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Environmental Protection in International Investment Arbitration: From Defences to Counterclaims

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The Environment Through the Lens of International Courts and Tribunals

Abstract

This chapter examines how environmental protection has been invoked as basis for host State defences against investor claims, host State counterclaims against investors, and as a separate ground for investor claims against host States—all with relative degrees of success before investor-State arbitration tribunals. When invoked in these ways as a key substantive ground for legal defences, claims, and counterclaims, environmental protection poses issues of interdisciplinary complexity for tribunals when it comes to evidentiary assessment, the standard of diligence and precaution required of States as well as non-State actors, and the concurrent interaction of States’ environmental protection obligations with their investment treaty obligations. While investor-State arbitration may (and should probably) not be the court of first resort to achieve environmental protection, it should also not be seen as the court of last resort when it comes to producing sound, competent, and credible adjudication that is mindful of the role of scientific expertise, public regulatory concerns, and desired environmental outcomes. At the very least, the jurisprudential record examined in this chapter provides some qualitative evidence of the feasibility of investor-State arbitration as an adjudicative process, capable of accommodating various scientific, fact-finding, expert-driven, and interdisciplinary methodologies towards resolving questions raised by either host States or investors concerning environmental protection.

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Notes

  1. 1.

    See e.g. Boisson de Chazournes 2017; Asteriti 2015 and Beharry and Kuritzky 2015.

  2. 2.

    See e.g. Anh et al. 2019; Borregaard and Dufey 2002; Demena and Afesorgbor 2020.

  3. 3.

    See Marisi 2020; Gordon and Pohl 2011.

  4. 4.

    See Tienhaara 2011.

  5. 5.

    See Mistura 2019; Da Silva 2018.

  6. 6.

    See Ho 2018, pp. 222–253.

  7. 7.

    See in comparison Payne 2017.

  8. 8.

    See e.g., Mesa Power Group LLC v Government of Canada, Award, 24 March 2016, PCA Case No 2012-17, para 672; Methanex v United States of America, Final Award on Jurisdiction and Merits, 3 August 2005, NAFTA/UNCITRAL (Methanex Award) (https://www.italaw.com/sites/default/files/case-documents/ita0529.pdf—accessed 23 April 2021).

  9. 9.

    See Harrison 2016; Burlington Resources Inc v Republic of Ecuador, Decision on Ecuador’s Counterclaims, 7 February 2017, ICSID Case No ARB/08/5, para 1075 (awarding compensation to Ecuador for environmental harm caused by the investor in breach of Ecuador’s environmental laws); Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v The Argentine Republic, Award, 8 December 2016, ICSID Case No ARB/07/26, paras 1182–1192 (Urbaser Award) (recognizing that in general, investors could be bound by international human rights law, such as the right to water, but in the specific circumstances of the case, such rights had to be incorporated first in the investment contract).

  10. 10.

    See De Luca 2020.

  11. 11.

    See e.g., Romson 2012.

  12. 12.

    Sharma 2020; Gleason 2020.

  13. 13.

    See Viñuales and Dupuy 2013.

  14. 14.

    See e.g., ibid., pp. 281–292; Sweify 2015; Mahla and Duggal 2020.

  15. 15.

    Methanex Award, above n 8.

  16. 16.

    Ibid., paras 26–28.

  17. 17.

    Composed of J. William F. Rowley, V. V. Veeder and W. M. Reisman.

  18. 18.

    Methanex Award, above n 8, para 102, item no. 2.

  19. 19.

    Ibid., Part IV, Chapter B, p. 19, para 38.

  20. 20.

    Ibid., Part IV, Chapter C, pp. 5–12, paras 9–27.

  21. 21.

    Ibid., Part IV, Chapter D, p. 4, para 7. Italics added.

  22. 22.

    Ibid., Part IV, Chapter D, p. 5, paras 9 and 10.

  23. 23.

    David Aven and Others v Republic of Costa Rica, Final Award, 18 September 2018, DR-CAFTA/UNCITRAL, Case No UNCT/15/3 [Members of the Tribunal: Eduardo Siqueiros, Presiding Arbitrator, C. Mark Baker and Pedro Nikken, Co-Arbitrators) (Aven Award).

  24. 24.

    Ibid., para 6.

  25. 25.

    Ibid., paras 18–20, 360.

  26. 26.

    Ibid., paras 370–374.

  27. 27.

    Ibid., para 369.

  28. 28.

    Ibid., para 7.

  29. 29.

    Ibid., para 385.

  30. 30.

    Ibid., para 384.

  31. 31.

    Ibid., para 394.

  32. 32.

    Ibid., para 449.

  33. 33.

    Ibid., para 552.

  34. 34.

    Ibid., para 553.

  35. 35.

    Ibid., para 558.

  36. 36.

    Ibid., para 585.

  37. 37.

    Ibid., Part XIV, dispositif.

  38. 38.

    See Marisi 2020, pp. 19–28.

  39. 39.

    Compania Del Desarrollo De Santa Elena S.A. v The Republic of Costa Rica, Final Award, 17 February 2000, ICSID Case No ARB/96/1 [Members of the Tribunal: Yves Fortier, President; Prof. Sir Elihu Lauterpacht, and Prof. Prosper Weil, Tribunal Members].

  40. 40.

    Ibid., para 71.

  41. 41.

    Ibid., para 72.

  42. 42.

    Sergei Paushok, CJSC Golden East Company, CJSC Vostokneftegaz Company v The Government of Mongolia, Award on Jurisdiction and Liability, 28 April 2011, UNCITRAL, para 678(5) [Tribunal President Hon. Marc Lalonde, Tribunal Members: Dr. Horacio Grigera Naon, Professor Brigitte Stern].

  43. 43.

    Ibid., para 696.

  44. 44.

    Urbaser Award, above n 9 [Tribunal President: Professor Andreas Bucher; Tribunal Members: Professor Pedro Martinez-Fraga, Professor Campbell McLachlan QC].

  45. 45.

    Ibid., para 34.

  46. 46.

    Ibid., para 36.

  47. 47.

    Ibid., last sentence.

  48. 48.

    Ibid., para 1150.

  49. 49.

    Ibid., para 1151.

  50. 50.

    Ibid., paras 1194–1195.

  51. 51.

    Ibid., paras 1196–1198.

  52. 52.

    Ibid., para 1206.

  53. 53.

    Ibid., paras 1207 and 1208.

  54. 54.

    Ibid., paras 1209 and 1210.

  55. 55.

    Ibid., para 1212.

  56. 56.

    Ibid., para 1220.

  57. 57.

    See Joseph 2004, pp. 8–15; Augenstein and Kinley 2013; Bernaz 2017, Chapter 10 (on business and human rights litigation).

  58. 58.

    Committee on Economic, Social and Cultural Rights, General Comment No. 24 (2017) on State obligations under the International Covenant on Economic, Social and Cultural Rights in the Context of Business Activities, 10 August 2017, E/C.12/GC/24, full text at https://www.refworld.org/docid/5beaecba4.html (last accessed 23 April 2021).

  59. 59.

    Ibid., para 5.

  60. 60.

    Ibid., para 11.

  61. 61.

    See e.g., Marques and Simoes 2020; Jensen 2017; Gerlach and Franceys 2010.

  62. 62.

    Perenco v Ecuador LTD. v The Republic of Ecuador and Empressa Estatal Petroleos de Ecuador (Pertoecuador), Interim Decision on Environmental Counterclaim, 11 August 2015, ICSID Case No ARB/08/6 [Tribunal President: Judge Peter Tomka; Tribunal Members: Mr. Neil Kaplan and Mr. J. Christopher Thomas].

  63. 63.

    Ibid., para 4.

  64. 64.

    Ibid., para 5.

  65. 65.

    Ibid., para 34.

  66. 66.

    Ibid., paras 34 and 35.

  67. 67.

    Ibid., paras 109–110.

  68. 68.

    Ibid., para 355.

  69. 69.

    Ibid., para 354.

  70. 70.

    Ibid., para 320.

  71. 71.

    Ibid., para 323.

  72. 72.

    Ibid., para 352.

  73. 73.

    Ibid., para 356.

  74. 74.

    Ibid., paras 357–358.

  75. 75.

    Ibid., para 359.

  76. 76.

    Ibid., paras 371, 372, 374 and 379 (emphasis added).

  77. 77.

    Ibid., para 447.

  78. 78.

    Ibid., para 611.

  79. 79.

    Ibid., para 899.

  80. 80.

    Burlington Resources Inc. v Republic of Ecuador, Decision on Counterclaims, 7 February 2017, ICSID Case No ARB/08/5 [Tribunal President: Professor Gabrielle Kaufmann-Kohler; Tribunal Members: Professor Brigitte Stern, Mr. Stephen Drymer].

  81. 81.

    Ibid., para 1075.

  82. 82.

    Ibid., paras 195–249.

  83. 83.

    Ibid., para 247.

  84. 84.

    Ibid., paras 291–292.

  85. 85.

    Peter A. Allard v The Government of Barbados, Award, 27 June 2016, PCA Case No 2012-06 [Members of the Tribunal: Dr. Gavan Griffith (President), Professor Andrew Newcombe, Professor W. Michael Reisman].

  86. 86.

    Ibid., para 33.

  87. 87.

    Ibid., para 34.

  88. 88.

    Ibid., para 42.

  89. 89.

    Ibid., para 43.

  90. 90.

    Ibid., para 50.

  91. 91.

    Ibid., para 51.

  92. 92.

    Ibid., para 52.

  93. 93.

    Ibid., para 139.

  94. 94.

    Ibid., para 166.

  95. 95.

    Ibid., para 194.

  96. 96.

    Ibid., para 199.

  97. 97.

    Ibid., para 208.

  98. 98.

    Ibid., paras 222–223.

  99. 99.

    Ibid., para 229–230.

  100. 100.

    Ibid., para 242.

  101. 101.

    Ibid., para 244.

  102. 102.

    Ibid., para 255.

  103. 103.

    Ibid., para 264.

  104. 104.

    William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton, and Bilcon of Delaware Inc. v Government of Canada, Award on Jurisdiction and Liability, 17 March 2015, PCA Case No 2009-04 [Tribunal President: Judge Bruno Simma; Tribunal Members: Professor Donald McRae, Professor Bryan Schwartz].

  105. 105.

    Ibid., paras 588–604. See para 602 (‘The Tribunal at this stage simply holds that the applicant was not treated in a manner consistent with Canada’s own laws, including the core evaluative standard under the [Canadian domestic environmental statute] and the standards of fair notice required by Canadian public administrative law’).

  106. 106.

    Ibid., para 5.

  107. 107.

    Ibid., para 26.

  108. 108.

    Ibid., paras 27–39.

  109. 109.

    Ibid., para 591.

  110. 110.

    Ibid., para 600.

  111. 111.

    Ibid., para 742. See William Ralph Clayton, William Richard Clayton, Douglas Clayton, Daniel Clayton, and Bilcon of Delaware Inc. v Government of Canada, Award on Damages, 10 January 2019, UNCITRAL, PCA Case No 2009-04, para 400.

  112. 112.

    See Charanne B.V Construction Investments S.A.R.L. v The Kingdom of Spain, Award, 21 January 2016, ICSID Case No 062/2012; Eiser Infrastructure Limited and Energia Solar Luxembourg S.A.R.L. v The Kingdom of Spain, Award, 4 May 2017, ICSID Case No ARB/13/36; Isolux Netherlands B.V. v Kingdom of Spain, Final Award, 17 July 2016, SCC Case No V2013/153; Novenergia II—Energy & Environment (SCA) (Grand Duchy of Luxembourg), SICAR v The Kingdom of Spain, Final Award, 15 February 2018, SCC Case No 2015/063.

  113. 113.

    See Meshel 2016; Stephens 2009, pp. 21–60; Garimella 2016.

  114. 114.

    See Boute 2012.

  115. 115.

    See O’Gorman et al. 2020.

  116. 116.

    See e.g., Latifah et al. 2020; Di Benedetto 2013, pp. 3–82; Robert-Cuendet 2019.

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Authors and Affiliations

  1. Notre Dame Law School, University of Notre Dame, Notre Dame, IN, USA

    Diane A. Desierto

  2. Keough School of Global Affairs, University of Notre Dame, Washington, DC, USA

    Diane A. Desierto

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  1. ESILA, The Hague, The Netherlands

    Edgardo Sobenes

  2. Amsterdam, The Netherlands

    Sarah Mead

  3. Université Paris Nanterre, Angers, France

    Benjamin Samson

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Desierto, D.A. (2022). Environmental Protection in International Investment Arbitration: From Defences to Counterclaims. In: Sobenes, E., Mead, S., Samson, B. (eds) The Environment Through the Lens of International Courts and Tribunals. T.M.C. Asser Press, The Hague. https://doi.org/10.1007/978-94-6265-507-2_11

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