The Environment Breaks into Investment Disputes
In M. Bungenberg, J. Griebel, S. Hobe, A., Reinisch (eds), International Investment Law (Munich/London: C.H. Beck/Hart/Nomos) (2012) (Forthcoming)
25 Pages Posted: 7 Aug 2012
Date Written: 2012
Foreign investment is much needed for the ‘development’ component of ‘sustainable development’ but it entertains an ambiguous relationship with the other component of this concept: ‘environmental protection’. On the one hand, foreign investment can harness the resources (financial and technological) to promote environmental protection through a variety of channels (e.g. energy efficiency, reduction of GHGs emissions, waste treatment, and other ‘clean’ technologies). On the other hand, foreign investment may adversely affect the environment of the host State (e.g. destruction of biodiversity, pollution of water resources, improper disposal of hazardous waste, commercialization of dangerous chemicals banned/restricted in developed countries). This ambiguity also arises in the relationship between the bodies of international law primarily regulating foreign investment schemes and environmental protection. Both international investment law (‘IIL’) and international environmental law (‘IEL’) may help channel much needed foreign investment into pro-environment projects, the former by reducing the risks of investing in developing countries and the latter by providing specific incentives to channel funds to certain activities (e.g. the CDM). Yet, the obligations of the host State under IIL and IEL may sometimes conflict – at least to some extent – with each other. IIL may, more generally, collide with purely domestic environmental measures, as evidenced by an increasing number of investment disputes. This chapter analyzes the relationship between foreign investment and environmental protection from a legal perspective.
Keywords: green economy, investment and environment, conflict of norms, regulatory expropriation
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