The Changing Landscape of International Law: Investor-State Arbitration and the Case of Pac Rim Cayman LLC v. El Salvador

Traditionally, the only actors in the realm of public international law were sovereign states. In the late 1940s, the group of actors was widened to include international organizations, which were also deemed to possess legal personality by the International Court of Justice’s (ICJ) ruling in the Reparations Case. [1] With the dawn of investor-state arbitration, the number of claimants able to assert rights based on language contained in international treaties has expanded exponentially.

Investor-state disputes present essentially a hybrid between public international law and traditional fields of private law, such as contract and property. Relationships between investors and sovereign states come into existence when two or more states agree to a bilateral (or multilateral) investment treaty (BIT), or the provisions which are normally included in a BIT form part of a free trade agreement (FTA). Chapter eleven of the North American Free Trade Agreement (NAFTA), for instance, contains the relevant provisions concerning investor-state disputes in the context of North American investors operating in another NAFTA state. [2] The provisions in NAFTA essentially allow an investor to sue a sovereign state through the International Centre for Settlement of Investment Disputes (ICSID), a branch of the World Bank based in Washington D.C., in the event that its property was expropriated. BITs are ostensibly beneficial to both investors and the signatory states. Investors gain from the legal certainty which the BIT provides in…

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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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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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The ANC’s Economic Identity Crisis: International Commitments, Local Problems and Politics

“Our history has been a bitter one dominated by colonialism, racism, apartheid, sexism and repressive labour policies. The result is that poverty and degradation exist side by side with modern cities and a developed mining, industrial and commercial infrastructure. Our income distribution is racially distorted and ranks as one of the most unequal in the world – lavish wealth and abject poverty characterise our society.”[1]

Since 1994 the African National Congress (ANC) has tried to ‘have its cake and eat it, too.’ The ANC has led a broad-based coalition that governs, more or less, from the centre of the South African political scene, but its current domestic economic policies do not seem to withstand the strong pull of its international commitments. Economically, ‘revolution’ in South Africa has been a tricky subject for policymakers within the ANC. The government has since 1994 been part of a tri-partite alliance with the Coalition of South African Trade Unions (COSATU) and the South African Communist Party (SACP) – these two parties giving a strong leftist tinge to the government’s composition and policymaking ability.

The country is outwardly open to investment, and President Jacob Zuma has boldly courted corporations to assure them his coalition will not create an “anti-business” atmosphere. However, committing to a neo-liberal trade agenda has not been easy for Zuma politically, and has been very tough on the nation. Economic…

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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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A Primer to Economic Regional Integration in Africa

“Africa could rightly be described as the major theatre of contemporary cases of shared sovereignty.”[1]

It is the hope of many African leaders that greater cohesion in African trade will lead to more firm patterns of national development. Formalizing the international trade sector within Africa could lead to greater national tax revenues, a freer exchange of ideas, labour and technology across borders, the stabilization of regional agricultural and natural resource markets, and greater cooperation over shared infrastructure projects such as the creation of highways, waterways development, and even the deployment of green technology such as wind energy projects.[2]

While more flamboyant African leaders such as Muammar Gaddafi stress the need for pan-African unity (Gaddafi even calling for a United States of Africa), smaller regional unification bodies are already active. Most Westerners might be surprised that much of West Africa, the nations of the Economic Community of West African States (ECOWAS), already has a unified currency between fifteen nations. Since its creation by treaty in 1993, ECOWAS trade commissioners from a diverse array of fields attempt to integrate trans-national policies on social affairs, water resources, energy, and security matters. Just as NATO intervenes in foreign conflicts, when civil unrest unfolds in member states, such as recently in Guinea, ECOWAS applies strong diplomatic and military pressure to uphold the rule of law.

The East African Community…

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Bill C-300 – A National Law with International Ramifications

Scarborough-Guildwood Liberal MP John McKay has introduced a private members bill to Parliament that has been stirring up controversy in the global mining and natural resource sector. Bill C-300 asks mining companies that seek financing from Canadian markets to disclose to Export Development Canada (EDC) a wide array of information having to do with their human rights practices, labour standards, and environmental policies. If they fail to meet this requirement, or if their standards do not conform with pre-established norms, these companies will not be eligible to receive public pension plan investment dollars and other public monies from EDC. Perhaps this does not sound like a major deal, but 85% of international extractive projects seek financing at the Vancouver and Toronto stock exchanges. This is a case where a domestic law could have a very international reach.

McKay has brought the bill forward in the hopes that it will alter what he sees as an inexcusable state of affairs concerning the global mining industry’s effects on the populations of developing nations.[1] Detractors of the bill note that the extractive sector of Canada has already enacted very stringent Corporate Social Responsibility (CSR) guidelines after the National Roundtables on Corporate Social Responsibility of 2006. For them, more regulation simply re-invents the wheel.[2]…

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