Export Credit Agencies, International Investment Law and the Spectre of Unsustainable Developing Countries' Debts

Abstract

This article argues that the activities of Export Credit Agencies (ECAs), which provide political risk insurance to cover exports and foreign direct investments (FDIs), may be undermining the goals of Investor-State Dispute Settlement (ISDS). ISDS is supposed to limit investment disputes so that they are between the investor and host-state of the investment (investor-state disputes). However, since ECAs are quasi-governmental organisations that support FDIs, they can effectively elevate such investment disputes so that they are between the host-state and home-state of the investor (state-to-state disputes). This has implications for the necessity defence in international investment disputes, which is likely to feature in cases triggered by governmental measures taken in response to the COVID-19 pandemic. Further, the article argues that the activities of ECAs often precipitate unsustainable debt accumulation in developing countries. And these situations are becoming increasingly combustible because ECAs have escalated their activities to season investment programmes with foreign and geopolitical influence. This may worsen in the aftermath of the COVID-19 pandemic. The article concludes that increased transparency and a sustainability element in the activities of ECAs are essential to both expose these risks more broadly and to create a space under the canopy of international economic law for more sustainable growth from the understory of developing nations.