Environmental and Health Regulation: Assessing Liabilities Under Investment Treaties

Abstract:     
Numerous investors have filed arbitration claims alleging that a state’s enactment of a regulatory measure purportedly aimed at protecting human health or the environment constituted a violation of the state’s investment treaty obligations. The question of when a regulatory measure should be treated as a compensable indirect expropriation has received the most attention from commentators. However, in advancing such claims, investors typically also rely on the fair and equitable treatment and non-discrimination standards. For all three, a threshold question is whether the state measure was legitimate. In answering that question, tribunals focus on the procedural soundness of the measure and whether it was motivated by proper regulatory objectives. The overall legal framework thus deviates significantly from the approach taken in the international trade law context, and appears to provide limited space for a claimant to prevail on a claim relating to a bona fide environmental or health regulation.

Number of Pages in PDF File: 65

Accepted Paper Series