Corporations should not have the power to undermine the global battle against Covid-19

Even if governments agree to suspend patent protections for vaccines, corporations can fight back with expensive lawsuits.

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SOURCEForeign Policy in Focus

President Joe Biden’s support for suspending COVID-19 vaccine patents to facilitate the global production of immunologic agents is vital. If approved by the World Trade Organization (WTO), it will make it easier for many countries to produce their own vaccines at a time when high-income countries control more than 80 percent of the vaccines and only 0.3 percent have gone to low-income countries.

Biden took action in the face of a massive social and political campaign. One of the leaders of this campaign, Arthur Stamoulis, the director of the Citizens Trade Campaign, stated that “President Biden’s willingness to support the waiver is a testament not only to his character, but to the excellent work of the hundreds of organizations and millions of individuals who urged this to happen.”

But even if governments reach an agreement at the WTO, the fight, unfortunately, might not end there.

Companies could still appeal to supranational arbitration in tribunals, such as the World Bank’s International Centre for Settlement of Investment Disputes (ICSID). While these tribunals do not have the power to reverse government policies, they can put tremendous pressure on policymakers to bend to the will of powerful corporations.

The pharmaceutical industry has made clear their opposition to the patent waiver. Both the Pharmaceutical Research and Manufacturers of America and the Biotechnology Innovation Organization have threatened that this suspension will interrupt vaccine distribution. They have also pressed for the prevention of the “expropriation” and transfer of technology to other countries.

Government actions to guarantee vaccines, as well as other interventions to ensure access to medical treatment and balance economic recovery with support for the most unprotected social sectors, could all be targeted by corporate lawsuits.

In fact, since the beginning of the pandemic, law firms have been advising their clients regarding measures they can take to file multimillion-dollar lawsuits under bilateral investment treaties (BITs) and free trade agreements (FTAs) if their operations or profits are impacted by COVID-19 response policies.

For example, Aceris Law, an international arbitration firm based in Washington, D.C., declared that “while the future remains uncertain, the response to the COVID-19 pandemic is likely to violate various protections provided in bilateral investment treaties (BITs) and may bring rise to claims in the future by foreign investors.”

And according to an article in the specialized magazine Global Arbitration Review

“Mexico adopted two energy policies that were said to be in response to the fall in energy demand caused by COVID-19. The policies have had the practical effect of curbing renewable energy production by suspending all testing on solar and wind farms, giving enhanced grid access to non-renewable electricity generators, and strengthening the Federal Electricity Commission’s role in electricity planning. In response, several investors are reportedly considering bringing a claim against Mexico amid a doubt over the motive of these measures.”

Indeed, since 2020 lawsuits against governments have propagated like a virus in supranational tribunals. The supranational system for protecting investments functions in parallel to international law, promoted by the implementation of more than 2,600 BITs and FTAs. The lawsuits reach up to millions or even billions of dollars and target public policies and regulations that, the investors argue, reduce the value of their investments or even their expected profits (which they call “indirect expropriation”).

Since 2020, at least 72 new cases of investor-state lawsuits were registered at ICSID alone, several of them for exorbitant amounts. The Brazilian construction company Odebrecht has sued Peru for more than $1.2 billion. The Dutch port company Bob Meijer has sued the Republic of Georgia for $1 billion. The Italian construction company Webuild has sued Panama for $2.2 billion. And Mexico has been the target of at least three new cases since 2020 (by Rabobank, Espiritu Santo Holdings, and First Majestic), making it one of the most-sued countries in the world.

One year ago, 630 organizations, including the International Trade Union Confederation, raised the alarm about this situation, urging governments to “take a lead in ensuring 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.”

Biden criticized this system during his campaign, declaring: “I don’t believe that corporations should get special tribunals that are not available to other organizations.” He added, “I oppose the ability of private corporations to attack labor, health, and environmental policies through the investor-state dispute settlement (ISDS) process, and I oppose the inclusion of such provisions in future trade agreements.”

Now, in addition to waving patents and confronting powerful intellectual property rights, he should work with other countries to protect governments from the proliferation of more lawsuits by investors against governments and begin to dismantle this biased system.

Nowadays, when policymakers around the world are struggling to find resources to address the COVID-19 pandemic and its impacts, they should not be overwhelmed by having to defend themselves against multimillion-dollar corporate lawsuits. It is time to put health and security above the corporate thirst for profits.

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