Environmental Engineering Reference
In-Depth Information
Drawing on the NAFTA experience, we now propose to canvass in somewhat more
detail sustainable development implications of speci
fi
c elements of the IIA investor rights
regime.
National treatment (NT) and most favoured nation (MFN)
NT, as elaborated in the
NAFTA and most BITs, requires a host state to 'accord to investments of investors of
another party treatment that is no less favourable than it accords, in like circumstances,
to those of its own investors'. The devil is in the interpretation of 'like circumstances' due
to the fact that most IIAs do not specify in what circumstances this right is engaged.
Critics have worried that tribunals will import a narrow, trade-law-inspired approach to
this question that would restrict the capacity of host governments to implement
bona
fi
de
environmental regulatory decisions that a
erently from their
domestic counterparts (Tollefson, 2002a, p. 152). This concern has been reinforced by
some early jurisprudence under the NAFTA (notably
S.D. Myers
). While more recent
NAFTA cases (notably
Methanex
) have adopted a more regulator-friendly approach, the
potential for investors to invoke NT to seek damages for enterprise-, site- or project-
speci
ff
ect foreign investments di
ff
c regulation remains.
The companion MFN obligation means that a foreign investor is entitled to the better
of how the host government treats investors from any other country 'in like circum-
stances'. Identical issues of interpretation to the NT obligation arise here. Also, an MFN
argument may be raised on the part of a foreign investor that they can claim the advan-
tages of investor treatment accorded by the host state in any of its BITs signed with other
investor countries, a prospect that underlines the 'need to carefully consider the relation-
ship between di
fi
ff
erent treaties when they are drafted' (Cosbey, 2005, p. 160).
International Minimum Standard (IMS) of Treatment
Virtually all IIAs augment the
relativist protections of NT and MFN with an absolute obligation to treat investors in a
manner consistent with international minimum standards (IMS). For example, in Article
1105, NAFTA directs that investors shall receive treatment 'in accordance with interna-
tional law, including fair and equitable treatment'. Historically, IMS has been regarded as
protecting against egregious state conduct that was in violation of international custom-
ary law. In several recent cases, however, investors have sought to expand this protection
by claiming damages for alleged violations of non-customary forms of 'international law'
including provisions of various WTO agreements and even non-Chapter 11 parts of
NAFTA. An interpretative statement by the NAFTA Commission in 2001 narrowed that
possibility by pointing out that the obligation of fair and equitable treatment was to be
in accordance with customary international law standards of treatment (Tollefson, 2002a,
pp. 155-6), a position now codi
ed in the new US and Canadian model BITs (Newcombe,
2007, p. 70). Whether and to what extent IIA jurisprudence will adopt this more narrow
approach remains to be seen (Cosbey, 2005, pp. 161-3).
fi
Prohibition of performance requirements
As noted above, IIAs are often criticized for giving rights to foreign investors without
imposing on them correlative responsibilities: for example, to advance various commu-
nity development objectives of the host government in areas such as local job creation,
environmental protection, technology transfer and sustainable development (Peterson,
