Browsing by Subject "International Investment Law"

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  • Silvander, Johanna (Helsingin yliopisto, 2020)
    Foreign direct investment (FDI) is considered important for economic growth, and a vital component of sustainable development. To foster the potential benefits, states have concluded thousands of international investment agreements (IIAs). These IIAs are designed to facilitate, promote, and protect FDI, and they often include provisions on investor-state dispute settlement (ISDS). The resolution of investor-state disputes by arbitration has alarmed many scholars since these disputes often entail serious public interest implications. This research aims to contribute to the debate on the sustainability and development impact of ISDS and international investment law from the perspective of labour and employment law and policy. Against this backdrop, the research investigates how the interpretation and application of IIAs may affect labour and employment regulation and policies in host states. A targeted key word search was used to identify cases in the International Centre for Settlement of Investment Disputes (ICSID) case law database, followed by a legal review to come down to cases where substantive labour-related claims and arguments have been made. Beyond pinpointing vulnerabilities from the perspective of sustainable development, the case law analysis extends to researching the potential and real impacts of ISDS cases on host states’ domestic labour law and policy, drawing from the world polity theory within the socio-legal discipline. On this basis, recommendations are made in view of improving the sustainability-related outcomes of ISDS and international investment law. The research provides a rich set of findings. First, the research finds that labour-related issues have arisen in six per cent of ICSID cases with publicly available material. Labour-related claims and arguments have also been made in ISDS cases outside of the ICSID framework. Second, the research finds that tribunals have handled such matters with different approaches, ranging from teleological interpretation and “arbitral activism” emphasizing labour rights to literal and narrow interpretation techniques. Tribunals have only to a limited extent applied the provisions of other treaties binding on the disputing parties or general principles of international law. Further, several incoherencies can be identified in the case law. Third, labour-related arguments in ISDS have been made by both investors and host states. Many of the standard IIA provisions have provided the basis for such arguments, including standards of treatment, expropriation and actions tantamount to expropriation, exceptions clauses, preamble clauses and provisions on the definition of an investment, as well as provisions in investor-state agreements. These provisions and related ISDS jurisprudence are analysed in detail in the paper. Fourth, the research finds certain direct impacts of ISDS decisions on host states’ labour and social regulation, while other impacts may be implied, potential or may have appeared in a longer timeframe. Unarguably, ISDS will have had an impact on both state and enterprise spending and, consequently, policies. The case law analysed reconfirms the states’ “right to regulate” in a non-discriminatory manner, implying at times even a highly protected status for national labour laws. At the same time, the research finds various vulnerabilities and risks, including in cases where states use stabilization agreements, as well as where certain standard provisions are included in IIAs without careful framing of their content. Furthermore, the research points to varying ISDS outcomes in terms of labour protection depending on the choice of wording in specific labour-protection related clauses in IIAs. Lastly, different possibilities to improve the sustainable development and labour aspects of IIAs and ISDS are proposed by the research. The following topics are analysed in detail: improved legal basis and guidance, improved institutions, improved inclusiveness of investment policy making as well as international cooperation. The research suggests that sustainability-oriented treaty drafting would be required to improve the expected outcomes of adjudicated cases. Such drafting could take place at bilateral, plurilateral or multilateral level, focusing on clarifying the content and scope of standard IIA provisions, as well as on incorporating specific labour provisions. The research indicates that institutional improvements would be needed particularly at the preventative front at the national level, while also proposing improvements at the level of ISDS. For more balanced FDI promotion, institutions with expertise in labour matters at the national level could be linked to bodies in charge of preventing investment disputes. Improved inclusiveness in investment policy making entails broader consultations and key roles assigned to labour-related bodies in investment policy making. Lastly, international cooperation would be required to deepen technical assistance towards more sustainable IIAs as well as to provide platforms for consensus-building on more sustainable FDI promotion.
  • Alahuhta, LIisa (Helsingin yliopisto, 2021)
    The study clarifies how foreign investors’ legitimate expectations are interpreted in environment-related investment disputes and what criteria are used to apply the legitimate expectations doctrine. Additionally, the study examines whether the application of legitimate expectations doctrine in environmental investment disputes differs from other disputes under international investment agreements and whether they should differ. As the protection of investor’s legitimate expectations is the product of arbitral tribunals’jurisprudence without actual textual support from the international investment agreements, the study has been conducted mainly based on the abundant case law on legitimate expectations. Although the focus is primarily on disputes with an environmental dimension, to provide a full picture of the doctrine some of the most influential awards without any environmental aspects are analysed as well. The analysis is conducted based on three different categories of legitimate expectations; investor’s legitimate expectations that are based firstly on contractual relationship between the investor and the host state, secondly on specific representations given by the host state, and thirdly on the general legal framework. The main conclusions of the study are that there exist significant inconsistencies in the application of the doctrine, and the outcome of a specific case depends largely on its details. Furthermore, there appears to be no differences in the application of the doctrine in environmental cases and others. Finally, the study examines briefly the future of the legitimate expectations doctrine in light of the so-called new generation investment agreements, which have stricter formulations of the FET standard compared to the older ones; despite these new agreements, the doctrine will continue to be relevant also in the future.
  • Heinäsmäki, Aapo (Helsingin yliopisto, 2020)
    The Energy Charter Treaty (ECT) is a multilateral investment treaty with over 50 contracting parties that solely concerns the energy sector, which is of crucial importance in combatting climate change. Further, more investor claims have been brought forward under the ECT than under any other investment agreement, and some of the largest arbitral awards have been rendered under its auspices. These factors combined make the ECT a very significant instrument for the global climate as a whole. This paper is based on the premise that more and more countries would wish to cut back on their use of highly polluting fossil fuels to produce energy. However, it is often argued that the investment protection clauses, which are also included in the ECT, cause ‘regulatory chill’, meaning that states are wary of passing stricter regulations, as such measures might well result in investor-state dispute settlement proceedings. Therefore, it is plausible that the investment protection clauses of the ECT are in fact slowing down the transition from fossil fuels to renewable forms of energy, and various NGOs in fact view the ECT solely as a tool of the fossil fuel industry used for this purpose. In this paper, I challenge such simplified take on the ECT and argue that states are in fact able to pass stricter regulations to protect the environment without breaching their ECT obligations towards foreign investors, and further, also should do so. This paper can most readily be described as a doctrinal research, as it concerns specific treaty provisions and all the claims made within it can be traced back to formal legal sources. In particular, I have relied on the texts of the ECT framework, and various judicial decisions. Therefore, large parts of this paper are comprised of treaty interpretation and analogic reasoning. The precise questions to which I have sought answers using these methods are: 1) What are the environmental aspects of the ECT; 2) Can the ECT, in its current form, be interpreted and applied in an environmentally sustainable way, and if so, how this could be done; 3) Why the ECT should be interpreted and applied in such way; and 4) Does the ECT require amendments to its current text? It is well known that the ECT framework contains a plethora of environmental provisions, however, due to their soft formulation, they are often overlooked as it would be difficult to find a state to be in breach of them. According to the findings of this paper this is, however, erroneous. Based on the sheer volume of environmental provisions, and the great significance placed upon them within the Preamble of the ECT and European Energy Charter, I have developed a novel, more balanced, take on the object and purpose of the ECT, which places significance on both the protection of investments and environment, unlike the tribunals applying the ECT have thus far done. Furthermore, I have found that despite the soft formulation of the environmental provisions, a state may still rely on them when responding to investor claims. However, the degree to which a state can do so depends greatly on the claims made – the text of the ECT places little to no significance to environmental matters in cases of alleged expropriation, whereas on alleged breaches of e.g. the FET standard environmental matters may be of great significance. Additionally, the text of the ECT allows for a state to argue that measures to protect the environment fall under the allowed exceptions of the ECT. Having identified the various environmental aspects of the ECT, and developed techniques for responding states to utilise them, I have also discussed why the presented findings should be applied, and whether it would be enough. It is evident that matters such as sustainable development and protection of the environment are gaining foothold within the law both on national and international level. As the ECT is not situated in a void, these global trends should be considered when applying it. As the findings of this paper would encourage states to pass legitimate measures for the protection of the environment, there are relatively clear policy reasons as to why the application of the findings would be desirable. Many of the findings made in this paper were reached through teleological interpretation of the ECT. While such interpretative approach is perfectly valid, it would nevertheless be beneficial for the text of the ECT to be amended to explicitly incorporate the interpretations made within this paper. Amending a multilateral treaty such as the ECT is, however, difficult. Therefore, the findings of this paper can be of great importance for states wishing to pass measures to protect the environment, as they offer greater certainty of the legality of their actions towards foreign investors.
  • Back, Joel (Helsingin yliopisto, 2021)
    Claims of breach of legitimate expectations have been widely used by investors in the energy sector. The protection of legitimate expectations is one of the core elements of the fair and equitable treatment obligation which is included in most investment treaties. The protection of expectations is an important function of investment treaties as investors make their investment decisions on the basis of calculations on the expected return, which is highly dependent of the laws in the state where the investment is made. In other words, returns of energy investments are directly linked to the stability and predictability of domestic laws. There is a need to protect investors against adverse state measures, as subsequent state conduct after that the investment decision has been made can cause substantial loses for the investors within the energy sector. However, at the same time, states need to implement measures that may affect investments in a detrimental manner to achieve certain energy policy goals. The energy sector and energy law are constantly developing due to changing circumstances. The current change is driven by the energy transition and the move towards a low-carbon economy. Environmental protection, human rights and renewable energy production are key issues of the energy transition. These issues are getting more and more attention in energy policies. Investment treaty provisions, and especially the FET standard, have usually been drafted in a vague manner which does not explicitly tell what the relationship is between investment protection and host state’s regulatory right. This has led to many different conceptions of the doctrine of legitimate expectations. These conceptions have usually either been overinclusive or underinclusive. This thesis suggests that most investment treaties should be interpreted in a balanced manner that considers both the interests of investors and host states. Therefore, a balancing approach where investors’ expectations are weighed against the host states’ right to regulate is needed. It is argued in this thesis that a conception on the protection of expectations should be based on the principles of legal certain and proportionality. A justification that is based on these two principles could be applied in a manner that is balanced and would not be over- or underinclusive. This principle-based approach would replace the doctrine of legitimate expectations. According to this approach legitimate expectations would only be an element that should be considered in the assessment on whether investors right to legal certainty has been breached, but legitimate expectations would not constitute a self-standing doctrine with direct legal effect. This thesis argues that a similar approach used in EU law should be applied in international investment disputes. In EU law the principle of legal certainty is just one principle that should be weighed against other core principles of the EU. Therefore, it is suggested that when assessing if investors’ expectations should be protected in specific circumstances, arbitral tribunals should use and weigh the international energy law principles against the principle of legal certainty when conducting a proportionality assessment. It is concluded that this principles based approach would be the most suitable conception for the protection of investors’ expectations as it would not be under- or overinclusive and it could be used in a flexible manner to changing circumstances in the energy market. This principle-based approach would be allowed under the current normative framework. However, it would be sensible to include in investment treaties that when considering if investors’ expectations should be protected, arbitral tribunals should rely on the principle of legal certainty, and conduct a proportionality assessment where all circumstances relating to the investment and the state measure are considered. As this thesis concerns the question of whether the current framework allows treaties to be interpreted in a balanced manner, the thesis will mainly rely on doctrinal research. In addition, by applying an inductive methodology this thesis will answer whether the doctrine has been conceptualized in a suitable manner in investment disputes.