JJUA55305U Cancelled International Investment Law and Sustainability

International Investment Law or, International Law on Foreign Investments, is one of the principal sub-disciplines within International Law. It concerns the law and regulation that States commit to follow in respect of investments originating from foreign States. It is based on  international investment treaties (IIAs), most of which are bilateral investment treaties (BITs) which give foreign investors the remedy to seek damages and compensation based on IIA violations of states vis-à-vis these investments. These violations can be expropriations or nationalizations that are illegal or otherwise not compensated, unfair treatment, discrimination (vis-à-vis national investors and other foreign investors), and so on. The system allows foreign investors, subject to certain preconditions, to have ‘access to justice’ outside the domestic courts of the host country, who allegedly destroyed or substantially harmed an investment or mistreated the foreign investor. Most IIAs that ensure these protections also provide for an arbitration-based dispute settlement system, which is referred to as the investor-State dispute settlement (ISDS).

This general framework might look uncontroversial at first glance. However, international investment flows establish a complex network of relationships between the state, the foreign investor, and the public. It is a system highly publicized and heavily criticized for its alleged ‘investor-’ or ‘capital-centric’ approach to this complex interrelation between different stakeholders. Especially in foreign investments handling large-scale public services or more politically sensitive sectors such as energy production, telecommunication, waterworks, infrastructure, waste management, etc., there is an undeniable and substantial public interest embedded. In the last decade, the issue of the capabilities of States to regulate foreign investments in case of environmental concerns or on the challenges posed by changing climate has taken a center-stage. Thus, compelling the need of the law to engage with the broader discourse beyond protection of investment.

We are still very much at the defining moments for this interaction between investment law and environmental norms. What makes the challenge of climate change and consequently, sustainability unique is its all-pervasive character, affecting every geography and nearly all aspects of existing law and doctrine. Thus, International Investment Law today has reached a tipping point where it recognizes the differences in viewpoints of stakeholders, as well as the presence of room for divergence in interpretations and prospective solutions.

The course is thus an invitation to engage with the complexities of law of foreign investment and its ongoing debates on account of sustainability and climate change. The course begins by introducing the origins and evolution of the International Investment Law with its doctrines and principles. It follows this discussion by actively engaging with its critiques with the goal of locating the prospective solutions and discourse towards balance between the needs of protection of foreign investment as well as sustainability. In particular, the criticisms are focused on the system’s disregard for public concerns, as well as a state’s right to ‘regulate’ for the good of its citizens. In many cases, such as Vattenfall v. Germany (in which Vattenfall sued Germany for expropriating its investment because the state decided to opt out of nuclear energy) and the Philip Morris arbitrations (in which Philip Morris brought claims against a number of states where plain packaging for tobacco products were introduced), said foreign investors brought claims against their host states for state measures arguably aimed at protecting public health and security. Because these measures adversely affected these investors, the states were sued for millions, if not billions, of dollars – eventually to be paid by the taxpayers – for acts essentially for the benefit of their people.

The questions that arise from such instances are should a host state be responsible for damages suffered by foreign investors because, for instance, a state passed a law that benefits the public, but restricts the foreign investor and/or devalues foreign investment? To what extent must a state be held accountable? How should the system ‘balance’ the protection of foreign investment with public interest and a state’s right to regulate? What is a permissible environmental regulation and what is not? How the standards of treatment employed in hundreds of existing International Treaties could be changed without fundamentally altering the bargain that the States entered into? Additionally, how all of this ties within the framework of European legal order and the challenge of climate change.

Based on the explanations above, this course aims to acquaint students with fundamental knowledge of the legal-political regime that is international investment law. It will familiarize students with the highly fragmented treaty-based international network that aims at promoting and protecting foreign investment. The course endeavors to comprehensively cover investment treaty standards, their key doctrinal debates, investor-state dispute mechanism and the role of procedure. With each topic, discussion engages with the need to address the concerns of environmental sustainability. The course will provide a comprehensive overview of how these treaties are signed, and to what extent they undertake to protect foreign investment in a host country. It will give a detailed account of each state obligation included in the vast majority of IIAs currently in force.      The module will also offer insights into regulation of such key subfields of international investments as the energy sector and as the trade in carbon emission quotas. It also looks at systemic criticisms targeting international investment law, its current reform processes, as well as steps that can be taken to amend the shortcomings and fine-tune systemic priorities.