Foreign Investment Law and Climate Change: Legal Conflicts Arising from Implementing the Kyoto Protocol Through Private Investment

Marie-Claire Cordonier Segger, Markus W Gehring & Andrew Newcombe eds., Sustainable Development in World Investment Law, Kluwer Law International, November 2010

CISDL Working Paper

27 Pages Posted: 26 Jul 2012  

Freya Baetens

PluriCourts Centre of Excellence, Law Faculty, Oslo University; Leiden University - Leiden Law School

Date Written: November 1, 2010

Abstract

The international developments over the last century, the implementation of international rules and the interaction between different fields of international law have fascinated many legal minds. The expansion of international investment law in particular is occurring at such speed and in such a manner that overlap with other areas of law, such as international rules relating to sustainable development, seems unavoidable. One international rule-set promoting sustainable development is the climate change regime formed by the United Nations Framework Convention on Climate Change and the Kyoto Protocol. Both international instruments form good illustrations of the current groundbreaking trends in thinking about international law. One particularly interesting innovation is that the Protocol explicitly provides for the involvement of private entities, such as foreign investors, to achieve its goals of limiting and reducing greenhouse gas emissions.

This Paper first provides a brief overview of the climate change regime and in particular, the different ways in which private investors can participate in the execution of the Protocol, the so-called Kyoto Flexibility Mechanisms: Joint Implementation, the Clean Development Mechanism and Emissions Trading. Secondly, through the analysis of a number of investment protection standards found in most international investment treaties (expropriation, nondiscrimination, fair and equitable treatment, and the prohibition on performance requirements), this Paper addresses the problems that the implementation of the Kyoto Protocol could create for the functioning of investment arbitration (and vice versa). Finally and most importantly, the present Paper makes a number of proposals as to how the Kyoto Protocol and investment protection objectives could be reconciled and even reinforce each other.

Keywords: climate change, Kyoto Protocol, private investment, Flexible Mechanisms, international investment agreements, investor-State arbitration, legal regime interaction

Suggested Citation

Baetens, Freya, Foreign Investment Law and Climate Change: Legal Conflicts Arising from Implementing the Kyoto Protocol Through Private Investment (November 1, 2010). Marie-Claire Cordonier Segger, Markus W Gehring & Andrew Newcombe eds., Sustainable Development in World Investment Law, Kluwer Law International, November 2010. Available at SSRN: https://ssrn.com/abstract=2117950

Freya Baetens (Contact Author)

PluriCourts Centre of Excellence, Law Faculty, Oslo University ( email )

P.O. Box 6706
St. Olavs plass 5
0130 Oslo
Norway

HOME PAGE: http://https://www.jus.uio.no/ior/english/people/aca/freyab/

Leiden University - Leiden Law School ( email )

P.O. Box 9520
2300 RA Leiden, NL-2300RA
Netherlands

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