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Foreign Investment and the Environment in International Law: An Ambiguous Relationship

British Yearbook of International Law, Vol. 80, 2010

Posted: 3 Aug 2010 Last revised: 9 Aug 2010

Jorge E. Vinuales

University of Cambridge

Date Written: August 7, 2010


The purpose of this study is to analyse the interactions between two thriving fields of current international law, namely international investment law (IIL) and international environmental law (IEL). Since their modern inception back in the 1960s, the historical development of these two bodies of law has been characterised by a remarkable transformation from loosely-defined arrays of standards and principles, often controversial and with limited legal impact, to sophisticated legal fields, of considerable importance from both the policy and business perspectives. This transformation has also changed the relations between IIL and IEL.

The emerging legal literature on the interactions between IIL and IEL seeks to capture different dimensions of this interface, focusing on issues such as the environmental responsibility of multinational corporations, the scope of investment protection clauses, the role of non-disputing parties, the operation of emergency or necessity clauses, or the treatment given in foreign investment disputes to some particular environmental question. Despite the importance of this research, the overall picture that emerges from these contributions remains difficult to appraise, mostly as a result of the specific nature of the issues and perspectives selected.

Building on this literature, the study presents a broader assessment of the current state of international law on this topic. In the first section, the study provides a conceptual framework to facilitate the analysis of both mutually supportive and conflicting interactions between foreign investment and environmental protection and their international legal regimes (II). This is followed by an analysis of the most significant questions posed by such interactions in the light of the relevant investment-related decisions from international courts and tribunals. The analysis is structured into two sections dealing with issues arising, respectively, in the conduct of arbitration proceedings (jurisdiction, applicable law, procedural issues) (III) and in the assessment of the merits of investment claims (normative and legitimacy conflicts, compensation) (IV). The last section is devoted to some prospective considerations concerning the interactions between IIL and IEL (V).

Keywords: Foreign Investment, Environmental Protection, investment Disputes, Amicus Curiae, Regulatory Expropriation, Sustainable Development, Green Economy

Suggested Citation

Vinuales, Jorge E., Foreign Investment and the Environment in International Law: An Ambiguous Relationship (August 7, 2010). British Yearbook of International Law, Vol. 80, 2010. Available at SSRN:

Jorge E. Vinuales (Contact Author)

University of Cambridge ( email )

19 Silver Street
United Kingdom

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