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NUPGE sends letter to PM of Canada criticizing threat of ISDS cases

Brown urges Trudeau to safeguard the power to regulate in the public interest, and stop foreign investors from suing Canadian taxpayers.

Ottawa (18 June 2020) — In solidarity with over 350 global labour unions and international civil society organizations, NUPGE President Larry Brown sent a letter to Prime Minister Justin Trudeau urging him to take a lead to ensure that Canada and other countries around the world do not face a wave of investor-state dispute settlement (ISDS) cases arising from actions taken to tackle the COVID-19 pandemic and ensuing economic crisis.

Text of the letter to Prime Minister Trudeau

Dear Prime Minister:

On behalf of the 390,000 members represented by the National Union of Public and General Employees (NUPGE), I am writing to you today to urge you to take a leadership role in ensuring that Canada and other countries around the world do not face a wave of investor-state dispute settlement (ISDS) cases arising from actions taken to tackle the COVID-19 pandemic and ensuing economic crisis.

As you know, many governments around the world are enacting legislation, adopting public policies, and implementing new regulations to save lives, stem the pandemic, protect jobs, counter economic disaster, and ensure that peoples’ basic needs are met. Many of these laws, policies, and regulations have been unprecedented in modern times, and no one has questioned their necessity. On the contrary, we commend your government and Canada’s provincial governments for taking these actions.

But the expansive reach of the ISDS system could open such necessary government actions to claims for millions in compensation from foreign investors. The numbers of such claims could also be unprecedented and impose massive financial burdens on our federal and provincial governments struggling under the burden of devastating health and economic crises.

As you know, ISDS in various forms is written into many trade and investment agreements, including ones to which Canada is a signatory, such as the Comprehensive and Progressive Agreement for Trans-Pacific Partnership. The ISDS allows foreign investors—and foreign investors alone — to sue governments in secretive tribunals outside of the national legal system for amounts far higher than are likely to be available to them in domestic courts.

The lawyers, who profit enormously from the ISDS system, are already fishing for corporate clients interested in using ISDS tribunals to extract large sums from governments over actions they have taken in response to the COVID-19 crisis. Law firms, trade experts, UN bodies, and human rights experts have already predicted an imminent wave of ISDS cases. Crisis situations in the past, such as the Argentine financial crisis and the Arab Spring, led to many ISDS cases. Likewise, specialist law journals have speculated that “the past few weeks may mark the beginning of a boom” of ISDS cases.

Cases could arise from actions that many governments have taken, such as those with the aim of

  • restricting and closing business activities to limit the spread of the virus and protect workers;
  • securing resources for health systems by requisitioning use of private hospital facilities, putting private health care providers (such as long-term care facilities) under public control, or requiring manufacturers to produce ventilators;
  • mandating relief from mortgage payments or rent for households and businesses;
  • preventing foreign takeovers of strategic businesses stricken by the crisis; 
  • ensuring access to clean water for hand-washing and sanitation by freezing utility bills and suspending disconnections;
  • ensuring medicines, tests, and vaccines are affordable;
  • debt restructuring.

The damage from a COVID-related wave of ISDS cases could be immense. From among the 1,023 known ISDS cases, 13 have resulted in awards or settlements of more than US$1 billion, including for lost future profits (UNCTAD). Some developing countries have billions outstanding in pending ISDS claims.

At a time when government resources are stretched to the limit in responding to the crisis, public money should not be diverted from saving lives, jobs and livelihoods into paying ISDS awards or legal fees to fight a claim. And given that the battle against COVID-19 will continue, a spate of ISDS cases now could result in a regulatory chilling effect in which governments water down, postpone or withdraw actions to tackle the pandemic out of fear of such payments, which could be deadly.

In order to prevent this, we urge your government to immediately and urgently take the following steps before the first cases are brought:

  1. Permanently restrict the use of ISDS in all its forms with respect to claims that concern measures related to COVID-19.
  2. Suspend all ISDS cases on any issue against Canada while it is fighting COVID-19 crises, when capacity needs to be focused on the pandemic response.
  3. Ensure that no public money is spent paying corporations for ISDS awards during the pandemic. 
  4. Stop negotiating, signing, and/or ratifying any new agreements that include ISDS. 
  5. Terminate existing ISDS clauses in trade agreements, ensuring that “survival clauses” do not allow cases to be brought subsequently.
  6. In light of threats exposed by the pandemic, comprehensively review all existing trade agreements to ensure that they don’t unduly restrict government actions regarding repatriation of manufacturing capacity.

We urge you to take immediate action to ensure that the duty of the Canadian government to regulate in the public interest is safeguarded and put beyond the scope of ISDS claims.

Sincerely,
Larry Brown
President