Environmental Engineering Reference
In-Depth Information
follows we re
ect on the nature and extent of the tension between domestic sustainable
development policy in this broad sense and investor rights under the emerging IIA regime.
Although both the scholarly literature and the jurisprudence in this area remain in their
infancy, some preliminary lessons can be drawn particularly from the experience under
the NAFTA, where academics and tribunals have been grappling with the relationship
between investor rights and sustainable development policies for well over a decade. We
also propose to explore the emerging experience under the ever-expanding network of
BITs, a context in which this issue is increasingly focusing global attention. In the next
section, we provide an overview of the tension between investor rights and domestic sus-
tainable development, and the competing values and interests underlying this tension.
Then we describe the architecture and procedures of the IIA governance regime with a
view to elucidating the claims of its critics and supporters. Finally, we re
fl
ect on the
growing debate with respect to how the current IIA regime can be reformed to achieve a
better balance between investor rights and sustainable development norms.
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The tension between investor rights and sustainable development
In the years following the watershed 1999 protests at the WTO trade meetings in Seattle,
few issues have stirred more controversy within the broader globalization debate than
investor rights. During this period, investor rights and their implications for domestic sus-
tainable development initiatives have become front-page news in jurisdictions around the
world. Many of the most recent suits have targeted LDCs. Argentina has been particu-
larly hard hit, facing close to about 30 such suits, many arising out of its
nancial restruc-
turing of 2002 (Anderson and Grusky, 2007). Within the last two years alone, arbitral
tribunals have ruled against it on four occasions. Other Latin American countries (includ-
ing Ecuador, Bolivia, Peru and Mexico) have also faced or are facing investor suits, as are
several former Soviet republics and African states (Anderson and Grusky,
fi
2007;
Newcombe, 2007).
Ongoing high-pro
le claims include a suit brought by UK-based water TNC Biwater,
seeking damages from Tanzania for canceling a water and sewerage privatization deal; a
suit by EU investors against South Africa seeking compensation for legislation aimed at
bolstering black participation in the mining sector; a suit by the oil giant Occidental
Petroleum against Ecuador in connection with the cancellation of oil leases due to alle-
gations of environmental degradation and human rights abuses; and a suit by Texas
farming interests claiming that Mexico has infringed their water rights. Frequently the
damages sought, and in several recent cases awarded, have been in excess of $100 million
(Newcombe, 2007).
Developed states have also been increasingly been forced to defend themselves from
analogous investor claims. Canada and the USA have each been sued close to a dozen
times under NAFTA's investor rights provisions (Chapter 11) for various government mea-
sures in the realms of environmental protection, public health and resource management.
In two of these cases, Canada has ended up paying compensation (one an out-of-court
settlement of a claim arising from a ban on the import of the fuel additive MMT
(Methylcyclopentadienyl manganese tricarbonyl); a second involving an arbitral ruling
that a federal ban on the export of PCB (polychlorinated biphenyl) waste violated
NAFTA). To date, the USA has enjoyed more success, most notably in its successful
defense of a claim arising from a fuel additive ban in the
Methanex
litigation. However,
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