States’ responses to the global pandemic may, however well-intended, harm the interests of inward investors. Under international public law, those investors have rights and so a spate of investor-State arbitral claims may well be a legacy of the pandemic.

Across the world, governments have responded to Covid-19 by introducing emergency measures, which have inhibited social interaction and hampered economic activity. Each State hopes that its measures will alleviate the impact of Covid-19 on its people until a vaccine is found, but without proving financially ruinous.

In the interests of protecting public health, many States have introduced “lock-downs” to curb individuals’ freedom of movement, closed designated “non-essential” businesses, imposed price controls, restricted exports and nationalised, or provided State aid to, certain domestic companies or industries.

If you are a foreign investor in a State where emergency measures have been implemented, the chances are that you weren’t consulted by that host State prior to its announcement of the measures, yet your business is suffering just as much as your competitors’ there – perhaps more so.

Under international law, your host State has certain responsibilities towards you. If there is a bilateral investment treaty (“BIT”) in force between the host State and your home State, then those responsibilities will be clearly set out in the BIT. Every BIT differs, but its purpose is to facilitate and promote inward investment reciprocally between the signatories. Under a BIT, each host State is therefore typically obliged to:

• compensate you fully and promptly if its measures have had the effect of destroying your investment (known as expropriation);
• ensure that you receive fair and equitable treatment as an investor, both in terms of the commercial markets in which you have made your investments, but also the juridical system which protects and upholds your related legal rights;
• ensure that as an investor, you receive no less favourable treatment than others who are domiciled in the host State or a third country (i.e. a country that is not a party to the BIT);
• permit the repatriation of your capital and profits without hinderance.

It’s important to make sure that the BIT covers whatever form of economic activity you or your company have been engaged in. This depends on the BIT’s definition of “Investor” and “investment”. While BITs differ, their common purpose ensures that in general, the definitions are widely drafted.

If you have reason to believe that your host State has breached its obligations under the BIT, then you may be entitled to seek redress. You can bring an arbitration claim against the State and pursue it through an appropriate forum, e.g. the International Centre for the Settlement of Investment Disputes (“ICSID”). The defending host State is of course likely to argue that its measures were justified by the need to respond to a public health emergency and protect its citizens, so the ICSID or other tribunal will be required to consider the measures – and how they affected your investment – in that context.

If successful, you can enforce the arbitration award against the State, pursuant to the New York Convention 1958.

Throughout the Covid-19 crisis, in anticipation of investor-State claims, I would expect governments to document carefully both their reasons for implementing, changing and removing emergency measures and the impact that those steps have had in combating the virus.

As an overseas investor, it is of paramount importance that you should be mindful of possible claims too and make sure that you are documenting your experience of the crisis, in terms of its impact on your investment. If you have reason to restructure your business in the host State, it is also vital that you consider whether possible claims might be lost, e.g. with the dissolution of a subsidiary company.