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Protection of the environment in investment arbitration - a double edged sword

Dr Kate Parlett of 20 Essex Street and Sara Ewad co-authored this article discussing the rise in investment disputes with an environmental component. Key points the authors discuss include:

  • More than 60 investment disputes filed since 2012 have involved some kind of environmental issue.
  • Environmental obligations might be invoked by States against investors, by way of a counterclaim. The most likely basis of a counterclaim is the host State’s domestic law, binding on investors under a contract or other requirement to comply with national laws. A damages award against investors for breach of environmental obligations could be substantial.
  • A State’s domestic and international environmental obligations might also be invoked by an investor – an investor might be able to claim damages for the State’s failure to comply with an environmental obligation where such failure has caused damage to a protected investment. An investor might also claim that a State’s environmental obligations should be taken into account in assessing whether there has been a breach of a treaty standard, such as fair and equitable treatment or full protection and security.

The full article is attached below.

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Protection of the environment in investment arbitration - a double-edged sword Final.pdf943.46 KB