Watching the pendulum swing: investigating changes in the scope and impact of provisions in investment treaties for securing environmental protection

With the turn of the century, investment treaties began to address the potential for conflict between the introduction by governments of protective environmental measures and investors’ claims of intereference with their rights to fully exploit their investments, prompting claims for compensation over reduction in the profitability of their investments. This conflict reflects a tension between the public’s right to a safe environment, on the one hand, and investors’ rights on the other. Since the 1990s, this tug-of-war between those supporting investment protection and those advocating for a safe environment has been played out in the case law of courts and arbitral tribunals, as well as in the drafting of investment treaties and free trade agreements. While environmental provisions in recent agreements, such as NAFTA and Trans Pacific Partnership (TPP), have suggested the pendulum is swinging with greater force in the direction of the environment, nevertheless the potential for positive impact on the environment has continued to be hampered by both legal and linguistic expedients that prioritize economic growth over environmental concerns. The Investor-State Dispute Settlement (ISDS) provisions carried over into TPP from NAFTA allow foreign investors to challenge government measures related to environmental, health, and safety regulations which investors claim to violate treaty obligations into which the State willingly entered for investors’ protection. Moreover, with recent calls for the renegotiation of NAFTA and the US decision to withdraw from TPP, it may be the pendulum is swinging back in favour of economic over environmental concerns.