Corporate Wealth Over Public Health? Assessing the Resilience of Developing Countries' COVID-19 Responses Against Investment Claims and the Implications for Future Public Health Crises

In the wake of the COVID-19 pandemic, states around the world swiftly enacted a multitude of far-reaching emergency responses to contain the viruses’ spread and to cope with the economic repercussions of the ensuing crisis. However, these measures detrimentally impacted the operating conditions of many businesses or otherwise decreased their profitability. As this inevitably affected foreign investments, investors could be tempted to invoke ISDS clauses in International Investment Agreements to initiate proceedings before arbitral tribunals and seek compensation for loss of profit caused by states’ COVID-19 responses. Due to the specific circumstances in most developing countries, they were hit particularly hard by the crisis and are especially vulnerable to the threat of investment claims. It is therefore important to enable developing countries to realistically anticipate the risk of investment arbitration by assessing the chances of success of foreign investment claims against those policies that were most frequently adopted by them amidst the crisis. Against this background, this paper assesses how likely developing countries’ COVID-19 responses breached substantive standards of investor treatment under typical IIAs and which defence strategies states may invoke to justify their regulatory action. Based on this analysis, this paper concludes by formulating policy recommendations on how developing countries may enhance the resilience of their emergency responses against foreign investors amidst future public health crises.