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Dünnwald, S. (2015). Bilateral and Multilateral Investment Treaties and Their Relationship with Environmental Norms and Measures. Duncker & Humblot. https://doi.org/10.3790/978-3-428-54506-3
Dünnwald, Sonja. Bilateral and Multilateral Investment Treaties and Their Relationship with Environmental Norms and Measures. Duncker & Humblot, 2015. Book. https://doi.org/10.3790/978-3-428-54506-3
Dünnwald, S (2015): Bilateral and Multilateral Investment Treaties and Their Relationship with Environmental Norms and Measures, Duncker & Humblot, [online] https://doi.org/10.3790/978-3-428-54506-3
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Bilateral and Multilateral Investment Treaties and Their Relationship with Environmental Norms and Measures
Schriften zum Internationalen Recht, Vol. 202
(2015)
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About The Author
Sonja Dünnwald hat in Berlin und Louvain-la-Neuve Rechtswissenschaften studiert und 2005 das Erste Staatsexamen abgelegt. Im Rahmen eines anschließenden Praktikums am Permanent Court of Arbitration und eines LL.M.-Studiengangs am University College London 2006 hat sie sich mit Fragestellungen des Investitionsschutzrechts und des internationalen Umweltrechts beschäftigt. Während ihres Referendariats absolvierte sie Stationen u.a. im Bundesministerium für Umwelt, einer internationalen Kanzlei in London und der Ständigen Vertretung Deutschlands bei den Vereinten Nationen in Genf. Sie legte ihr Zweites Staatsexamen 2009 ab. Seit 2011 arbeitet sie als Rechtsanwältin in einer internationalen Rechtsanwaltskanzlei im Schieds- und Prozessrecht. Sie wurde 2014 von der Universität Frankfurt am Main promoviert.Abstract
Investment treaties protect the investments of foreign investors against interference by the host state: The core standards offer protection against discriminatory or unequitable treatment and expropriation. However, the investment activities can impact on the environment of the host state. The state retains its policy space to regulate for an environmental purpose.Some investment treaties refer to concepts of international environmental law, but do not impose a hierarchy of norms. In practice, it often falls to investment tribunals to distinguish between legitimate regulation and the violation of investors' rights. They decide on the scope of the state's policy space by balancing the opposing interests: Investment tribunals focus on the absence of protectionist intent, procedural propriety and the review of scientific evidence. If the regulatory framework is more stringent when the investment is made, there is less potential for subsequent conflict.Investment treaties protect the investments of foreign investors against interference by the host state: The core standards offer protection against discriminatory or unequitable treatment and expropriation. However, the investment activities can impact on the environment of the host state. The state retains its policy space to regulate for an environmental purpose.Some investment treaties refer to concepts of international environmental law, but do not impose a hierarchy of norms. In practice, it often falls to investment tribunals to distinguish between legitimate regulation and the violation of investors' rights. They decide on the scope of the state's policy space by balancing the opposing interests: Investment tribunals focus on the absence of protectionist intent, procedural propriety and the review of scientific evidence. If the regulatory framework is more stringent when the investment is made, there is less potential for subsequent conflict.
Table of Contents
| Section Title | Page | Action | Price |
|---|---|---|---|
| Preface | 7 | ||
| Table of Contents | 9 | ||
| Introduction | 17 | ||
| I. Contemporary Investment Law | 20 | ||
| II. Outline of Methodological Approach | 25 | ||
| Chapter 1: Environmental Norms and Principles | 30 | ||
| A. ‘Environment’ as a Concept | 31 | ||
| B. Development of Environmental Regulation | 34 | ||
| C. Subject Areas of Environmental Law | 40 | ||
| I. Conservation and Biological Diversity | 41 | ||
| 1. Protection of Species from Direct Interference | 43 | ||
| 2. Habitat Preservation | 45 | ||
| 3. Indirect Impacts on Species | 46 | ||
| II. Toxic Substances, Waste Disposal, and Hazardous Activities | 48 | ||
| III. Atmosphere and Climate Change | 54 | ||
| IV. Intermediate Summary | 61 | ||
| D. Fundamental Principles of Environmental Law | 62 | ||
| I. Sustainable Development | 63 | ||
| II. Precautionary Principle | 70 | ||
| III. Polluter-Pays Principle | 75 | ||
| IV. Intermediate Summary | 82 | ||
| E. Scenarios of Potential Conflict | 82 | ||
| I. Scenario No 1: Introduction and Application of Environmental Regulation | 82 | ||
| II. Scenario No 2: Subsidies or Other Advantages for Environmentally Friendly Investments as Potential Violation of Other Investments | 83 | ||
| III. Scenario No 3: Withdrawal of or Reductions in a Scheme Favouring Environmentally Friendly Investments | 85 | ||
| IV. Scenario No 4: Withdrawal of Support Scheme because Investment Affects the Environmental Objective | 86 | ||
| 1. Creation of a ‘Perverse Incentive’ | 87 | ||
| 2. Neglect of Impacts on other Environmental Sectors | 90 | ||
| V. Intermediate Summary | 93 | ||
| F. Conclusion | 94 | ||
| Chapter 2: The Influence of Environmental Concepts on the Interpretation of Investment Provisions | 95 | ||
| A. Conflicts of Norms and Interpretation | 97 | ||
| B. Preambular Clauses | 102 | ||
| I. Bilateral Investment Treaties | 103 | ||
| II. Free Trade Agreements Containing Provisions on Investment Protection | 106 | ||
| III. Multilateral Investment Treaties | 111 | ||
| IV. Interpretative Value of Preambular Clauses | 113 | ||
| C. References within the Substantive Provisions of the Respective Treaties | 115 | ||
| I. Articles Referring to the Environment within the Investment Provisions | 116 | ||
| 1. Adopting, Maintaining and Enforcing Environmental Measures | 117 | ||
| 2. Regulatory Race-to-the-Bottom | 119 | ||
| 3. General Exception Provisions | 123 | ||
| II. Separate Chapters or Provisions on the ‘Environment’ | 125 | ||
| 1. Provisions Setting Forth Environmental Regime | 126 | ||
| a) North American Agreement on Environmental Co-operation | 126 | ||
| b) Environmental Chapters in Post-NAFTA Agreements | 128 | ||
| 2. Provisions on Relationship with Environmental Agreements | 133 | ||
| III. Sector Specific References | 138 | ||
| IV. Interpretative Value of Environmental Provisions | 139 | ||
| V. Intermediate Summary | 143 | ||
| D. Further Points of Entry for Relevant Rules of International Law | 144 | ||
| I. Additionally Taking Relevant Rules of International Law into Account | 144 | ||
| 1. Rules of International Law | 145 | ||
| 2. Issues of Inter-Temporality | 149 | ||
| 3. Interpretative Effect and Relevance of Article 31 paragraph 3 lit c VCLT | 152 | ||
| II. ‘International Law’ as Applicable Law to the Dispute | 155 | ||
| 1. Designation of ‘International Law’ as Applicable Law within the Treaty | 156 | ||
| 2. Applicable Law through Article 42 paragraph 1 sentence 2 ICSID Convention | 156 | ||
| 3. Evaluation | 161 | ||
| E. Conclusion | 161 | ||
| Chapter 3: Standards of Non-Discriminatory Treatment | 164 | ||
| A. National Treatment | 166 | ||
| I. Definition of the Comparator | 168 | ||
| II. Treatment No Less Favourable | 171 | ||
| III. Justification of Differential Treatment | 174 | ||
| IV. Analysis of Case Law Concerning Environmental Measures | 176 | ||
| 1. S.D. Myers v. Canada | 176 | ||
| a) Portrayal of the Arbitral Decision | 176 | ||
| b) Evaluation | 181 | ||
| 2. Methanex v. United States | 183 | ||
| 3. Ethyl Corporation v. Government of Canada | 186 | ||
| V. Intermediate Summary | 187 | ||
| B. Most-Favoured Nation Treatment | 187 | ||
| I. Parkerings-Compagniet AS v. Lithuania | 189 | ||
| II. Intermediate Summary | 193 | ||
| C. Prohibition against Arbitrary and Discriminatory Measures | 193 | ||
| I. Elements of the Standard | 194 | ||
| II. Intermediate Summary | 198 | ||
| D. The Environmental Relevance of Standards of Non-Discrimination | 199 | ||
| I. Criteria for Standards of Non-Discrimination in Environmental Context | 199 | ||
| 1. No Restrictive Comparator Test | 199 | ||
| 2. Relevance of Protectionist Intent | 201 | ||
| 3. Justification | 202 | ||
| a) Deference | 202 | ||
| b) Reasonable Nexus | 203 | ||
| c) Alternative, Less Disruptive Measures | 205 | ||
| 4. Burden of Proof | 207 | ||
| II. Application of Criteria to Different Scenarios | 208 | ||
| 1. Scenario No 1: Introduction and Application of Environmental Regulation | 209 | ||
| a) Establishment of the Investment – Refusal of Permits | 209 | ||
| b) Introduction of Environmental Restrictions after Investment Has Been Placed | 211 | ||
| aa) Restrictive Regulation of Some, but Not All Business Sectors | 213 | ||
| bb) Universal Regulation | 218 | ||
| 2. Scenario No 2: Subsidies or Other Advantages for Environmentally Friendly Investments as Potential Violation of Other Investments | 218 | ||
| 3. Scenario No 3: Withdrawal of, or Reductions in, a Scheme Favouring Environmentally Friendly Investments | 220 | ||
| 4. Scenario No 4: Withdrawal of Support Scheme because Investment Affects the Environmental Objective | 221 | ||
| III. Summary Assessment | 222 | ||
| E. Summary | 223 | ||
| Chapter 4: Standards of Fair Treatment | 225 | ||
| A. Full Protection and Security | 226 | ||
| I. Scope of Protection | 227 | ||
| II. Evaluation of the Relevance of this Standard for this Study | 231 | ||
| B. Fair and Equitable Treatment | 232 | ||
| I. Interpretative Approaches to Fair and Equitable Treatment | 233 | ||
| II. The Relationship between Fair and Equitable Treatment and the International Minimum Standard of Treatment | 236 | ||
| III. Conceptual Notions of the Standard of Fair and Equitable Treatment | 240 | ||
| 1. Legitimate Expectations | 241 | ||
| 2. Stable and Predictable Legal Framework | 247 | ||
| 3. Transparency | 250 | ||
| 4. Due Process | 252 | ||
| IV. Intermediate Summary | 254 | ||
| C. Analysis of Case Law Concerning Environmental Measures | 254 | ||
| I. Chemtura Corporation v. Canada | 255 | ||
| 1. Portrayal of the Arbitral Decision | 255 | ||
| 2. Assessment | 258 | ||
| II. Methanex v. United States | 259 | ||
| III. S.D. Myers Inc. v. Canada | 260 | ||
| IV. Metalclad Corporation v. United Mexican States | 261 | ||
| 1. Portrayal of the Arbitral Decision | 261 | ||
| 2. Assessment | 264 | ||
| V. Glamis Gold, Ltd. v. U.S.A. | 265 | ||
| 1. Portrayal of the Arbitral Decision | 265 | ||
| 2. Assessment | 269 | ||
| VI. Plama Consortium Limited v. Bulgaria | 270 | ||
| VII. Técnicas Medioambientales Tecmed, S.A. v. United Mexican States | 271 | ||
| VIII. Vattenfall AB, Vattenfall Europe AG, Vattenfall Europe Generation AG & Co. KG v. The Federal Republic of Germany | 273 | ||
| IX. Intermediate Summary | 275 | ||
| D. Prohibition against Arbitrary or Unreasonable Measures | 275 | ||
| E. The Environmental Relevance of Standards of Fairness | 276 | ||
| I. Criteria for Standards of Fairness in Environmental Context | 276 | ||
| 1. Legitimacy of the Investor’s Expectations | 277 | ||
| 2. Scientific Basis for Introducing Environmental Measure | 282 | ||
| 3. Procedural Fairness and Transparency | 284 | ||
| 4. Conclusive Summary | 286 | ||
| II. Application of Criteria to Different Scenarios | 287 | ||
| 1. Scenario No 1: Introduction and Application of Environmental Regulation | 287 | ||
| a) Refusal of Permits | 287 | ||
| b) Introduction of Environmental Restrictions after Investment Was Placed | 289 | ||
| 2. Scenario No 2: Subsidies or Other Advantages for Environmentally Friendly Investments as Potential Violation of Other Investments | 292 | ||
| 3. Scenario No 3: Withdrawal of or Reductions in a Scheme Favouring Environmentally Friendly Investments | 293 | ||
| 4. Scenario No 4: Withdrawal of Support Scheme because Investment Affects the Environmental Objective | 296 | ||
| 5. Conclusive Summary | 298 | ||
| F. Summary | 298 | ||
| Chapter 5: Expropriation | 300 | ||
| A. Direct Expropriation | 302 | ||
| B. Indirect Expropriation | 305 | ||
| I. Factors Establishing Indirect Expropriation | 307 | ||
| 1. Substantial Deprivation | 308 | ||
| a) Duration of the Impact | 313 | ||
| b) Intensity of the Impact | 314 | ||
| c) Economic Impact as Sole Criterion? | 316 | ||
| 2. Interference with Reasonable Investment-Backed Expectations | 318 | ||
| 3. Character of the Governmental Measure | 321 | ||
| II. Intermediate Summary | 323 | ||
| C. Analysis of Case Law Concerning Environmental Measures | 323 | ||
| I. Metalclad Corporation v. United Mexican States | 324 | ||
| II. Técnicas Medioambientales Tecmed, S.A. v. United Mexican States | 328 | ||
| III. S.D. Myers Inc. v. Canada | 330 | ||
| IV. Chemtura Corporation v. Canada | 332 | ||
| V. Methanex v. United States | 333 | ||
| VI. Glamis Gold, Ltd. v. U.S.A. | 335 | ||
| VII. Marion Unglaube and Reinhard Unglaube v. Republic of Costa Rica | 336 | ||
| VIII. Further Cases Alleging Expropriation | 340 | ||
| IX. Evaluating Summary | 342 | ||
| D. Expropriation in the Environmental Context | 342 | ||
| I. Blanket Exemption for Regulatory Measures from Scope of Expropriation | 343 | ||
| II. Influence of Police Powers | 345 | ||
| III. Proportionality | 349 | ||
| IV. Only in Rare Circumstances | 352 | ||
| 1. Environmental Measure in Breach of Prior Commitment | 355 | ||
| 2. Imposition of Special Sacrifice | 356 | ||
| V. Evaluating Summary | 360 | ||
| E. Application of Criteria to Different Scenarios | 361 | ||
| I. Scenario No 1: Introduction and Application of Environmental Regulation | 361 | ||
| 1. Permits and Environmental Restrictions | 362 | ||
| 2. Introduction of Environmental Restrictions after Investment Was Placed | 363 | ||
| II. Scenario No 2: Introduction of Scheme Supporting Environmentally Friendly Investments as Potential Violation of Other Investments | 365 | ||
| III. Scenario No 3: Alterations to a Scheme Supporting Environmentally Friendly Investments | 365 | ||
| IV. Scenario No 4: Withdrawal of Support Scheme because Investment Affects the Environmental Objective | 368 | ||
| F. Compensation | 369 | ||
| I. Compensation Standard for Lawful Expropriation | 369 | ||
| II. Adequateness of Compensation | 370 | ||
| III. Potential Influence of Societal Factors on Level of Compensation | 373 | ||
| 1. Investment Arbitration | 374 | ||
| 2. European Court of Human Rights | 377 | ||
| 3. Decisions of the Iran-U.S. Claims Tribunal | 378 | ||
| IV. Evaluation | 379 | ||
| V. Intermediate Summary | 380 | ||
| G. Conclusion | 381 | ||
| Conclusion | 383 | ||
| I. Legal Findings Derived From the Study | 384 | ||
| 1. Relevant Findings for the Specific Standards | 384 | ||
| 2. Common Features | 386 | ||
| II. Practical Evaluation | 389 | ||
| 1. The Environmental Framework at the Moment of the Investment Decision | 389 | ||
| 2. The Legislative and Administrative Reality in the Host State | 390 | ||
| 3. Practical Implications of the Conflict | 392 | ||
| III. Perspectives for the Future | 395 | ||
| 1. The Need for Host States to Protect Their Citizens | 396 | ||
| 2. Changes to the Content and Interpretation of Investment Treaties | 398 | ||
| 3. Institutional Implications | 401 | ||
| IV. Conclusion | 402 | ||
| Bibliography | 404 | ||
| Table of Decisions | 421 | ||
| Table of Treaties and Other International Instruments | 433 | ||
| Subject Index | 445 |