Abstract
In international disputes between investors and host-States, the traditionally asymmetric nature of international investment agreements (IIAs) may prevent States from bringing claims against investors for harm caused, including environmental damage. At the same time, allowing host-State counterclaims for environmental damage is a potentially useful tool for rebalancing the asymmetric nature of IIAs. Yet, in the highly fragmented area of international investment law, the availability of host-State counterclaims is not always clear. This article analyses the procedural and legal bases available for host-State counterclaims for environmental damage, including newly developing human rights and transnational public policy approaches to such claims. The question that this article seeks to evaluate is to what extent host-State counterclaims are available to rebalance the asymmetric relationship between host-States and investors, specifically concerning environmental damage. To answer this question, the article takes a qualitative approach by examining case law, commentary, and the work of international organizations, and applying the results of the research to the specific context of host-State counterclaims for environmental damage. Future developments are also discussed in the context of ongoing multilateral investor-State dispute settlement reform efforts at the United Nations Commission on International Trade Law. There currently exists a window of opportunity for States to seek cooperative, effective multilateral strategies for partially rebalancing the relationship between investment and the environment. The article posits that harmonization of State approaches towards counterclaims for environmental damage is desirable and States should take a permissive approach towards host-State counterclaims for environmental damage in their IIA treaty negotiation practice.
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Notes
E.g., the German public’s opposition to the Vatenfall v. Germany case concerning nuclear power production, and opposition to the Philip Morris cases against both Australia and Uruguay.
Scheduled for discussion during WGIII’s 39th session from 30 March—3 April 2020, postponed to October 2020 due to COVID-19.
That the investor’s claims and host-State’s counterclaims are based on the same facts.
That the investor’s claims and host-State’s counterclaims are based on the same law, e.g., a BIT.
Art. 26(1).
Arts. 1116 and 1117.
‘Everyone has the right to a standard of living adequate for the health and well-being of himself and of his family, including food, clothing, housing and medical care and necessary social service’.
‘Nothing in this Declaration may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights and freedoms set forth herein.’
‘Nothing in the present Covenant may be interpreted as implying for any State, group or person any right to engage in any activity or to perform any act aimed at the destruction of any of the rights or freedoms recognized herein, or at their limitation to a greater extent than is provided for in the present Covenant.’
Indigenous and Tribal Peoples Convention 1989.
Importantly, the applicable law clause of the operative IIA provided that the Tribunal ‘shall decide the issues in dispute in accordance with this Agreement and applicable rules of international law’ allowing for ILO Convention 169 to be taken into consideration as a rule of international law applicable to Peru. See Partial Dissenting Opinion at p. 11.
E.g., participating in the use, management, and conservation of natural resources, as well as participating in the benefits of the investment project.
E.g., improper disposal of toxic waste, exposure to radiation and harmful chemicals, oil pollution, and large-scale water pollution.
E.g., improper use of pesticides as a threat to the right to food, waste from extractive industries infringing the right to water.
As reflected by myriad sources, e.g., the International Bill of Rights, Guiding Principles on Business and Human Rights, the Revised Draft, regional instruments, and the work of the UN Human Rights Council.
As reflected by, e.g., the Stockholm and Rio Declarations, the work of the Special Rapporteur, myriad international environmental law treaties, and the law of 155 countries.
Examples include the EFTA—Indonesia CEPA (2018) and the Canada—EU CETA (2016).
If counterclaims for environmental damage succeed, questions concerning appropriate remedies arise. While this issue is beyond the scope of this article, remedies will generally need to be addressed taking the factual elements of a dispute into consideration, in order to determine whether primary (i.e., preventative or restorative) or secondary (i.e., pecuniary damages) remedies are most appropriate.
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Gleason, T. Examining host-State counterclaims for environmental damage in investor-State dispute settlement from human rights and transnational public policy perspectives. Int Environ Agreements 21, 427–444 (2021). https://doi.org/10.1007/s10784-020-09519-y
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DOI: https://doi.org/10.1007/s10784-020-09519-y