Criticizing the field of international investment law: A simple story made complex

The system of international investment law is often criticised by civil society organizations and legal academics. The Guardian recently described this system as a “legal weapon that gives corporations the edge on government”; it emphasized that there is a “growing concern among legal experts” that the investment regime “favours corporations over the public interest, puts sovereignty at stake, is chronically lacking in transparency and accountability and has been mis-sold to many developing countries that only realize exactly what they have signed up for when they get sued.”[1]

A Public Statement on the International Investment Regime, signed by a group of forty eight academics from around the world, has added, “We have a shared concern for the harm done to the public welfare by the international investment regime, as currently structured, especially its hampering of the ability of governments to act for their people in response to the concerns of human development and environmental sustainability”. [2] It argues, inter alia, that investment treaty arbitrations are unfair and unbalanced,[3] and that states should withdraw from investment treaties.[4] International investment law has even been described by a distinguished academic as “a law of greed”.[5]

Although perhaps somewhat exaggerated, these critiques are certainly not baseless. Several recent developments, most notably the disputes between tobacco giant Philip-Morris and the governments of Australia and Uruguay, indeed demonstrate how foreign investors can…

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On tuna, dolphins and all sorts of barriers

Trade lawyers’ interest in tuna and dolphins began in the early 1990s, when Mexico threw the first punch in what later became the long saga (going on 20 years now) known today as the tuna-dolphin disputes. The battleground was (and still is) the waters of the Eastern Tropical Pacific (“ETP”) Ocean, extending from California in the north to Chile in the south and Hawaii in the west. These waters are known for their abundance of sea-life, including numerous types of fish, dolphins, sharks, whales and sea turtles. Where fish are plentiful usually fisheries arise, and economic interests enter the game. This short note is written following the latest of a line of trade disputes between the United States and other states (most notably Mexico) concerning fisheries, morals and influence.

The tuna-dolphin disputes revolve around unilateral measures taken by the United States in order to combat the use of purse-seine fishing nets. Purse-seine fishing nets are used for commercial fishing. When used for tuna harvesting, not only tuna but also dolphins (and other species as well) are often trapped, injured, and even killed. It was argued by the United States that due to the use of these nets, the population of dolphins at the ETP was dramatically reduced.

Luckily for the dolphins, two types of U.S. pressure groups did not intend to let them disappear from the waters of the ETP.…

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Environmental exceptions in the future EU investment policy. Perhaps more than meets the eye?

Following the ratification of the European Union (“EU”) Treaty of Lisbon, the field of International Investment Law is now included in the EU’s common economic policy. As a major exporter and recipient of Foreign Direct Investment (“FDI”) in the global arena, it is no wonder that the EU’s ongoing deliberations over future investment policy are at the heart of contemporary academic debates.

At present, it seems that the EU Parliament aspires to push forward an innovative approach, in line with (and perhaps even further than) policies already applied by countries like Canada, under which exceptions for sustainable development goals are included.[1] This is mostly the result of concerns about “regulatory chill”, which are often mentioned by scholars (and recently also by policy makers)[2] who wish to maintain states’ flexibility to regulate future policies with respect to the protection of the environment, health, human-rights, etc. Indeed, it has been reported that Uruguay intended to relax its proposal for new anti-smoking laws following Philip Morris’ threats of investor-state litigation.[3] Similar concerns seem to have led policy makers and civil society organizations in Australia and New-Zealand to object to the inclusion of the investor-state mechanism in their investment agreements (most notably in the Trans-Pacific Partnership Agreement).[4]

But things are not so simple. The aim of these general exceptions is often to promote sustainable development goals by making states ‘untouchable’…

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Special Contribution: A New Protocol To Stop Biopiracy: Worth a Standing Ovation?

Nailed it: Environment Minister Ryu Matsumoto raises the hammer to end the COP10 conference in Nagoya. KYODO PHOTO, Japan Times Sunday, Oct. 31, 2010

On Saturday morning, October 28 2010 the Nagoya Protocol on Access to Genetic Resources and the Fair and Equitable Sharing of Benefits Arising from their Utilization to the Convention on Biological Diversity was adopted in the midst of a standing ovation by the Parties present.

This Protocol is intended to comply with the 3^rd objective of the Convention on Biological Diversity (CBD), which is the fair and equitable sharing of benefits arising from the utilization of genetic resources with the custodians of biodiversity. This Protocol is being hailed by delegates and nongovernmental organizations as one of the most important measures the world has ever taken against biopiracy.

Indeed, for many decades, pharmaceutical and cosmetics firms, and the agricultural and biotech industries have manufactured everyday products (drugs, toothpaste, makeup, etc.) consumed in our developed countries using plants or organisms from such places as the tropical rain forests of Latin America and Southeast Asia without acknowledging their origin or sharing the profits with Indigenous peoples and local communities whose knowledge made the development of these products possible[1]. Even worse, companies have patented over the last decades traditional products that were developed with the knowledge of Indigenous peoples and local communities without…

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Climate Law Comes Home to Roost: South Africa Releases its Draft Integrated Resource Plan for 2010-2030

It is evident that climate law has begun to impact the scope of energy planning in South Africa. In particular, the second revision of the Draft Integrated Resource Plan 2010 (IRP2) released by the South African Department of Energy makes direct reference to the nation’s international carbon-mitigation commitments in planning for its electricity sector. While some parties might find the government’s foray into, for instance, renewable energy and low-carbon emitting energy sources as being timid, the planning process does reveal a lot about the changing energy ethics of Africa’s largest electricity producer and the world’s thirteenth largest carbon emitter.

As previously mentioned by this author, South Africa will have a very tough time meeting its commitment to the UNFCCC process. The IRP2 process has brought together industry, government, the academe, civil society and industry – including independent power producers (IPPs) – as never before. The IRP2 hints at the changing nature of energy security ethics and legal approaches in Africa. While the IRP2 does not fully embrace this new brand of energy ethics, it will start South Africa on the road towards a reduced reliance on coal-fired electricity production. There is still hope for critics of the plan. Energy Minister Dipuo Peters has promised that the IRP2 was written with enough “flexibility” to, for example, embrace more renewable energy in the future should it be desired.[1]…

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Environmental Law and the Curse of Competency

Have you ever been in an organization full of incompetents, where one competent person has to do everyone else’s work even though it has nothing to do with their own job? I certainly have – and identifying that individual really took the pressure off me and my fellow rubes. “Tibor,” we’d say, “we can’t get this project done on time even though your project depends on it. Can you help us out?” Sure enough, Tibor would come through for us, and we’d all learn something about teamwork. Something depressing.

“What does this have to do with law?” you may ask (other than its relevance to my ongoing unjust dismissal hearing). Simple: by passing the environmental buck on to financial regulatory agencies such as the Ontario Securities Commission (OSC), we would be treating them just like poor old Tibor.

In the land of the incompetent, the semi-competent man is king. Similarly, in the ham-fisted world of inefficient and ineffective governmental organisations, a body which generally satisfies its mandate, such as the OSC, is a paragon. Of course, the OSC (or the rest of Canada’s financial market regulators) isn’t beyond criticism. Many complain that Canada is more lax towards fraud and white-collar crime than other countries. Nevertheless, the OSC has fared much better in meeting its dual mandate – protecting investors while promoting fair and efficient markets – than equivalent organizations…

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Special Contribution : Moving Forward with Corporate Environmental, Social and Governance Disclosure

Whether the issue is climate change, biodiversity, labour and supply chains, or international human rights, corporate sustainability disclosure is of increasing relevance to shareholders.  In a recent report submitted to Ontario, Canada’s minister of finance, the Ontario Securities Commission (OSC) made various recommendations regarding corporate reporting that may be controversial to some, but are a step in the right direction.

The report follows the Ontario Legislature’s unanimous approval of a private member’s resolution calling on the province to review existing reporting requirements and issuers’ compliance.

The resolution asked the OSC to undertake a broad consultation in order to “establish best practice corporate social responsibility…and environmental, social and governance…reporting standards”. In response, the OSC – supported by the Hennick Centre for Business and Law at York University – convened a multi-stakeholder roundtable and held various consultations with interested parties.

The reporting of material environmental, social and governance (ESG) information should be viewed as an integral part of a businesses’ overall risk management strategy. With this information, shareholders are in a better position to assess financial risks and to allocate capital to firms best suited to mitigate these risks. Disclosure also encourages stakeholder dialogue. This dialogue, over time, informs internal decision-making and provides a critical framework for identifying both risks and opportunities. This, in turn, can drive performance, enhance an organization’s reputation and strengthen the core elements of its…

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A League of Their Own

In recent years China’s prominence on the world stage has grown rapidly. With consistently high GDP growth, a swelling middle class, and high-profile international events such as the 2008 Beijing Olympics or the Expo 2010 in Shanghai, many recognize China as an emerging superpower. But this growth has not been consistent across all fronts, and in some respects China lags far behind other world powers. Recent events have made one area in particular stand out in this regard: oil spills.

On July 16^th in the Chinese port city of Dalian, the explosion of two oil pipelines caused thousands of barrels of oil to begin gushing into the sea. The slick has since expanded to cover hundreds of square kilometres of water and spread upwards of 90km down the coast. The spill – and China’s cack-handed response – is clearly modelled after the U.S.’s ongoing gulf coast saga – but it’s a pale imitation. Unlike the American spill, there seems to be no threat of the oil being carried to other nations’ coasts. Yet even Australia has managed to pull off a massive spill affecting its neighbours. If China wants to get into the oil spill big leagues, they’ll have to find a way to go international.

But while the international oil spill scene is characterised by intense competition, there is a notable lack of corresponding cooperation. It’s…

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The true nature of BITs (at least as I see it…)

On February 19-20 a conference which dealt with recent developments in the field of international investment law took place at Sydney University.[1] About sixty speakers from all around the world gathered for two intensive days of exchanging ideas, debating pressing issues and discussing what seems to be an emerging sub-field of international law. One important trend that was highly emphasised during this conference was the recognition that international investment law is far more public in nature than it was considered to be in the past. The effects of foreign investment on public interests such as the environment, human rights and labour standards are now obvious and the tension between the protection of investments on the one hand, and the governments’ interests in regulating these sensitive fields on the other, is often emphasised in academic writings and arbitration awards.

The conceptual change that international investment law seems to have gone  through has not however reached one very fundamental point. To my great surprise, speakers continually repeated the same old mantra concerning the main objective of investment treaties: the objective of investment treaties, so it was argued, is the protection of investors. This, I would argue, carries the same amount of logic as claiming that the objective of preparing a salad is cutting tomatoes. While it is true that Bilateral Investment Treaties (BITs) are designed to provide…

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South Africa will Strain to Reach its Commitments to the UNFCCC

The last several years have provided for challenging times in South Africa. The country is struggling to find its place in the world in the post-Apartheid age. President Jacob Zuma’s recent State of the Nation address was long on rhetoric, mainly that which extolled the accomplishments of Nelson Mandela (who made a rare public appearance that evening) and the stewardship of the slightly rusty ruling African National Congress party. However, he said very little in the speech to help lay out a firm strategy for economic and social success.

One of the greatest problems in South Africa is that outside of major urban centres the population has only limited access to reliable energy sources. This flies in the face of South Africa’s international energy commitments because ESKOM, which nearly holds a complete monopoly in South African energy production, also provides 45% of the entire continent’s electricity. Of course, this is ‘the dark continent’[1], but South Africans are feeling a power pinch as export demands have been met at the expense of domestic power shortages.

After hosting the World Summit on Sustainable Development in 2002, South Africa made strong legal commitments to reduce its carbon footprint via the United Nations Framework Convention on Climate Change (UNFCCC). The Kyoto Protocol entered into force here in 2005. Despite a rocky start, the South African government recently…

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