International investment law and sustainable development: Key cases from the 2010s

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IISD | October 2018

International investment law and sustainable development: Key cases from the 2010s

by Stefanie Schacherer

Introduction

In the last several years, sustainable development has become the global paradigm guiding the ongoing reform of international investment law. Several model international investment agreements (IIAs) have been adopted that place sustainable development at their core and enshrine treaty provisions aimed at achieving a better balance between the public policy interest of states and the private interests of foreign investors. Some countries and regions have already concluded IIAs based on such models.

Despite this recent paradigm shift in treaty drafting, international investment law is still composed of traditional IIAs whose main function is to prescribe how host states treat foreign investors. They provide for broad and vaguely worded substantive protection standards for foreign investors, as well as for investor–state dispute settlement (ISDS) through international arbitration. Consequently, investment arbitrators are still important actors in defining and articulating the relationship between international investment law and sustainable development. Investment case law over the last 25 years has shown that tribunals have ample powers to interpret the scope and meaning of states’ obligations under IIAs. They decide to what extent IIAs limit states’ right to regulate and their ability to adopt and maintain policies to promote sustainable development.

Therefore, to understand the relationship between the international investment regime and the objective of achieving sustainable development, one needs to look beyond the text of IIAs and examine awards in treaty-based investment arbitration cases. International dispute settlement does not operate in a vacuum, and neither does ISDS, which has been subject to strong criticism over the past few years.

Has investment arbitration changed in light of this criticism? Do arbitrators increasingly consider sustainable development when interpreting IIAs? Do they advance legal concepts that seek to better balance public and private interests, such as the police power doctrine? Do they interpret international law systemically, integrating other fields, such as international human rights law? What levels of due diligence do tribunals expect of investors, and how can that impact the investors’ claim? What degree of deference do tribunals accord to a state measure adopted in order to foster sustainable development? The analysis of arbitration cases in this volume aims at elucidating these questions.

The selection of 10 key cases for this book has been made based on investment disputes that have implications for sustainable development, in its three dimensions: economic development, social development and environmental protection. The cases include investment activities that have impacts in the host country, such as on the environment, on the local population (including certain minorities) as well as on social rights (including matters of public health and human rights).

source: IISD