The Covid-19 pandemic caused states to enact almost unprecedented measures aiming at the protection of public health. These measures caused considerable negative impacts on the economy, including the commercial activities of foreign investors. This article will look at what extent foreign investors could claim damages for economic loss caused by the state measures in potential future claims in investment arbitration.
It will, first, take a few representative examples of measures that states enacted to combat the disease, which should serve as illustrative cases to address the conflict between the economic interests of investors and the need to pursue non-economic public policy goals. Secondly, it will look at relevant standards of protection contained in international investment agreements (IIAs) and their possible interpretation and application in potential future disputes. Thirdly, it will address the measure of damages and whether the disputes resulting from the Covid-19 pandemic will have an influence on approaches to valuation in the future.
With respect to the applicability of IIAs in disputes about Covid-19 measures, it will be shown that generally the right and even the duty of the state to enact measures to protect public health will not be questioned, but rather be confirmed and strengthened in international investment arbitration. States are very likely not to be responsible under international law for alleged treaty breaches, either because the respective treaty standards are not violated, or because available defences, such as necessity or force majeure, are applicable.