Aligning Investment Treaties with Sustainable Development Goals (original) (raw)
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Aligning International Investment Agreements with the Sustainable Development Goals
SSRN Electronic Journal, 2019
is the Investment Law and Policy Head at the Columbia Center on Sustainable Investment ("CCSI"). Her work at CCSI centers on analyzing investment treaties and treaty-based investor-state arbitrations, and examining the implications those instruments and cases have for host countries' domestic policies and sustainable development strategies. In addition, she concentrates on key institutional and procedural aspects of the investment law framework, including efforts to increase transparency in and legitimacy of investor-state dispute settlement. She has a B.A. from Yale University, a J.D. from the University of Arizona, an LL.M. from Columbia Law School, and is admitted to the bar in California. ** Lisa Sachs is the Director of CCSI, where she oversees three areas of focus: investments in extractive industries, investments in land and agriculture, and investment law and policy. She received a B.A. in economics from Harvard University, and earned her J.D. and M.A. in international affairs from Columbia University, where she was a James Kent Scholar and recipient of the Parker School Certificate in International and Comparative Law. She is admitted to the bar in New York. *** Nathan Lobel is a J.D. candidate at Harvard Law School, where he focuses on climate policy and political economy. Prior to law school, he was the Special Assistant to the Director of CCSI, where his scholarship centered on international governance and the clean energy transition. He received his B.A. in political science from Yale University with high honors, during which time he also worked with the Yale Program on Climate Change Communication and as a fossil fuel divestment organizer.
The proliferation of International Investment Agreements (IIAs) and treaty-based investment arbitration has raised concerns over the extent to which IIAs are actually fair and are able to balance the interests of foreign investors and States. The strong protections afforded by IIAs to investors may restrict the host State's ability to regulate for the public interest and potentially allow newly adopted public policies to be subject to compensation. Several economic transactions that have qualified as investments for treaty protection have fallen short of contributing to the host State's sustainable development. They have not added to the generation of employment and growth, the transfer of new technologies and knowledge or the strengthening of infrastructure. Nor have many of these economic transactions contributed to the home country's development. Moreover, regulatory measures adopted with the aim of fostering sustainable development (ie environmental measures) have been successfully challenged by investors. In some cases tribunals have interpreted these measures as creeping or indirect expropriations, therefore requiring compensation. Both the lack of consideration for the host State's interests under international investment law and the limitation to the State's policy space have been perceived as having negative implications for the development of the country, and in particular for the adoption of sustainable policies. Though little empirical evidence exists, it has been suggested that investment arbitration is a threat to the adoption of public policy regulations and may even have a 'chilling effect' on them. A possible way forward is the negotiation of a new generation of investment treaties, as well as the renegotiation and revision of the existing ones. These changes are needed in order to balance the interests of States and investors and to incorporate innovative features in light of the necessary policy space that States require in order to foster sustainable development through the application of dynamic social and environmental norms and regulations. Another alternative is the adoption of interpretative approaches, which ultimately foster sustainable development goals. The preferred options are the contextual and dynamic interpretation of the intention of the contracting States, as well as the systemic integration of international rules and norms into investor-State disputes.
Reforming investment agreements for sustainable development
2019
International Investment Agreements (IIAs) were and in most cases, predominately inclined to providing an extra measure of legal protection to investors seeking to invest in foreign countries, including much emphasis on their interest and rights as opposed to their obligations. The apparent lack of balance between the investor's interest and the government's rights in formulating policy and investment regulation, including in this case, aligning investment with sustainable development forms part of the reasons for IIAs reforms. Today, the regime exists in an environment marked by the imperative to promote sustainable development, the need to halt climate change; growing economic inequality; greater economic and political interdependence, with foreign direct investment increasingly a two-way street; and greater public involvement in policy and rule-making. Discussions on the needed IIAs reform which have been going on intensively for over a decade in Africa have helped to elu...
Briefing Note: Aligning International Investment Agreements with the Sustainable Development Goals
2020
International investment agreements (“IIAs”) provide enforceable protections to foreign investors based on the premise that enforceable investor protections will stimulate greater foreign investment flows, which, in turn, are assumed to promote development. However, as understandings of both the effectiveness of these agreements as well as the effects of investment and investment governance on sustainable development have evolved, it is not clear that IIAs, as currently designed, are fit for their purpose of promoting development. Worse: they may be undermining efforts to achieve the Sustainable Development Goals. Change is, therefore, essential. In this note, we summarize our proposal that IIAs should be designed and evaluated with respect to their ability to: • Encourage and channel investments that contribute to sustainable development, and do not support harm-causing investments; • Foster, and not constrain, responsible, SDG-advancing governance at the national level; and • Prom...
Reconciling International Investment Law and Sustainable Development: Necessity or Luxury?
SSRN Electronic Journal, 2010
The paper aims at studying the potential accommodation of the concept of sustainable development within the regime of international law regulating foreign direct investment (FDI). Reconciliation of international investment law and sustainable development is part of the current awareness of necessity to broaden interests involved in the international investment regime responding to such tensions as possible "regulatory chill", negative effect of FDI on development of host States and global commitment to promote sustainable development in every level of decision-making. The paper consists of two main parts and focuses on: (1) the notion of sustainable development and its legal character, and (2) proposed methods of accommodation of sustainable development in the international investment law regime through normative integration of sustainable development or its elements in the IIAs texts and judicial reasoning methods available to adjudicators. Detailed analysis of such recent IIAs as CARIFORUM EPA and various Model BITs will be provided to resemble the current successful incorporation of sustainable development concerns in investment regime which will possibly influence the drafting of future IIAs. The paper is designed to offer solutions for rebalancing FDI and to contribute to the formulation of international investment law in a more integrated, principled manner in the context of fragmentation versus unity of international law.
2021
The protection of foreign investment is a central concept of international investment law. Regarded as the core of international investment law, there are more than 2,000 investment treaties or treaties that include investment provisions. In essence, these agreements provide guarantees for the investments of investors from both contracting states when they operate outside of their home state. The investment arbitration system has been described as the “businessman’s court” which interferes on the State’s politico-economic decision-making. The international investment arbitration has faced increasing amount of criticism in the recent decades by political activists, legal scholars and environmental NGOs due to a lack of transparency of the investment arbitration proceedings and the claims that it restricts the sovereignty of the State. The research question of this thesis is linked to a real-world problem – does the investment arbitration slow down the energy transition towards carbon...
Room to move: Building flexibility into investment treaties to meet climate-change commitments
2021
Room to move: Building flexibility into investment treaties to meet climate-change commitments * by Rachel Thrasher ** Science and society speak loud and clear on climate change. Time is running out, and a massive transformation is needed to align our economic lives with the world's climate needs. Countries worldwide have adopted new laws to incentivize the renewable energy sector and encourage energy transitions, while discouraging the reliance on fossil fuels. Concurrently, developing countries, in particular, must balance this transition with the development needs of their constituents. These new laws, often called "green industrial policy," are also relevant for foreign investors, prompting them to put their money in green energy while also contributing to the diversification of the local economy. The World Bank, the IMF and other international institutions have begun, albeit inconsistently, to support these laws through institutional policies prioritizing climate-friendly development projects. But the international investment regime simply lags behind science, society and even international financial institutions. The vast majority of investment treaties focus on protecting investment, while remaining neutral on the impact of that investment. As a result, these treaties discourage measures favoring climate-friendly (or discouraging climate-harmful) investment. New treaty language only marginally increases policy flexibility. Some new treaties address climate change by reaffirming commitments in various multilateral climate accords (e.g., Brazil-Chile, Ecuador-EFTA). These provisions demonstrate an encouraging orientation by governments, but generally do not allow treaty parties to hold each other accountable to these commitments. Other new treaties contain investment provisions that tackle climate-change challenges through investment-facilitation provisions-seeking to increase investment in environmentally friendly goods and services (e.g., EU-Japan, EU-Singapore). Facilitation language, however, only goes part of the way and still puts liberalized investment regimes over governments' right to regulate key sectors. Still others preserve the right to roll back certain investment incentives, even if investors' interests are adversely affected (e.g., CETA, EU-Vietnam), but they have yet to be tested and often (paradoxically) omit any direct mention of climate change.