Environmental Engineering Reference
In-Depth Information
The debate over reforming the IIA regime in light of sustainable development norms
Although still embryonic and inchoate in form, the emerging IIA regime is confronting
growing pressures for reform from a variety of constituencies and quarters. Some LDCs
are now calling for fundamental reforms to both the governing rules and procedures of
the current regime, are examining their options to exit from current agreements, and, in
the meantime, are actively resisting regime expansion. They are also demanding that
future agreements restrict investor access to mandatory arbitral dispute resolution and
incorporate new obligations on foreign investors to transfer technologies and employ
local inputs and labour (Anderson and Grusky, 2007). Regime reform has also become a
key issue for the international NGO community although, as yet, no consensus has
emerged as to what these reforms should entail. Even stalwart supporters of the prevail-
ing regime have expressed concerns about the inconsistency of emerging IIA jurispru-
dence and the need to retool the procedures by which cases are adjudicated and decisions
reviewed (Franck, 2005).
Some commentators contend that the current IIA regime is already evolving in a direc-
tion that lends enhanced recognition to sustainable development norms and values
(Newcombe, 2007). Evidence relied on in support of this thesis includes interpretive state-
ments issued by the NAFTA parties on the meaning of 'international standards of treat-
ment' (2001) and 'amici participation' (2003), as well as recent rule changes at ICSID
(2006) aimed at facilitating
amici
participation and ongoing discussions on this topic at
UNCITRAL. Jurisprudentially, recent decisions such as
Methanex
have been interpreted
in a similar light (Mann, 2005). It is likewise claimed that analogous developments are
under way at the domestic level. For example, both Canada and the USA have amended
their model BIT agreements (used as templates for BITs that are currently being negoti-
ated) to provide better legal recognition of the need for investor rights not to trump the
right of governments to pursue legitimate sustainable development objectives (see below).
Both countries have also, of late, adopted a much more civil-society-friendly approach to
public access to IIA information and NGO participation in tribunal hearings. And
Canada and several other DCs have recently implemented policies requiring proposed
new BITs to undergo an environmental impact assessment before being signed.
Yet while most critics of the current IIA regime welcome these developments, incre-
mental reforms of this kind are unlikely to diminish the growing pressure for more fun-
damental reform. An approach being promoted by some of the NGOs that intervened in
the
Methanex
litigation seeks to impose on investors a
rmative obligations to abide by
various internationally recognized labor, environmental and human rights standards.
Under their proposed model IIA, investors would also be required to undertake environ-
mental and social impact assessments with respect to their investments (Mann et al.,
2005). While the model does not eliminate the right of investors to pursue arbitration,
they would
rst be required to exhaust domestic remedies. Moreover, investors found to
have breached any of their a
fi
rmative obligations under such an agreement would forfeit
their right to arbitrate. The proposed model also contains a 'general exception' provision,
analogous yet considerably broader than Article XX of the GATT. It provides that host
states have 'the right to pursue their own development objectives and priorities' and 'the
right to take regulatory and other measures to ensure that development in their territory
is consistent with the goals and principles of sustainable development' as long as they act
in accordance with international law (Mann et al., 2005).
