Does regulatory chill still concern states?

Abstract

Public health measures taken by States have been subject to mounting arbitration legal challenges. These challenges resulted in an argument that investment agreements in general and the prevalence of the Investor-State Dispute Settlement (ISDS) mechanism, in particular, may force governments to refrain from introducing new legislative or policy measures due to a fear that the measures could be contested by investors. This situation, a fear to adopt legislative and similar other measures, is often referred to as “regulatory chill.” Recent arbitration cases show, however, that some of the cases involving pharmaceutical and similar other companies have been decided in favor of State Parties to the ISDS. In this regard, the legal claims initiated by Eli Lilly against the Government of Canada or the arbitration claims brought by Philip Morris against the Government of Australia and Uruguay can be cases in point. Due to these recent cases, some scholars have argued that the ISDS decisions (such as Eli Lilly and Government of Canada) demonstrate that regulatory chill may not be States’ concern anymore.

This paper examines the obligations of State Parties to the International Covenant on Economic, Social and Cultural Rights (ICESCR or Covenant) to ensure access to affordable health technologies (medicines, vaccines, etc.) and the likelihood of investment agreements to result in a “regulatory chill” that hinders the realization of the obligations. In order to do so, the paper takes the TPP’s (now CPTPP) investment chapter as a case in point.