Claims after COVID? COVID-19 and State Defenses in Response to Investment Claims
Völkerrechtsblog, 2 June 2020, doi: 10.17176/20200603-013408-0.
3 Pages Posted: 15 Mar 2022
Date Written: June 2, 2020
Abstract
COVID-19 continues to wreak havoc – not only by taking the lives of thousands of people across the world but also by impacting the national and international economy. The pandemic has disrupted business in all of its manifestations and caused millions of workers to be laid off.
Many companies, including those owned and run by foreign investors, are subjected to an unprecedented host of state measures. These unexpected circumstances have brought international investment law center stage, as legal scholars and practitioners evaluate the current position of foreign investors and host states. In this vein, the most critical questions are: Will a state be shielded from its responsibility resulting from responses to COVID-19 if the emergency measures taken by the host government are challenged by foreign investors? And more specifically, which defenses can, and should a host state invoke in response to such claims?
Generally, host states may rely on two grounds to legally defend themselves against treaty claims regarding the measures in question. The first ground is exemption provisions of international investment agreements (IIAs). The second possible ground is defenses under customary international law, especially force majeure and necessity.
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