Environmental Engineering Reference
In-Depth Information
22
Investor rights and sustainable development
Chris Tollefson and W.A.W. Neilson
Introduction
Controversy surrounding the protection of investor rights through international invest-
ment agreements (IIAs) is longstanding. This has been particularly so in the context of
the relationship between developed countries (DCs) and their less developed country
(LDC) counterparts. From an LDC perspective, such protections have traditionally been
seen as a substantial derogation from state sovereignty, fettering not only the ability of a
host state to determine domestic policy priorities (most notably with respect to resource
management and development) but also, more generally, its ability to regulate the activi-
ties of transnational corporate investors. The constraining impact of IIAs on domestic
policy space has also been a thorny issue within the more developed economies. Here the
overriding concern has been the impact of IIAs on the ability of governments to enact
measures to protect the environment and public health. Given these various concerns, it
is perhaps not surprising that, over the last 20 years, three successive initiatives to broker
broad-based multilateral investment treaties (under the auspices of the United Nations,
the OECD and most recently the WTO) have ended in failure.
Yet despite this pervasive skepticism about and resistance to IIAs, the last two decades
have nonetheless seen a dramatic consolidation of investor rights in the realm of inter-
national law, accompanied by an unprecedented expansion in global foreign direct invest-
ment (FDI). During this period, both FDI
ows and FDI stock have expanded over
15-fold (UNCTAD, 2006). In keeping with historical patterns, the predominant share
(approximately 60%) of FDI has
fl
owed from North to South (ibid.). This dramatic
growth in FDI has been paralleled by the emergence of a highly complex and burgeoning
international investment governance regime. This regime comprises a complex global
network of well over 2500 IIAs, over 1500 of which have been concluded within the last
15 years. The vast majority of these IIAs are bilateral investment treaties (BITs) between
DCs and LDCs, although there are also a handful of regional investment treaties, most
notably those contained in the 1994 North American Free Trade Agreement (NAFTA).
The volume and magnitude of investor claims being submitted to arbitration has also
risen sharply. As of June 2006, the total number of known investment-related arbitrations
was 248, two-thirds of which were
fl
led after 2001 and most of these seeking damages in
the tens or hundreds of million dollars (Newcombe, 2007).
This chapter considers the implications of this emerging IIA network for the ability
(and indeed the appetite) of states to pursue domestic sustainable development policies.
In framing our topic in this way, we have been mindful of the need to consider the rela-
tionship between IIAs and the capacity of governments to protect the environment and
public health, and likewise the relationship between IIAs and resource management and
development. As it has evolved in international law scholarship, the concept of sustain-
able development not only embraces these concerns but emerging public participation,
good governance and human rights norms (French, 2005; Newcombe, 2007). In what
fi
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