On March 11th 2020, the Director-General of the World Health Organisation (WHO), Dr Tedros Adhanom Ghebreyesus, declared the COVID-19 a pandemic after witnessing increasing spread of the disease across countries and continents at the same time1. At the time of this designation, the global health architecture was confronted with ‘118,000 cases in 114 countries, with 4,291 deaths from the virus’2. Currently, the devastating effects of the virus both in spread and deaths is astronomical, thus becoming the greatest health issue since the 20th Century. According to the European Centre for Disease Prevention and Control, there are currently 19 357 085 cases and 721 174 deaths from the virus globally3.
Consequent upon these impacts of the COVID-19 across the world, several countries initiated measures towards minimising its effects in their jurisdictions. These measures included the closing of boarders and internal frontiers, shutting down of all but essential business activities and organisational undertakings, and the enactment of different regulations aimed at curtailing the spread, infection and deaths arising from the pandemic4. Beyond the human costs of the pandemic, these plethora of measures by countries will also impact on other areas of human activity such as international investment law. Therefore, this intervention aims to assess the wider implications of the COVID-19 on international investment regulation and protection. In particular, this piece sets out to examine how the policy measures embarked upon by different countries will be approached within the international investment regulatory architecture.
Multinational investments are mainly regulated through international investment agreements consummated by states5. Whether in its bilateral or multilateral variants, these agreements provide and grants nationals of consummating states access and protections to invest in the jurisdictions of each other. More importantly, these agreements also contain substantive protections such as Expropriations, Fair and Equitable Treatment (FET), Full security, Most-favoured-nation (MFN) and National treatments among others. Essentially, they contain clauses aimed at protecting the investments of foreign nations from being expropriated and discriminated against by host states6. On the thrust of these guarantees by host states, foreigners therefore invest in other climes with the full assurance that their investments are safe. But, such assurances and legitimate expectations are on the premise and assumption of normalcy. Since the COVID-19 pandemic is a period of global health and economic crises, the question arises as to whether the impact of the policy measures by states on investment agreements will be subjected to the same adjudicatory procedures in international investment arbitration.
Towards providing guidance to this question, perhaps a good starting point is to state that international investment law might have provided a framework that applies at a time like this moment. This view is supported by two mechanisms that are inherent within the international investment regulatory landscape. Firstly, most model investment agreements contain exemption clauses that protects states from investor claims for democratic and lawful decisions taken during periods of emergency7. For instance, Article 9 of the Morocco-Nigeria BIT affirms that compensation for damages and loss of investments during periods of war, armed conflict, revolution, insurrection, state of national emergency and other occurrences of similar nature shall be on the basis of reciprocal treatment that is ‘no less favourable’ than accorded to investors of the host state8.
This national treatment clause during emergency periods implicitly denotes that states may undertake measures that infringes on substantive protections and legitimate expectations in BITs for the preservation of their sovereign. In taking such measures however, losses arising from thence is expected to be compensated or settled on the basis of national treatment. Second, Articles XXI under security exceptions and XIX on Emergency Action on Imports of Particular Products of the General Agreement on Tariffs and Trade (GATT)9, a trade instrument of the World Trade Organisation (WTO), exempts states from investor claims for measures taken during emergency situations for the good of their homeland. It states inter alia that, ‘Nothing in this Agreement shall be construed to prevent any contracting party from taking any action which it considers necessary for the protection of its essential security interests taken in time of war or other emergency in international relations……10’
Consequent upon these exceptions therefore, it can be argued that investors will not be successful for any claims action against states for decisions taken during emergency periods like COVID-19, if such states elect not to compensate them for any losses incurred. This conclusion is advanced based on the knowledge that beyond the declaration of the COVID-19 as a pandemic by the WHO, several states have also described it as an act of invisible warfare11. As such, the emergency measures which will certainly restrict investment inflows and distort guarantees inserted in BITs will be contended as expected legitimate decisions by host states. Whatever argument to the contrary that will be advanced by investors will be approached on the objective ground of whether these policy measures were taken on the basis of national treatment. In essence, investors will only be successful if the tribunal of fact finds that the measures were discriminatory against foreign investors.
Within the forgoing circumstance, it is obvious that decisions of investment tribunals on cases about the COVID-19 measures by states will be determined on its facts and on a case by case basis. This is because, the margin of appreciation between national treatment, discrimination and expropriation is thin12, hence requiring delicate scrutiny and balance to determine them. Overall, the designation of the COVID-19 as a pandemic and global health emergency will play a key role in determining investor claims actions that will emerge after the global crises is over. Furthermore, exemptions which allows host states to undertake extraordinary measures during a period of global crises will also feature prominently. Ultimately, all decisions by states will also be objectively assessed to determine whether it was generally applied or discriminatory against foreign investors.
1See World Health Organisation, ‘WHO Director-General’s opening remarks at the media briefing on COVID-19 – 11 March 2020’ (2020), Available at <https://www.who.int/dg/speeches/detail/who-director-general-s-opening-remarks-at-the-media-briefing-on-covid-19—11-march-2020> (Accessed on 08/08/2020)
2See WHO Director-General’s opening remarks at the media briefing on COVID-19 – 11 March 2020
3European Centre for Disease Prevention and Control, ‘COVID-19 situation update worldwide, as of 8 August 2020’ (2020), Available at <https://www.ecdc.europa.eu/en/geographical-distribution-2019-ncov-cases> (Accessed on 08/08/2020)
4There were travel restrictions, flight bans and selling of COVID-19 medical supplies to other countries. See Department of Homeland Security, ‘Fact Sheet: DHS Measures on the Border to Limit the Further Spread of Coronavirus’ (2020), Available at <https://www.dhs.gov/news/2020/06/16/fact-sheet-dhs-measures-border-limit-further-spread-coronavirus> (Accessed on 08/08/2020) on the measures by the United states and European Commission, ‘Travel and transportation during the coronavirus pandemic’ (2020), Available at <https://ec.europa.eu/info/live-work-travel-eu/health/coronavirus-response/travel-and-transportation-during-coronavirus-pandemic_en> (Accessed on 08/08/2020) for measures by the European Union.
5See Organisation for Economic Co-operation and Development, ‘The impact of investment treaties on companies, shareholders and creditors  Available at <https://www.oecd.org/daf/inv/investment-policy/BFO-2016-Ch8-Investment-Treaties.pdf> (Accessed on 08/08/2020)
6See United Nations Conference on Trade and Development, ‘International Investment Agreements; Key Issues’ (2004) 2, Available at <https://unctad.org/en/Docs/iteiit200410v2_en.pdf> (Accessed on 08/08/2020), Claudia Levy, ‘Drafting and Interpreting International Investment Agreements from a Sustainable Development Perspective  3(1) Groningen Journal of International Law 1-26
7See South Africa’s Model BIT and Protection of Investment Act 2015
8Reciprocal Investment Promotion and Protection Agreement between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria 2016
9The General Agreement on Tariffs and Trade (GATT) 1948
10Ibid. 9 above, Article XXI (b)(iii)
11See Manuela Pellegrino, ‘COVID‐19: THE ‘INVISIBLE ENEMY’ AND CONTINGENT RACISM: Reflections of an Italian anthropologist conducting fieldwork in Greece’  36(3) Royal Anthropological Institute 1-3
12See Don Wallace Jr and David Bailey, ‘The Inevitability of National Treatment of Foreign Direct Investment with Increasingly Few and Narrow Exceptions’  31(3) Cornell International Law Journal 1-17