• ICAR


- Lucas Clover Alcolea

Keywords- Covid-19, ISDS, BIT, Investment Agreements, Investment Law, Covid-19 Moratorium, Treaty Interpretation

On May 5th 2020, the Columbia Center on Sustainable Development (CCSI) released a call for “an immediate moratorium on all [ISDS] claims… and a permanent restriction on all [ISDS] claims related to government measures targeting health, economic, and social dimensions of the pandemic and its effects.”[1] The call was signed by several international law luminaries including, inter alia, Juan Pablo Bohoslavsky, a former UN Independent Expert on Foreign Debt and Human Rights, Olivier de Schutter, UN Special Rapporteur on Extreme Poverty and Human Rights and H.E. María Fernanda Espinosa Garcés, former Ecuadorian Minister of Foreign Affairs and President of the 73rd Session of the UN General Assembly. Unsurprisingly, the call was not signed by any investment law experts at the time of its release, and one does not risk much in wagering that it is unlikely to be received well by the investment law community. A similar ‘Open letter to governments on ISDS and Covid-19’ was also put out by the ‘Seattle to Brussels Network’ in June.[2] To date, it has been signed by over 600 international and regional organisations and has also had extensive media coverage.[4]

Both instruments are light on details as to how such a moratorium would be implemented, for example, the call merely encourages various international organisations to implement it, and it appeals to individual consciences “to put the lives of people ahead of corporate interests at this dire moment facing humanity.”[4] The open letter, on the other hand, has an annexure appended to it with several suggestions, including withholding consent to ISDS and encouraging governments to request suspension of ongoing proceedings.[5] However, as admitted in the open letter, the former solution is available to only a very small minority of States as the vast majority has already given advance consent to ISDS and the latter is reliant on the discretion of arbitrators. [6]In consequence, one must look elsewhere for discussion about the possible means by which States could effectively enter into such a moratorium. In this regard, a report by the International Institute for Sustainable Development (IISD) published in April 2020, on the topic of protection against Covid-19 ISDS claims, is illuminating. It suggests that States could promulgate bilateral or multilateral interpretations which would state “that governments are to be considered as acting in necessity and therefore cannot be found on breach of their investment treaty obligations for COVID-related measures”.[7] This blog post aims to briefly analyse the possibility of entering into such interpretations and outline the challenges States are likely to face if they seek to do so.

The Use of Multi or Bi-lateral Interpretations to Immunise States from Covid-19 ISDS Claims

The IISD paper suggests that states could “issue a joint interpretation clarifying, for instance, that governments are to be considered as acting in necessity and therefore cannot be found in breach of their investment treaty obligations for COVID-related measures.”[8]Such an approach would not be completely unprecedented. For example, Laos and the PRC issued an interpretation clarifying the territorial scope of the Laos-PRC BIT during an ongoing arbitration, and the matter came before the Singaporean Courts for review. Ultimately, for reasons that will be discussed below, the interpretation was not applied by the Singapore Court of Appeal.[9] A more successful example was the interpretation issued by the NAFTA Free Trade Commission, holding that FET under NAFTA was equivalent to the minimum standard of treatment under customary international law.[10]

The primary basis for such interpretations can be found in Article 31(3) of the Vienna Convention on the Law of Treaties (VCLT) which states that “ There shall be taken into account, together with the context: Any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions”. The International Law Commission (ILC) report on the draft convention states, in relation to this provision, that, “an agreement as to the interpretation of a provision reached after the conclusion of the treaty represents an authentic interpretation by the parties which must be read into the treaty for purposes of its interpretation.”[11] The 2013 ILC Report on Subsequent Agreements and Subsequent Practice in Relation to the Interpretation of Treaties, also stated that “the parties to a treaty, if they wish, may reach a binding agreement regarding the interpretation of a treaty.”[12]

Having established above, that there is a clear legal basis for such subsequent state interpretation, it is now possible to consider what the effect of such an interpretation would be. The most important effect of an interpretation from a State’s point of view is that it has a retroactive effect, as stated by an OECD report on the topic “An interpretation clarifies the meaning of the original text. Its effect reaches back to the entry into force of the original text.”[13] In other words, States could issue such an interpretation in the next few weeks, months, or years and it would still potentially apply to the entirety of the Covid-19 crisis.

However, there are two important potential restrictions on the State’s powers to issue a binding bilateral or multilateral subsequent interpretation of a treaty. Firstly, according to the Singapore Court of Appeal in Sanum Investments the ‘critical date’ doctrine means that a party cannot rely on evidence which postdates the commencement of the dispute between the investor and the State to improve its position. In that case, the court refused to give any weight to a bilateral modification of the Laos – PRC BIT which was issued whilst the investment arbitration proceedings against Laos were ongoing.[14] It is important to note, however, that this doctrine was not mentioned or applied by NAFTA tribunals which were ongoing when the FTC interpretation was issued, and thus it is unclear whether the application of the ‘critical date’ doctrine in this way is a mere Singaporean idiosyncrasy.[15] That said, support for the Singaporean view can be found in the tribunal's statement in Compania de Aguas del Aconquiia SA and Vivendi Universal v Argentina that, “it is an accepted principle of international adjudication that jurisdiction will be determined in the light of the situation as it existed on the date the proceedings were instituted. Events that take place before that date may affect jurisdiction; events that take place after that date do not.”[16] In consequence, there exists a possibility that other courts or investment tribunals might refuse to accord any weight to treaty interpretations promulgated, after a dispute has arisen between the investor and the State, or at least after ISDS proceedings have commenced.

The second restriction on States’ interpretative powers is that, arguably, interpretations must be genuine interpretations and not an attempt to disguise treaty amendments, the key theoretical difference between the two is that whilst interpretations have retroactive effect, treaty amendments do not.[17] However, in practice, the line between interpretation and amendment is blurred, and interpretations which were arguably amendments, have nevertheless been accepted as interpretations by international courts and tribunals.[18] Consequently, the theoretical difference between interpretations and amendments of treaties is unlikely to be a fruitful argument for investors who wish to challenge a bilateral or multilateral Covid-19 interpretation of investment agreements.

It is now possible to conclude that from a legal perspective, the suggestion of enacting bilateral or multilateral modifications of investment agreements via binding State interpretations is well-founded. Although it would, for obvious reasons, be extremely controversial and go significantly beyond any interpretations of investment agreements to date, this does not change the fact that it would appear to be based on solid legal foundations. Nevertheless, attempts to enact such modifications would face obvious practical problems, put simply, why capital exporting States would enter into an agreement in which their nationals have much to lose and nothing to gain. The lines between some capital-exporting and importing states have indeed blurred in recent years, for example, China now exports significant amounts of capital, and in that sense traditionally capital exporting States may wish to protect themselves against claims. Equally, capital-exporting States may consider it morally expedient to protect capital importing States from ISDS claims by making an analogy with past cancellations of third world foreign debt. Lastly, given the current climate of scepticism towards ISDS, it is not impossible to imagine that certain capital exporting States may agree to Covid-19 bilateral or multilateral binding interpretations purely based on antipathy towards ISDS or a feeling that Covid-19 claims would be distasteful.


The suggested moratorium on Covid-19 Investment Claims by the CCSI cannot be considered mere verbiage because, when combined with suggestions by IISD, it represents a real window of opportunity for States to protect themselves from costly ISDS claims arising out of Covid-19 measures. Although investment law professionals may be more than a little sceptical of the bona fides of such suggestions, they are based on a solid legal foundation even if they face real practical challenges. In consequence, investment lawyers dismiss suggestions for a Covid-19 bilateral or multilateral interpretation of investment agreements at their peril.

Lucas Clover Alcolea is a doctoral candidate at McGill University under the supervision of Professor Fabien Gélinas and a student member of the Private Justice and Rule of Law Research Group. He would like to acknowledge McGill’s SSHRC Institutional Grant and the MI4 Emergency COVID-19 Research Funding (ECRF) program for their funding. All errors, omissions and opinions are his own.

Preferred Method of Citation – Lucas Clover Alcolea, ‘The Proposed Moratorium on Covid-19 Investment Law Claims’ (ICAR, 5 September 2020) <>.


[1] Call for ISDS Moratorium During COVID-19 Crisis and Response - Columbia Center on Sustainable Investment’ 7 <> accessed 18 May 2020.

[2] Martin, ‘Open Letter to Governments on ISDS and COVID-19’ (Seattle to Brussels Network) <> accessed 26 August 2020.

[3] Jamie Doward, ‘Global Firms Expected to Sue UK for Coronavirus Losses’ The Observer (15 August 2020) <> accessed 26 August 2020.

[4] ‘Call for ISDS Moratorium During COVID-19 Crisis and Response - Columbia Center on Sustainable Investment’ (n 2) 7.

[5] Martin (n 3).

[6] ibid.

[7] Nathalie Bernasconi-Osterwalder, Sarah Brewin and Nyaguthii Maina, ‘Protecting Against Investor–State Claims Amidst COVID-19: A Call to Action for Governments’ (International Institute for Sustainable Development 2020) 8.

[8] ibid.

[9] Sanum Investments Limited v The Government of the Lao People’s Democratic Republic [2016] SGCA 57.

[10] Emmanuel Gaillard and others, Fifteen Years of NAFTA Chapter 11 Arbitration: Joint McGill University/IAI Conference, Montreal, 25 September 2009 (Juris 2011) 175–194 <> accessed 1 April 2020.

[11] ‘Report of the International Law Commission on the Work of Its Eighteenth Session’ (1966) 2 Yearbook of International Law Commission.

[12] ‘Report of the International Law Commission Sixty-Fifth Session (6 May–7 June and 8 July–9 August 2013)’ (International Law Commission) Document A/68/10.

[13] David Gaukrodger, ‘The Legal Framework Applicable to Joint Interpretive Agreements of Investment Treaties’ 8 <> accessed 18 May 2020.

[14] Sanum Investments Limited v The Government of the Lao People’s Democratic Republic (n 10) paras 65–70; 101–121.

[15] Gaillard and others (n 11) at 181-185.

[16] Compania de Agues del Aconquija SA v Argentine Republic ICSID Case No. ARB/97/3 (Award) (20 August 2007) [61].

[17] Anthea Roberts, ‘Power and Persuasion In Investment Treaty Interpretation: The Dual Role of States’ (2010) 104 The American Journal of International Law 179, 201.

[18] ibid.

The views and opinions expressed in the article are those of the author(s) solely and do not reflect the of official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.


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