The system of investor-state dispute settlement (ISDS) found in over 3,000 bilateral investment treaties and numerous regional trade agreements has been criticized for interfering with the rights of sovereign states to regulate investment in the public interest, for example, to protect the environment and public health. This article argues that while much of the public debate around ISDS has focused on a small number of cases that have arisen over the regulation of tobacco packaging, there is a far greater threat posed by the potential use of ISDS by the fossil fuel industry to stall action on climate change. It is hypothesized that fossil fuel corporations will emulate a tactic employed by the tobacco industry – that of using ISDS to induce cross-border regulatory chill: the delay in policy uptake in jurisdictions outside the jurisdiction in which the ISDS claim is brought. Importantly, fossil fuel corporations do not have to win any ISDS cases for this strategy to be effective; they only have to be willing to launch them. The article concludes with three options to reform trade and investment agreements to better align them with climate change mitigation efforts: (i) exclude ISDS provisions; (ii) prohibit fossil fuel industries from accessing ISDS; or (iii) carve out all government measures taken in pursuit of international obligations (for example, under the Paris Agreement on climate change) from challenge under ISDS.
Humanity is currently faced with two global crises, one fi nancial and one environmental. Although ostensibly distinct, these crises are in fact interlinked. Unsustainable consumption, at the heart of the environmental crisis, is driven to a large extent by unsustainable debt, which creates fi nancial instability. If these underlying issues are tackled, and investment is directed into environmental initiatives through a 'green new deal', then the ultimate outcome of the fi nancial crisis could be the mitigation of the environmental crisis. If, conversely, economic hardship is used as a justifi cation for delaying action on critical environmental issues and economic growth remains at the centre of government policy, then the ultimate outcome of the fi nancial crisis could be the deepening of the environmental crisis. The relationship between the two crises therefore provides both opportunities and threats to achieving long-term economic and ecological sustainability.
Recent years have seen a substantial increase in investor-state disputes. In many cases matters of public interest, including environmental regulations, are being tried. While it is crucial to assess the outcomes of investor-state disputes that involve matters of public policy, the procedures followed in investment arbitration make this difficult and, in some cases, impossible. This is relevant not only for researchers, but also crucially for regulators. This article focuses on how the lack of transparency in arbitration, and the lack of consistency of tribunal decisions, creates uncertainty for regulators. This uncertainty, when combined with the financial risk involved in proceeding to arbitration, may create situations in which the threat of an investment dispute is sufficient to convince a government to reverse, amend or fail to enforce an environmental regulation-a phenomenon referred to as regulatory chill. These issues are explored in an Indonesian case involving a dispute over mining contracts in protected forests. (c) 2006 by the Massachusetts Institute of Technology.
, the Australian Government committed to "preserve the right of Australian governments to make laws in important public policy areas" and to reject provisions in trade agreements that could "limit its capacity to put health warnings or plain packaging requirements on tobacco products or its ability to continue the Pharmaceutical Benefits Scheme". 1 One forum in which this resolve is likely to be tested is the Trans-Pacific Partnership Agreement (TPPA) negotiations. The TPPA is a proposed regional free trade agreement between Australia,
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