Introduction The relationship between international investment law and sustainable development is complex. Some authors argue that IIAs do not constitute a structural impediment to sustainable development, while maintaining that more […]
In recent years, the “screening” of proposals for inward foreign investment has proliferated.[2] More countries around the world have introduced processes for the review of such proposals, often in particular […]
Introduction In August 2022, rain-induced flooding in Pakistan, which scientists linked to climate change, affected 33 million people and took the lives of 1,500. In July 2022, scorching heat waves […]
IIAs are known to pose various challenges to states, ranging from costly arbitration to delays or abandoning of regulatory action in the shadow of possible litigation. These important costs of IIAs raise the question of whether the treaties offer commensurate advantages to states that enter into them. Central among these claimed positive effects of IIAs is that they improve governance conditions (the rule of law) in host countries. It is on this point that Singapore’s experience with IIAs is particularly instructive. Singapore’s experience, as presented in this essay, highlights the challenges that IIAs can pose in even the best of governance environments and, in turn, raises questions as to the extent to which the treaties are calibrated to the goals that policy-makers and advocates set for them.
The paper summarizes the discussions related to the assessment of compensation and damages at UNCITRAL Working Group III on Reform of Investor–State Dispute Settlement (ISDS) and proposes an efficient and straightforward way to reform some of the problematic aspects of ISDS practice. The essay proposes limitations on the use of income-based valuation techniques (discounted cashflow method) in defined circumstances. This reform proposal would align ISDS practice with customary international law, improve the correctness and consistency of arbitral decision making and make the proceedings less costly.
Foreign investment activities of multinational enterprises may, at times, lead to violations of human rights. The existing legal avenues available to populations affected by human rights violations are known to be insufficient. This paper assesses to what extent the Hague Rules on Business and Human Rights Arbitration may offer advantages compared to the traditional means of redress.
This interview with Wolfgang Alschner, Associate Professor at the University of Ottawa, explores his new book on investment arbitration and state-driven reform. Alschner argues that new international investment agreements are not solving the problems of their predecessors because they are being interpreted in the same way as old agreements, thereby reproducing old outcomes. His book calls for a change in course for the investment regime, where new treaties inform the reading of old treaties rather than the other way around.
This article examines some of the main issues related to business group participation in three major investment policy reform processes. It identifies three general principles that can help ensure private sector stakeholders can participate in international governance processes more fairly and effectively.
This article examines two key provisions that pose costly arbitration risks for states but are often neglected in investment treaty reform processes. It aims to provide investment treaty negotiators with recommendations on how to better phrase these clauses to minimize the chances of misinterpretation in arbitral tribunals.
This article explores the meaning of the term “frivolous” as understood by the governments participating in the UNCITRAL WGIII ISDS reform process. It argues that participating states have focused on the procedural aspects of the problem by identifying ways to limit frivolous claims without undertaking the important substantive task of defining such claims.
This article argues that the success of efforts to modernize the ECT and prevent the treaty from impeding efforts to transition to clean energy sources will fail unless states participating in the process widen their focus to other IIAs to which they are part.
This article provides historical context for the shift in the transnational legal order that governs mining in Colombia and has provoked an increasing number of socio-political conflicts, leading to ISDS claims.
This article argues that African states should proactively and intentionally use accordance provisions to launch counterclaims against investors that violate domestic legislation enacted to protect human rights. Stand-alone accordance provisions can allow states to set their own standard for corporate liability even where international human rights law—and the arbitrators interpreting it—lags behind.
This article provides an initial assessment of the ECT-based arbitration risk flowing from the COP 26 pledges due to their impact on fossil fuel investments in ECT contracting parties. It further estimates how these impacts could translate into investor–state arbitration claims based on past and ongoing cases in the energy sector.
The importance of linking sustainable development and FDI has garnered increasing attention in recent years, and IIAs increasingly include sustainable development provisions. However, the architecture and functioning of the investment regime make application of these standards difficult.
The recently rendered decision in Eco Oro v. Colombia highlights many of the problems with policy exceptionalism. Most importantly, it suggests that states cannot, by larding their investment treaties with exceptions and carve-outs, simply avoid reckoning with the fundamental challenges facing the investment treaty system.
The Open-Ended Intergovernmental Working Group on Transnational Corporations and Other Business Enterprises With Respect to Human Rights recently held its seventh session to elaborate an international legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises with respect to human rights. While progress has been made, significant challenges still cast dark clouds over the future of this important process.
The increasing size of awards of compensation made under IIAs is drawing greater scrutiny over the approaches that investment tribunals use to arrive at these—at times staggering—amounts. One question being asked is: How are things being done elsewhere? By contrasting these approaches with approaches used by international investment tribunals, this article seeks to draw out some key policy considerations for the reform of compensation principles.
Talks on a possible COVID-19-related Agreement on Trade-Related Aspects of Intellectual Property Rights (TRIPS) decision aimed at scaling up vaccine and therapeutics production and equitable distribution continue, despite the postponement of the 12th WTO Ministerial Conference. Without coordination between a TRIPS decision and WTO members’ IIA obligations, these obligations could significantly reduce any decision’s effectiveness.
UNCITRAL’s Working Group III—charged with global ISDS reform—has circulated its third draft Code of Conduct for investment adjudicators and suggested means for its implementation and enforcement. This article aims to give negotiators an overview of the Code’s provisions, clarify what they mean in practice, and identify specific key issues.
Of all fossil fuels, coal has the greatest climate impact. However, sovereign decisions to phase out coal inevitably affect the investment of coal power plant operators, frequently leading to disputes concerning compensation for lost profits.
This article assesses the degree to which the Energy Charter Treaty can be thought of as a tool to protect renewable energy, and thus aid in energy transition, by analyzing data on ECT-based ISDS cases related to renewable energy investments. The article concludes that proponents of the ECT overstate its potential to have a positive role in the transition to renewable energy.
This article investigates the impact of a global minimum tax on the use of tax incentives in developing countries and what transitional arrangements are needed to protect countries from a transfer of tax revenue.
An interview with Esmé Shirlow about her new book, Judging at the Interface: Deference to State Decision-Making Authority in International Adjudication.
This article discusses the decision of a Panel of Experts, established under the EU–South Korea Free Trade Agreement, which found that South Korea was in breach of the FTA’s sustainable development chapter.
This article takes stock of UNCITRAL WGIII on ISDS reform discussions on the regulation of third-party funding.
The COVID-19 pandemic forced international negotiations, including those related to investment such as the Joint Statement Initiative (JSI) on investment facilitation by a group of WTO member states, and the UNCITRAL WGIII, to move online. Virtual negotiations create new challenges for officials, as well as new opportunities. This article discusses the results of a survey of delegates involved in the JSI and UNCITRAL processes.
This article is an interview with Nicolás Perrone on his new book, Investment Treaties and the Legal Imagination: How Foreign Investors Play by Their Own Rules.
Sorry, this entry is only available in French and European Spanish.
The Energy Charter Treaty (ECT) faces criticism for its outdated investment provisions and the threats it poses to the energy transition. This article examines one option for states to solve this problem—withdrawal from the treaty—and what this could mean for the EU and its member states, along with its impact on the energy transition in general.
The ways in which the investment protection regime frames disputes between states and investors misses that these disputes, particularly when they relate to the extractive industry, are embedded in complex social relations. This article calls for a reimagining of these disputes and efforts to resolve them.
This article examines a contract-based dispute, P&ID v. Nigeria, which highlights issues of corruption and lack of transparency in this type of dispute settlement. It concludes that, given the significant public interests at stake in investor–state arbitration, including the possibility that arbitration may facilitate the corrupt transfer of public funds to private actors, they should not be conducted in private.
This article focuses on debunking assumptions surrounding the use of balancing and proportionality in international investment arbitration as a way of successfully reconciling competing interests and conflicting protection obligations vested upon host states.
The relationship between the ECT and EU law is characterized by complexity and legal uncertainty, especially as far Article 26, the ECT’s dispute settlement mechanism and its application in an intra-EU setting is concerned. This article examines the question of whether the Achmea judgment’s finding on the incompatibility of intra-EU investment arbitration under BITs also affects the dispute settlement mechanism under the ECT
Because of their structure, multinational corporations (MNCs) can resort to IIAs to protect their subsidiaries. At the same time, by virtue of the principles of corporate separation and limited liability, MNCs can take advantage of their structure to avoid liability for the damages caused by their subsidiaries. This paper highlights the need for a more balanced approach with regards to the rights and obligations of MNCs under IIAs.
One of the most striking trends in investment policy over the past decade has been the increased use of investment screening as a policy tool, particularly in developed economies, with the issue becoming more salient with the advent of the COVID-19 pandemic. This article provides an overview of these developments.
According to the Colombian Constitution, the Constitutional Court must assess the constitutionality of all international treaties after signature and prior to ratification. In two recent landmark decisions, the court assessed the constitutionality of the BIT signed with France in 2014 and of the FTA signed with Israel in 2013. This article examines these decisions and identifies some areas of concern.
Investment treaties and arbitration are argued, by proponents of the regime, to contribute to “good governance” in host states. This article, based on an empirical study of mining investments in the Colombian páramo, argues that the conception of good governance promoted by investment arbitration is incomplete and does not adequately consider the role of courts in providing checks and balances.
Sorry, this entry is only available in French and European Spanish.
The sixth negotiation round for the binding treaty on business and human rights recently concluded. This article draws parallels between the issues raised during these negotiations and those that have been the focus of the ongoing conversations on investment arbitration reform.
Recently, references to corporate social responsibility (CSR) have been included in investment treaties as a way to address some of the criticisms levelled at the investment protection regime. This article gives an overview of these attempts and the limitations of this approach. It concludes by arguing that the inclusion of CSR in investment treaties primarily serves to legitimate the regime.
On November 12, 2020, Peter Tomka was re-elected to the United Nations’ International Court of Justice (ICJ). Tomka has served as a judge on the ICJ since 2003 and will […]
This article highlights three key areas where WTO Members need to be wary about unintended interactions between the proposed Multilateral Framework on Investment Facilitation (MFIF) and IIAs. It also comments on the effectiveness of proposed attempts to separate the MFIF developed by the trade community from the broader IIA regime, whose reform is being coordinated and led within the United Nations through UNCTAD and UNCITRAL.
This article provides an overview of Ecuador’s approach to foreign investment policy over the past decade, which has been subject to significant changes. It also reviews recent constitutional
developments that may allow Ecuador to develop a more coherent approach toward
new investment treaties and trade agreements.
Over the last several years, the government of Tanzania has enacted significant changes to the legislation governing foreign investment in natural resources, and related dispute settlement mechanisms, with the aim of ridding the sector of the vestiges of “colonial” relationships. Before discussing these changes, and in order to understand the rationale for them, this article first provides the relevant historical context of international arbitration in Africa.
The European Commission has launched a public consultation initiative on the EU’s current system of investment protection and facilitation, prompted by the recent termination of BITs between the member states. In this piece, the authors caution that new forms of international investment protection are not necessary and could serve to undermine the legitimacy of the EU.
This paper presents the results of a larger research project that attempts to establish a baseline for measuring the extent to which countries are “winning” (as home states of successful claimants) and “losing” (as respondent states with adverse awards and settlements) in the ISDS system.
In response to the Covid-19 pandemic, governments have taken an array of measures, which, while crucial from a health perspective have hit many businesses hard. According to the authors, Nathalie Bernasconi-Osterwalder, Sarah Brewin, and Nyaguthii Maina, this situation has created an unprecedented risk of investment arbitration arising from the more than 3,000 investment treaties concluded across the globe. They argue for collective action by states to suspend the application of investor–state arbitration with respect to COVID-related measures.
There have been more than 150 known ISDS cases brought by claimants whose business involves extracting, transporting, refining, selling, or burning fossil fuels for electricity. The authors, Kyla Tienhaara, Lise Johnson, and Michael Burger explore the question of how valuation and damages in fossil-fuel related investment claims should be approached in light of climate change considerations and the contested value of fossil fuel resources.
Scenarios in which states may face an obligation to pay damages as a result of international judicial or arbitral proceedings have proliferated as an increasing number of international courts have received state consent to their jurisdiction, including in international investment arbitration. As the author, Affef Ben Mansour, discusses, among the obstacles that states encounter in the implementation of investment arbitral awards is the unsuitability of internal budgetary procedures for paying the pecuniary obligations decided by an arbitral tribunal. This difficulty is now attenuated in certain states that have adopted budgetary standards aimed at addressing such unexpected budgetary developments, which are discussed in the second part of this article.