptitude needs, however, they also perceive that these courts are designed solely to read about the interests of investors.