Integrating Environmental Obligations into BIT Interpretation: Interpretive Approaches for Arbitral Tribunals

Abstract

Today, there is much debate about the regulatory space provided by Bilateral Investment Treaties (BIT) to adopt the climate change mitigation and adaptation measures. These treaties typically provide substantive and procedural protections to investor and his investment, including protection against expropriation, fair and equitable treatment (FET), full protection and security, non-discrimination and the right to bring claims before international tribunals. However, the protection of foreign investment can sometimes conflict with the principles of sustainable development (POSD) and protection of environment. The investor who has invested millions of dollars in industries which causes harmful effect to the environment bring disputes related to conflict between investor protection and environmental protection under the dispute settlement provision in BIT. The dispute settlement provisions under the BIT provide direct access to investors to institute the claim in Investor-State Dispute Settlement (ISDS) tribunals. Direct access to tribunals without any intervention from state of nationality has caused considerable hinderance to the measures adopted by state for climate mitigation and adaptation. The tribunals deciding these cases often decide in favour of investor due lack of provisions of environmental protection in BITs. But these tribunals often overlook the interpretation tools they could use to interpret the provisions of BIT to uphold the measures adopted by state for protection of environment. There is lack of considerable debate on the interpretation tools which can be adopted to interpret the old-generation BIT rather than making ineffective textual amendments in the BITs. This paper discuses those interpretive tools which an arbitration tribunal could utilise to integrate the international environmental protection obligations with the obligation provided under BITs.