Balancing the Protection of Foreign Investors and States Responses in the Post-Pandemic World

Abstract

The COVID-19 pandemic has had a shattering effect on the international economic ecosystem, severely hampering—if only temporarily—its much-needed effort for liberalization and ever-growing interconnection.2 In the wake of the pandemic, States have swiftly enacted drastic emergency measures to safeguard the health of their citizens, which among other things imposed limitations on the movement of people, suspended the production of non-essential activities, redirected economic endeavours towards life-saving products, disrupting the global supply chain. The ensuing economic shock suffered by national economies was promptly followed by a wide range of efforts to support domestic businesses, secure jobs, and protect crucial activities from foreign acquisition. The emergency measures were often adopted without a preliminary assessment of their compatibility with the State’s existing international commitments towards economic liberalization, raising the question whether their adoption would entail international responsibility for the State. Though the capacity of international economic regimes to unduly constrain the State’s ability to meet the need of its own people is a recurring theme in international economic law,3 it has emerged prominently with regard to the international investment regime.4 The international protection of foreign direct investment (FDI) has long been perceived as unbalanced in favour of foreign investors, triggering a widespread move to reform international investment agreements (IIAs) with the aim of granting States a greater ‘margin of manoeuvre’ in their sovereign action.5 Though the reform process is well under way, the lack of coordinated efforts has so far led to an extremely fragmented IIA framework, still dominated by old-generation treaties and in which new IIAs have often not yet entered into force.6