‭RESEARCH PAPER‬

‭SUSTAINABLE DEVELOPMENT AND INTERNATIONAL INVESTMENT LAW‬

‭SUBJECT :‬

‭INTERNATIONAL INVESTMENT LAW‬

‭SUBMITTED TO:‬

‭PROFESSOR RAJESH KAPOOR‬

‭SUBMITTED BY :‬

‭ISHAN DHIMAN‬

‭YEAR V SEM IX‬

‭2020-5LLB-26‬

‭NATIONAL ACADEMY OF LEGAL STUDIES AND RESEARCH UNIVERSITY OF LAW‬

‭HYDERABAD, TELANGANA‬
 ‭TABLE OF CONTENTS‬

‭1. INTRODUCTION‬

‭2.CONCEPTUAL‬ ‭FRAMEWORK‬ ‭:‬ ‭SUSTAINABLE‬ ‭DEVELOPMENT‬ ‭IN‬ ‭INTERNATIONAL‬

‭INVESTMENT LAW‬

‭3. KEY TREATIES, PRINCIPLES AND REFORMS‬

‭4. CASE STUDIES : BALANCING PUBLIC AND PRIVATE INTEREST‬

‭5. CHALLENGES AND OPPORTUNITIES IN REFORMING IIA’s‬

‭6. RECOMMENDATIONS : TOWARDS A SUSTAINABLE INVESTMENT REGIME‬

‭7. CONCLUSION‬
 ‭INTRODUCTION‬

‭Investment‬ ‭law‬ ‭and‬ ‭sustainable‬‭development‬‭have‬‭traditionally‬‭functioned‬‭in‬‭distinct‬‭spheres,‬‭however‬‭they‬

‭are‬ ‭becoming‬ ‭increasingly‬ ‭interrelated‬‭1‬‭.‬ ‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs),‬ ‭including‬ ‭Bilateral‬
‭Investment‬ ‭Treaties‬ ‭(BITs)‬ ‭and‬ ‭investment‬ ‭provisions‬ ‭in‬ ‭Free‬ ‭Trade‬ ‭Agreements‬ ‭(FTAs),‬ ‭primarily‬ ‭seek‬‭to‬
‭attract‬ ‭and‬ ‭safeguard‬ ‭foreign‬ ‭investments‬ ‭by‬ ‭providing‬ ‭legal‬ ‭certainty,‬ ‭equitable‬ ‭treatment,‬ ‭and‬ ‭protection‬
‭against‬ ‭expropriation.‬ ‭Nevertheless,‬ ‭these‬ ‭protections‬ ‭may‬ ‭clash‬ ‭with‬ ‭governmental‬ ‭policies‬ ‭aimed‬ ‭at‬
‭fostering‬ ‭sustainable‬ ‭growth,‬ ‭especially‬ ‭when‬ ‭environmental,‬ ‭social,‬ ‭or‬ ‭human‬ ‭rights‬ ‭legislation‬ ‭place‬
‭limitations on investments.‬

‭The‬ ‭Sustainable‬ ‭Development‬ ‭Goals‬ ‭(SDGs)‬‭2‬‭,‬ ‭established‬ ‭by‬ ‭the‬ ‭United‬ ‭Nations‬ ‭in‬ ‭2015,‬ ‭underscore‬ ‭the‬
‭necessity‬‭of‬‭harmonising‬‭economic‬‭advancement‬‭with‬‭environmental‬‭conservation‬‭and‬‭social‬‭inclusivity.‬‭The‬
‭incorporation‬ ‭of‬ ‭SDG‬ ‭concepts‬ ‭into‬ ‭investment‬ ‭legislation‬ ‭presents‬ ‭a‬ ‭considerable‬ ‭difficulty‬‭3‬‭.‬ ‭Although‬
‭certain‬‭IIAs‬‭allude‬‭to‬‭sustainability‬‭objectives,‬‭they‬‭frequently‬‭employ‬‭ambiguous‬‭or‬‭aspirational‬‭phrasing‬‭in‬
‭preambles,‬ ‭without‬ ‭robust,‬ ‭enforceable‬ ‭obligations.‬‭Conflicts‬‭emerge‬‭when‬‭host‬‭states‬‭endeavour‬‭to‬‭enforce‬
‭sustainable‬ ‭development‬ ‭policies‬ ‭that‬ ‭foreign‬ ‭investors‬ ‭view‬ ‭as‬ ‭violations‬ ‭of‬ ‭their‬ ‭legitimate‬ ‭expectations‬
‭under the provisions of International Investment Agreements (IIAs).‬

‭The‬ ‭quantity‬ ‭of‬ ‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs)‬ ‭has‬ ‭increased‬ ‭markedly,‬ ‭with‬ ‭almost‬ ‭3000‬
‭Bilateral‬ ‭Investment‬ ‭Treaties‬ ‭(BITs)‬ ‭and‬ ‭more‬ ‭than‬ ‭360‬ ‭additional‬ ‭types‬ ‭of‬ ‭IIAs‬ ‭presently‬ ‭in‬ ‭effect.‬
‭Nevertheless,‬ ‭the‬ ‭majority‬ ‭of‬ ‭treaties‬ ‭are‬ ‭primarily‬ ‭aimed‬ ‭at‬‭investor‬‭protection,‬‭with‬‭just‬‭a‬‭limited‬‭number‬
‭incorporating‬ ‭enforceable‬ ‭elements‬ ‭that‬ ‭further‬ ‭sustainable‬ ‭development‬ ‭objectives.‬ ‭Notable‬ ‭instances‬
‭encompass‬ ‭contemporary‬ ‭agreements‬ ‭such‬ ‭as‬ ‭the‬ ‭Canada-EU‬ ‭Comprehensive‬ ‭Economic‬ ‭and‬ ‭Trade‬
‭Agreement‬ ‭(CETA)‬‭4‭,‬ ‬ ‭designed‬ ‭to‬ ‭harmonise‬ ‭investment‬ ‭promotion‬ ‭with‬ ‭environmental‬ ‭and‬ ‭social‬‭policies,‬
‭and‬ ‭Southern‬ ‭African‬ ‭Development‬ ‭Community‬ ‭[‬‭SADC’s‬‭]‬ ‭Model‬ ‭BIT‬‭5‭,‬ ‬ ‭which‬ ‭prioritises‬ ‭environmental‬
‭impact assessments.‬

‭Moreover,‬‭prominent‬‭arbitration‬‭cases‬‭like‬‭Philip‬‭Morris‬‭v.‬‭Uruguay‬‭and‬‭Vattenfall‬‭v.‬‭Germany‬‭illustrates‬‭the‬

‭1‬
‭Bjorklund, A.K., 2019. Sustainable development and international investment law. In‬‭Research handbook on environment and‬
‭investment law‬‭(pp. 38-68). Edward Elgar Publishing.‬
‭2‬
‭Fund, S., 2015. Sustainable development goals.‬‭Available at this link: https://www. un. org/sustainabledevelopment/inequality‬‭.‬
‭3‬
‭Muchhala, B., 2018. International Investment Agreements and Industrialization: Realising the Right to Development and the‬
‭Sustainable Development Goals.‬‭Human Rights Council, Working Group on Right to Development, 19th Session, Geneva (23–27 April‬
‭2018) A/HRC/WG‬‭,‬‭2‬‭, p.19‬‭.‬
‭4‬
‭Wang, A., 2016. The Canada-EU Comprehensive Economic and Trade Agreement: What Did Canada Do and Why?.‬
‭5‬
‭Khandelwal, P., 2004. COMESA and SADC: Prospects and challenges for regional trade integration.‬
 ‭tension‬ ‭between‬ ‭a‬ ‭state's‬ ‭regulatory‬ ‭independence‬ ‭and‬ ‭investors'‬ ‭rights‬ ‭under‬ ‭International‬ ‭Investment‬
‭Agreements‬ ‭(IIAs).‬ ‭These‬ ‭instances‬ ‭illustrate‬ ‭how‬ ‭Investor-state‬ ‭dispute‬ ‭settlement‬ ‭(ISDS)‬ ‭procedures‬
‭frequently‬ ‭constrain‬ ‭states'‬ ‭capacity‬ ‭to‬ ‭achieve‬ ‭public‬ ‭policy‬ ‭objectives‬ ‭in‬ ‭domains‬ ‭such‬ ‭as‬ ‭health‬ ‭and‬
‭environmental‬ ‭safeguarding.‬ ‭Current‬ ‭reform‬ ‭initiatives‬ ‭seek‬ ‭to‬ ‭establish‬ ‭durable‬ ‭and‬ ‭transparent‬ ‭conflict‬
‭settlement processes; nonetheless, the process remains ongoing and contentious.‬

‭This‬ ‭research‬ ‭paper‬ ‭will‬ ‭examine‬ ‭the‬ ‭changing‬ ‭relationship‬ ‭between‬ ‭investment‬ ‭law‬ ‭and‬ ‭sustainable‬
‭development,‬ ‭emphasising‬ ‭how‬ ‭investment‬ ‭treaties,‬ ‭arbitration‬ ‭processes,‬ ‭and‬ ‭new‬ ‭legal‬ ‭reforms‬ ‭tackle‬
‭sustainable‬‭development‬‭issues.‬‭The‬‭paper‬‭will‬‭examine‬‭the‬‭adaptation‬‭of‬‭treaties‬‭to‬‭incorporate‬‭sustainability‬
‭objectives and the interpretation by courts of the relationship between investor protection and public policy.‬

‭ ONCEPTUAL FRAMEWORK : SUSTAINABLE DEVELOPMENT IN INTERNATIONAL‬

C
‭INVESTMENT LAW‬

‭The‬‭notion‬‭of‬‭Sustainable‬‭development‬‭originated‬‭from‬‭the‬‭“Brundtland‬‭Report‬‭(1987)‬‭6‬‭”,‬‭which‬‭characterised‬
‭it‬‭as‬‭"satisfying‬‭the‬‭needs‬‭of‬‭the‬‭present‬‭without‬‭jeopardising‬‭the‬‭capacity‬‭of‬‭future‬‭generations‬‭to‬‭fulfil‬‭their‬
‭own‬ ‭needs."‬ ‭This‬ ‭concept‬ ‭underscores‬ ‭the‬ ‭equilibrium‬ ‭among‬ ‭three‬ ‭essential‬ ‭pillars:‬ ‭economic‬ ‭growth,‬
‭environmental‬ ‭protection,‬ ‭and‬ ‭social‬ ‭inclusion.‬ ‭Sustainable‬ ‭development‬ ‭embodies‬ ‭intergenerational‬ ‭justice‬
‭and‬ ‭advocates‬ ‭for‬ ‭the‬ ‭precautionary‬ ‭principle,‬ ‭necessitating‬ ‭that‬ ‭decisions‬ ‭consider‬ ‭environmental‬ ‭dangers‬
‭despite the absence of scientific certainty.‬

‭The‬‭concept‬‭of‬‭sustainable‬‭development‬‭has‬‭expanded‬‭to‬‭encompass‬‭social‬‭welfare‬‭and‬‭economic‬‭stability,‬‭in‬
‭addition‬‭to‬‭environmental‬‭issues.‬‭The‬‭United‬‭Nations'‬‭Sustainable‬‭Development‬‭Goals‬‭(SDGs),‬‭established‬‭in‬
‭2015,‬ ‭delineate‬ ‭17‬ ‭objectives,‬ ‭encompassing‬ ‭cheap‬ ‭energy,‬ ‭climate‬ ‭action,‬ ‭responsible‬ ‭consumerism,‬ ‭and‬
‭diminished‬ ‭disparities‬‭7‬‭.‬ ‭These‬ ‭objectives‬ ‭seek‬ ‭to‬ ‭promote‬ ‭economic‬ ‭development‬ ‭that‬ ‭adheres‬ ‭to‬
‭environmental‬ ‭constraints‬ ‭while‬ ‭advancing‬ ‭human‬ ‭rights‬ ‭and‬ ‭social‬ ‭equality.‬ ‭As‬ ‭globalisation‬ ‭intensifies‬
‭economic‬ ‭interdependence,‬ ‭sustainable‬ ‭development‬ ‭is‬ ‭widely‬ ‭regarded‬ ‭as‬ ‭an‬ ‭essential‬ ‭framework‬ ‭for‬
‭international investments and business conduct.‬

‭6‬
‭ rundtland, G.H., 1987. Brundtland report. Our common future.‬‭Comissão Mundial‬‭,‬‭4‬‭(1), pp.17-25.‬
B
‭7‬
‭Carlsen, L. and Bruggemann, R., 2022. The 17 United Nations’ sustainable development goals: A status by 2020.‬‭International‬
‭Journal of Sustainable Development & World Ecology‬‭,‬‭29‬‭(3), pp.219-229.‬
 ‭Normative and Legal Conflicts: Investment Protection vs Environmental and Social Regulations‬
‭Sustainable‬ ‭development‬ ‭prioritises‬ ‭regulatory‬ ‭policies‬ ‭to‬ ‭advance‬ ‭environmental‬‭and‬‭social‬‭goals,‬‭whereas‬
‭international‬ ‭investment‬ ‭agreements‬ ‭(IIAs)‬ ‭predominantly‬ ‭concentrate‬ ‭on‬ ‭investment‬ ‭protection.‬ ‭Legal‬
‭conflict‬ ‭emerges‬ ‭when‬ ‭states‬ ‭enact‬ ‭public‬ ‭policies—such‬ ‭as‬ ‭environmental‬ ‭legislation,‬ ‭human‬ ‭rights‬
‭standards,‬ ‭or‬ ‭labour‬ ‭protections—that‬ ‭disrupt‬ ‭the‬ ‭expectations‬ ‭or‬ ‭profitability‬ ‭of‬ ‭foreign‬ ‭companies.‬ ‭This‬
‭conflict‬ ‭is‬ ‭most‬ ‭prominently‬ ‭exhibited‬ ‭through‬ ‭Investor-state‬ ‭dispute‬ ‭settlement‬ ‭(ISDS)‬ ‭processes,‬ ‭when‬
‭investors‬ ‭seek‬ ‭compensation‬ ‭for‬ ‭laws‬ ‭that‬ ‭purportedly‬ ‭infringe‬ ‭upon‬ ‭their‬ ‭rights‬ ‭under‬ ‭international‬
‭investment agreements (IIAs).‬

‭Investment‬‭treaties‬‭generally‬‭provide‬‭investors‬‭with‬‭protections‬‭including‬‭fair‬‭and‬‭equitable‬‭treatment‬‭(FET)‬‭8‬‭,‬
‭safeguards‬‭against‬‭expropriation,‬‭and‬‭national‬‭treatment.‬‭Nonetheless,‬‭these‬‭protections‬‭may‬‭constrain‬‭states'‬
‭regulatory‬ ‭independence,‬‭resulting‬‭in‬‭what‬‭is‬‭sometimes‬‭referred‬‭to‬‭as‬‭the‬‭regulatory‬‭chill—the‬‭hesitance‬‭of‬
‭governments‬‭to‬‭enforce‬‭or‬‭adopt‬‭rigorous‬‭public‬‭policies‬‭due‬‭to‬‭concerns‬‭about‬‭provoking‬‭investor‬‭claims.‬‭In‬
‭Bilcon‬ ‭v.‬ ‭Canada‬‭9‬‭,‬ ‭the‬ ‭investor‬ ‭contested‬ ‭environmental‬ ‭laws,‬ ‭asserting‬ ‭that‬ ‭they‬ ‭violated‬ ‭its‬ ‭legitimate‬
‭expectations‬ ‭under‬ ‭the‬ ‭treaty,‬ ‭thereby‬ ‭deterring‬ ‭Canada‬ ‭from‬ ‭implementing‬ ‭more‬ ‭stringent‬ ‭environmental‬
‭measures.‬‭Likewise,‬‭Philip‬‭Morris‬‭v.‬‭Uruguay‬‭exemplifies‬‭the‬‭tension‬‭between‬‭public‬‭health‬‭goals‬‭(such‬‭as‬
‭tobacco regulation) and investor rights inside trade and investment treaties.‬

‭Although‬ ‭soft‬ ‭law‬ ‭instruments‬ ‭—‬ ‭like‬ ‭the‬ ‭UN‬ ‭Guiding‬ ‭Principles‬ ‭on‬ ‭Business‬ ‭and‬ ‭Human‬ ‭Rights‬‭10‬ ‭—‬
‭advocate‬ ‭for‬ ‭responsible‬ ‭investment‬ ‭practices,‬ ‭they‬ ‭are‬ ‭inherently‬ ‭non-binding.‬ ‭The‬ ‭absence‬ ‭of‬ ‭binding‬
‭responsibilities‬ ‭on‬ ‭investors‬ ‭enables‬ ‭corporate‬ ‭interests‬ ‭to‬ ‭prioritise‬ ‭profits‬ ‭over‬ ‭social‬ ‭or‬ ‭environmental‬
‭concerns, resulting in conflicts between public interest and investment protection.‬

‭The Role of IIAs in Promoting Sustainable Investment‬

‭Recent‬ ‭advancements‬ ‭indicate‬ ‭increasing‬ ‭endeavours‬‭to‬‭incorporate‬‭sustainable‬‭development‬‭principles‬‭into‬
‭investment‬‭frameworks‬‭11‬‭.‬‭The‬‭European‬‭Commission‬‭asserts‬‭that‬‭next‬‭IIAs‬‭must‬‭include‬‭sustainability-related‬
‭provisions‬ ‭to‬ ‭safeguard‬ ‭the‬ ‭environment,‬ ‭labour‬ ‭standards,‬ ‭and‬ ‭human‬ ‭rights‬ ‭while‬ ‭preserving‬ ‭investment‬
‭protection.‬ ‭Contemporary‬ ‭generation‬ ‭IIAs,‬ ‭exemplified‬ ‭as‬ ‭the‬ ‭Canada-EU‬ ‭Comprehensive‬ ‭Economic‬ ‭and‬

‭8‬
‭Vasciannie, S., 2000. The fair and equitable treatment standard in international investment law and practice.‬‭The British Year Book of‬
‭International Law‬‭,‬‭70‬‭(1), p.99.‬
‭9‬
‭Bilcon of Delaware et al. v. Government of Canada (2015) PCA Case No. 2009-04.‬
‭10‬
‭Mares, R. ed., 2011.‬‭The UN guiding principles on business and human rights: foundations and implementation‬‭(Vol. 39). Martinus‬
‭Nijhoff Publishers.‬
‭11‬
‭Alschner, W. and Tuerk, E., 2013. The role of international investment agreements in fostering sustainable development.‬‭Investment‬
‭Law Within International Law: Integrationist Perspectives (CUP 2013)‬‭.‬
 ‭Trade‬ ‭Agreement‬ ‭(CETA),‬ ‭encompass‬ ‭chapters‬ ‭addressing‬ ‭sustainable‬ ‭development,‬ ‭environmental‬
‭preservation,‬‭and‬‭labour‬‭rights.‬‭CETA‬‭promotes‬‭regulatory‬‭cooperation,‬‭seeking‬‭to‬‭harmonise‬‭the‬‭interests‬‭of‬
‭investors and governments while preserving states' regulatory autonomy for public policy objectives.‬

‭Furthermore,‬ ‭the‬ ‭Southern‬ ‭African‬ ‭Development‬ ‭Community‬ ‭(SADC)‬ ‭Model‬ ‭Bilateral‬ ‭Investment‬ ‭Treaty‬
‭(BIT)‬‭includes‬‭provisions‬‭mandating‬‭environmental‬‭impact‬‭assessments‬‭(EIAs)‬‭for‬‭investment‬‭initiatives‬‭and‬
‭permitting‬‭states‬‭to‬‭adopt‬‭precautionary‬‭environmental‬‭policies‬‭without‬‭violating‬‭treaty‬‭commitments.‬‭These‬
‭provisions‬ ‭illustrate‬ ‭the‬ ‭transition‬ ‭from‬ ‭exclusively‬ ‭commercial‬ ‭agreements‬ ‭to‬ ‭frameworks‬ ‭that‬ ‭promote‬
‭sustainable‬ ‭investment.‬ ‭Nonetheless,‬ ‭despite‬ ‭these‬ ‭initiatives,‬ ‭most‬ ‭IIAs‬ ‭continue‬ ‭to‬ ‭prioritise‬ ‭investment‬
‭liberalisation, with sustainability provisions predominantly confined to preambles or non-binding sections.‬

‭ISDS Mechanisms and Evolving Legal Norms‬

‭ISDS‬‭cases‬‭during‬‭the‬‭past‬‭decade‬‭demonstrate‬‭an‬‭increasing‬‭focus‬‭by‬‭tribunals‬‭on‬‭sustainable‬‭development‬
‭principles,‬ ‭while‬ ‭the‬ ‭incorporation‬ ‭of‬ ‭these‬ ‭concepts‬ ‭is‬ ‭still‬ ‭inconsistent.‬ ‭In‬ ‭Urbaser‬ ‭v.‬ ‭Argentina‬‭12‬‭,‬ ‭the‬
‭tribunal‬ ‭acknowledged‬‭that‬‭corporations‬‭may‬‭hold‬‭human‬‭rights‬‭responsibilities,‬‭signifying‬‭a‬‭transformation‬
‭in‬ ‭the‬ ‭normative‬ ‭framework‬ ‭by‬ ‭recognising‬ ‭investor‬ ‭obligations‬ ‭that‬ ‭extend‬ ‭beyond‬ ‭profit‬ ‭generation.‬
‭Nonetheless,‬ ‭the‬ ‭tribunal‬ ‭refrained‬ ‭from‬ ‭deeming‬‭the‬‭investor‬‭accountable‬‭for‬‭not‬‭adhering‬‭to‬‭human‬‭rights‬
‭standards, suggesting that sustainable development principles are still in a state of evolution in practice.‬

‭ISDS‬‭reform‬‭has‬‭gained‬‭traction,‬‭with‬‭nations‬‭investigating‬‭multilateral‬‭investment‬‭courts‬‭and‬‭new‬‭arbitration‬
‭frameworks‬ ‭that‬ ‭prioritise‬‭openness‬‭and‬‭public‬‭engagement‬‭13‬‭.‬‭Tribunals‬‭now‬‭routinely‬‭permit‬‭amicus‬‭curiae‬
‭submissions,‬ ‭facilitating‬ ‭the‬ ‭involvement‬ ‭of‬ ‭non-state‬ ‭parties‬ ‭in‬ ‭investment‬ ‭disputes‬ ‭to‬ ‭emphasise‬ ‭public‬
‭interest‬ ‭issues.‬ ‭The‬ ‭Vattenfall‬ ‭v.‬ ‭Germany‬‭14‬ ‭case,‬ ‭which‬ ‭addressed‬ ‭disputes‬ ‭around‬ ‭Germany's‬ ‭shift‬ ‭to‬
‭renewable energy, highlights the necessity of reconciling legitimate public policy goals with investor rights.‬

‭Obstacles in Advancing Sustainable Investment via International Investment Agreements‬

‭Notwithstanding‬ ‭advancements‬ ‭in‬ ‭treaty‬ ‭formulation‬ ‭and‬ ‭arbitral‬ ‭jurisprudence,‬ ‭considerable‬ ‭obstacles‬
‭persist.‬ ‭Many‬ ‭earlier‬ ‭BITs‬ ‭feature‬ ‭extensive‬ ‭investor‬ ‭protections‬ ‭with‬ ‭minimal‬ ‭scope‬ ‭for‬ ‭regulatory‬
‭exceptions.‬ ‭Countries‬ ‭are‬ ‭progressively‬ ‭amending‬ ‭or‬ ‭abolishing‬ ‭obsolete‬ ‭BITs‬ ‭to‬ ‭reclaim‬ ‭regulatory‬
‭autonomy,‬‭however‬‭this‬‭process‬‭is‬‭gradual‬‭and‬‭politically‬‭delicate.‬‭Secondly,‬‭arbitration‬‭tribunals‬‭consistently‬

‭12‬
‭Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia v. Argentine Republic (2016) ICSID Case No. ARB/07/26.‬
‭13‬
‭ aplan, L.M., 2019. ISDS Reform and the Proposal for a Multilateral Investment Court.‬‭Berkeley J. Int'l L.‬‭,‬‭37‬‭, p.207.‬
C
‭14‬
‭Vattenfall AB and Others v. Federal Republic of Germany (2019) ICSID Case No. ARB/12/12.‬
 ‭prioritise‬ ‭treaty‬ ‭duties‬ ‭above‬ ‭soft‬ ‭law‬ ‭norms,‬ ‭complicating‬ ‭the‬ ‭enforcement‬ ‭of‬ ‭non-binding‬ ‭sustainability‬
‭agreements.‬‭Third,‬‭there‬‭exists‬‭no‬‭standardised‬‭framework‬‭for‬‭integrating‬‭sustainable‬‭development‬‭into‬‭IIAs,‬
‭leading to disparate approaches that differ among treaties and regions.‬

‭Sustainable‬ ‭development‬ ‭and‬ ‭investment‬ ‭law‬ ‭are‬ ‭interconnected‬‭15‬‭,‬ ‭while‬ ‭their‬ ‭goals‬ ‭frequently‬ ‭diverge.‬
‭Investment‬ ‭treaties‬ ‭foster‬ ‭economic‬ ‭progress‬ ‭by‬ ‭safeguarding‬ ‭foreign‬ ‭investments;‬ ‭but,‬ ‭they‬ ‭may‬ ‭impede‬
‭states'‬ ‭capacity‬ ‭to‬ ‭achieve‬ ‭social‬ ‭and‬ ‭environmental‬ ‭goals.‬‭Nevertheless,‬‭contemporary‬‭generation‬‭IIAs‬‭and‬
‭advancing‬ ‭ISDS‬ ‭practices‬ ‭demonstrate‬ ‭growing‬ ‭endeavours‬ ‭to‬ ‭harmonise‬ ‭investment‬ ‭legislation‬ ‭with‬
‭sustainable‬ ‭development‬ ‭objectives.‬ ‭The‬ ‭incorporation‬ ‭of‬ ‭environmental‬ ‭protections,‬ ‭human‬ ‭rights‬
‭commitments,‬‭and‬‭transparent‬‭arbitration‬‭processes‬‭in‬‭these‬‭accords‬‭represents‬‭a‬‭notable‬‭development,‬‭while‬
‭more extensive reforms are necessary to provide a genuinely equitable framework.‬

‭Future‬‭research‬‭and‬‭policy‬‭development‬‭should‬‭prioritise‬‭the‬‭establishment‬‭of‬‭IIAs‬‭that‬‭include‬‭sustainability‬
‭as‬ ‭a‬ ‭fundamental‬ ‭premise,‬ ‭promoting‬ ‭responsible‬ ‭investment‬ ‭while‬ ‭preserving‬ ‭state‬ ‭sovereignty‬‭16‬‭.‬ ‭This‬
‭necessitates‬ ‭legal‬ ‭innovation,‬ ‭encompassing‬ ‭more‬ ‭robust‬ ‭binding‬ ‭obligations‬ ‭in‬ ‭treaties‬ ‭and‬ ‭more‬
‭sophisticated‬‭arbitral‬‭rulings‬‭that‬‭acknowledge‬‭the‬‭legitimacy‬‭of‬‭public‬‭policy‬‭aims‬‭alongside‬‭investor‬‭rights.‬
‭By‬ ‭confronting‬ ‭these‬ ‭problems,‬ ‭international‬ ‭investment‬ ‭law‬ ‭can‬ ‭advance‬ ‭to‬ ‭more‬ ‭effectively‬ ‭promote‬
‭sustainable development in an increasingly interconnected global landscape.‬

‭KEY TREATIES, PRINCIPLES AND REFORMS‬

‭Investment Treaties Incorporating Sustainable Development Provisions‬

‭As‬ ‭sustainable‬ ‭development‬ ‭becomes‬ ‭pivotal‬ ‭to‬ ‭global‬ ‭governance,‬ ‭contemporary‬ ‭International‬ ‭investment‬
‭agreements‬ ‭(IIAs)‬ ‭increasingly‬ ‭incorporate‬ ‭sustainability‬ ‭clauses‬‭17‬‭.‬ ‭Two‬ ‭significant‬ ‭instances‬ ‭of‬ ‭such‬
‭initiatives‬ ‭are‬ ‭the‬ ‭Canada-EU‬ ‭Comprehensive‬‭Economic‬‭and‬‭Trade‬‭Agreement‬‭(CETA)‬‭and‬‭the‬‭Southern‬
‭African‬ ‭Development‬ ‭Community‬ ‭(SADC)‬ ‭Model‬ ‭Bilateral‬ ‭Investment‬ ‭Treaty‬ ‭(BIT)‬‭.‬ ‭These‬ ‭accords‬
‭constitute‬ ‭progressive‬ ‭frameworks‬ ‭designed‬ ‭to‬ ‭reconcile‬ ‭investment‬ ‭protection‬ ‭with‬ ‭environmental,‬ ‭social,‬
‭and public policy objectives.‬

‭15‬
‭Volpon, F.T. and Xavier Junior, E.C., 2021. International Investment Agreements and the Promotion of Sustainable Development. In‬
‭Partnerships for the Goals‬‭(pp. 666-676). Cham: Springer International Publishing.‬
‭16‬
‭Dotzauer, M., Biber-Freudenberger, L. and Dietz, T., 2024. The Rise of Sustainability Provisions in International Investment‬
‭Agreements.‬‭Global Environmental Politics‬‭, pp.1-27.‬
‭17‬
‭ESCAP, U., 2018. Sustainable development provisions in investment treaties‬‭.‬
 ‭CETA‬‭surpasses‬‭conventional‬‭BITs‬‭by‬‭integrating‬‭sustainable‬‭development‬‭themes‬‭throughout‬‭the‬‭document.‬
‭It‬ ‭encompasses‬ ‭a‬ ‭specific‬ ‭chapter‬ ‭on‬ ‭sustainable‬ ‭development‬ ‭and‬ ‭advocates‬ ‭for‬ ‭environmental‬‭and‬‭labour‬
‭norms.‬ ‭CETA‬ ‭guarantees‬ ‭that‬ ‭public‬ ‭policies‬ ‭consistent‬ ‭with‬ ‭sustainable‬ ‭development,‬ ‭including‬
‭environmental‬‭protections‬‭and‬‭climate‬‭change‬‭initiatives,‬‭do‬‭not‬‭amount‬‭to‬‭indirect‬‭expropriation.‬‭Article‬‭8.9‬
‭explicitly‬ ‭acknowledges‬ ‭the‬ ‭authority‬ ‭of‬ ‭states‬ ‭to‬ ‭regulate‬ ‭in‬ ‭domains‬‭such‬‭as‬‭public‬‭health,‬‭environmental‬
‭protection,‬ ‭and‬ ‭labour‬ ‭standards,‬ ‭mitigating‬ ‭apprehensions‬ ‭over‬ ‭the‬ ‭regulatory‬ ‭chill‬ ‭linked‬ ‭to‬ ‭ISDS‬
‭mechanisms.‬ ‭Furthermore,‬‭CETA‬‭fosters‬‭regulatory‬‭collaboration‬‭between‬‭Canada‬‭and‬‭the‬‭European‬‭Union,‬
‭facilitating‬ ‭the‬ ‭alignment‬ ‭of‬ ‭environmental‬ ‭standards‬ ‭across‬ ‭countries‬ ‭and‬ ‭reducing‬ ‭conflicts‬ ‭with‬ ‭investor‬
‭expectations.‬

‭The‬ ‭SADC‬ ‭Model‬ ‭BIT‬ ‭implements‬ ‭progressive‬ ‭reforms‬ ‭that‬ ‭advance‬ ‭sustainable‬ ‭development‬ ‭goals.‬ ‭A‬
‭significant‬‭innovation‬‭is‬‭the‬‭mandate‬‭for‬‭Environmental‬‭Impact‬‭Assessments‬‭(EIAs)‬‭to‬‭be‬‭performed‬‭prior‬‭to‬
‭the‬‭approval‬‭of‬‭foreign‬‭investments,‬‭guaranteeing‬‭that‬‭environmental‬‭and‬‭social‬‭risks‬‭be‬‭assessed‬‭in‬‭advance.‬
‭This‬ ‭BIT‬ ‭has‬ ‭provisions‬ ‭that‬ ‭permit‬ ‭states‬ ‭to‬ ‭adopt‬ ‭precautionary‬ ‭measures‬ ‭for‬ ‭environmental‬ ‭protection‬
‭without‬ ‭violating‬ ‭treaty‬ ‭obligations,‬ ‭signifying‬ ‭a‬ ‭significant‬ ‭transition‬ ‭towards‬ ‭state‬ ‭sovereignty‬ ‭in‬ ‭public‬
‭policy‬ ‭issues.‬ ‭The‬ ‭SADC‬ ‭Model‬ ‭BIT‬ ‭includes‬ ‭provisions‬ ‭on‬ ‭corporate‬ ‭social‬ ‭responsibility‬ ‭(CSR),‬ ‭urging‬
‭investors to comply with international environmental and labour norms.‬

‭Nonetheless,‬ ‭notwithstanding‬ ‭these‬ ‭advances,‬ ‭sustainable‬ ‭development‬ ‭provisions‬ ‭in‬ ‭the‬ ‭majority‬ ‭of‬
‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs)‬ ‭remain‬ ‭predominantly‬ ‭aspirational.‬‭They‬‭are‬‭frequently‬‭located‬
‭in‬ ‭preambles‬ ‭or‬ ‭non-binding‬ ‭sections,‬ ‭which‬ ‭restricts‬ ‭their‬ ‭enforceability‬ ‭and‬ ‭allows‬ ‭for‬ ‭interpretation‬ ‭by‬
‭arbitral‬ ‭tribunals.‬ ‭These‬ ‭constraints‬ ‭underscore‬ ‭the‬ ‭necessity‬ ‭for‬ ‭additional‬ ‭reforms‬ ‭to‬ ‭guarantee‬ ‭that‬
‭sustainable development principles are more effectively incorporated into the global investment framework.‬

‭Case Law Demonstrating Treaty Conflicts and Regulatory Authority‬

‭Significant‬ ‭arbitration‬ ‭cases‬ ‭highlight‬ ‭the‬ ‭tensions‬ ‭between‬ ‭investor‬ ‭protection‬ ‭and‬ ‭state‬ ‭regulatory‬
‭independence.‬ ‭Two‬ ‭pertinent‬ ‭cases‬ ‭are‬ ‭Philip‬ ‭Morris‬ ‭v.‬ ‭Uruguay‬ ‭and‬ ‭Vattenfall‬ ‭v.‬ ‭Germany,‬ ‭which‬
‭demonstrates‬ ‭how‬ ‭ISDS‬ ‭proceedings‬ ‭have‬ ‭contested‬ ‭state‬ ‭initiatives‬ ‭to‬ ‭enforce‬ ‭sustainable‬ ‭development‬
‭policies.‬

‭1.‬ ‭Philip‬ ‭Morris‬ ‭v.‬ ‭Uruguay‬‭18‬ ‭:‬ ‭In‬ ‭this‬ ‭case,‬ ‭the‬ ‭Tobacco‬ ‭corporation‬ ‭Philip‬ ‭Morris‬ ‭contested‬ ‭Uruguay’s‬

‭18‬
‭Philip Morris Brands Sàrl, Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Uruguay (2016) ICSID‬
‭Case No. ARB/10/7.‬
 ‭tobacco‬ ‭control‬ ‭regulations,‬ ‭asserting‬ ‭that‬ ‭the‬ ‭measures‬ ‭infringed‬ ‭upon‬ ‭its‬ ‭legitimate‬ ‭expectations‬ ‭under‬ ‭a‬
‭Bilateral‬‭Investment‬‭Treaty‬‭(BIT)‬‭between‬‭Uruguay‬‭and‬‭Switzerland.‬‭Uruguay‬‭implemented‬‭graphic‬‭warning‬
‭labels‬‭and‬‭imposed‬‭limitations‬‭on‬‭cigarette‬‭packaging‬‭to‬‭address‬‭smoking,‬‭presenting‬‭these‬‭policies‬‭as‬‭crucial‬
‭public‬ ‭health‬ ‭initiatives.‬ ‭Philip‬ ‭Morris‬ ‭asserted‬ ‭that‬ ‭these‬ ‭laws‬ ‭constituted‬ ‭indirect‬ ‭expropriation‬ ‭of‬ ‭its‬
‭intellectual property and adversely affected its market position.‬

‭The‬ ‭panel‬ ‭favoured‬ ‭Uruguay,‬ ‭determining‬ ‭that‬ ‭public‬ ‭health‬ ‭control‬ ‭is‬ ‭encompassed‬ ‭within‬ ‭the‬ ‭sovereign‬
‭rights‬ ‭of‬ ‭states.‬ ‭It‬‭asserted‬‭that‬‭non-discriminatory‬‭regulatory‬‭measures‬‭aimed‬‭at‬‭safeguarding‬‭public‬‭health‬
‭do‬ ‭not‬ ‭amount‬ ‭to‬ ‭expropriation‬ ‭under‬ ‭international‬ ‭law.‬ ‭The‬‭tribunal‬‭additionally‬‭observed‬‭that‬‭the‬‭right‬‭of‬
‭states‬ ‭to‬ ‭regulate‬ ‭for‬ ‭public‬ ‭policy‬ ‭purposes‬ ‭must‬ ‭be‬ ‭upheld,‬ ‭even‬ ‭if‬ ‭such‬ ‭actions‬ ‭adversely‬ ‭impact‬
‭international‬‭investors‬‭19‬‭.‬‭This‬‭decision‬‭is‬‭noteworthy‬‭as‬‭it‬‭confirmed‬‭that‬‭Bilateral‬‭Investment‬‭Treaties‬‭(BITs)‬
‭must‬ ‭not‬ ‭compromise‬ ‭fundamental‬ ‭public‬‭health‬‭safeguards,‬‭establishing‬‭a‬‭crucial‬‭precedent‬‭for‬‭reconciling‬
‭investor rights with public interest objectives.‬

‭2.‬‭Vattenfall‬‭v.‬‭Germany‬‭20‬ ‭:‬‭In‬‭this‬‭case,‬‭Vattenfall,‬‭a‬‭Swedish‬‭energy‬‭corporation,‬‭commenced‬‭ISDS‬‭actions‬
‭against‬ ‭Germany‬ ‭subsequent‬ ‭to‬ ‭the‬ ‭government's‬ ‭decision‬ ‭to‬ ‭discontinue‬ ‭nuclear‬‭energy‬‭in‬‭the‬‭wake‬‭of‬‭the‬
‭Fukushima‬ ‭disaster.‬ ‭Vattenfall‬ ‭contended‬ ‭that‬‭Germany's‬‭decision‬‭infringed‬‭upon‬‭its‬‭legitimate‬‭expectations‬
‭under‬ ‭the‬ ‭Energy‬ ‭Charter‬ ‭Treaty‬ ‭(ECT)‬ ‭and‬ ‭sought‬ ‭compensation‬ ‭for‬ ‭the‬ ‭damages‬ ‭sustained‬ ‭from‬ ‭the‬
‭decommissioning‬ ‭of‬ ‭nuclear‬ ‭facilities.‬ ‭This‬ ‭lawsuit‬ ‭illustrates‬ ‭how‬ ‭environmental‬ ‭restrictions‬ ‭designed‬ ‭to‬
‭facilitate the transition to renewable energy can result in investor claims under international investment law.‬
‭The‬‭tribunal‬‭favoured‬‭Vattenfall,‬‭granting‬‭significant‬‭compensation.‬‭The‬‭ruling‬‭underscored‬‭the‬‭susceptibility‬
‭of‬‭states‬‭to‬‭investor‬‭claims‬‭when‬‭enacting‬‭laws‬‭designed‬‭to‬‭foster‬‭environmental‬‭protection‬‭and‬‭facilitate‬‭the‬
‭transition‬ ‭to‬ ‭sustainable‬ ‭energy.‬ ‭This‬‭case‬‭illustrates‬‭the‬‭constraints‬‭of‬‭the‬‭current‬‭ISDS‬‭framework,‬‭since‬‭it‬
‭deters nations from undertaking decisive regulatory measures to combat climate change‬‭21‬‭.‬

‭Collectively,‬ ‭these‬ ‭examples‬ ‭exemplify‬ ‭the‬ ‭conflict‬ ‭between‬ ‭investment‬ ‭treaties‬ ‭and‬ ‭regulatory‬ ‭autonomy.‬
‭They‬‭emphasise‬‭the‬‭necessity‬‭for‬‭IIAs‬‭to‬‭explicitly‬‭delineate‬‭the‬‭regulatory‬‭rights‬‭of‬‭governments‬‭to‬‭prevent‬
‭conflicts‬ ‭that‬ ‭jeopardise‬ ‭sustainable‬ ‭development‬ ‭initiatives.‬ ‭Future‬ ‭treaties‬ ‭must‬ ‭implement‬ ‭more‬ ‭robust‬

‭19‬
‭Voon, T., 2017. Philip Morris v. Uruguay: Implications for Public Health: Philip Morris Brands Sàrl, Philip Morris Products SA and‬
‭ bal Hermanos SA v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016 (Piero Bernardini, Gary Born,‬
A
‭James Crawford).‬‭The Journal of World Investment & Trade‬‭,‬‭18‬‭(2), pp.320-331.‬
‭20‬
‭Vattenfall AB and Others v. Federal Republic of Germany (2018) ICSID Case No. ARB/12/12.‬
‭21‬
‭Jacur, F.R., 2015. The Vattenfall v. Germany disputes: Finding a balance between energy investments and public concerns.‬‭Bridging‬
‭the Gap between International Investment Law and the Environment. Den Haag: Legal Perspectives on Global Challenges Series‬
‭Eleven Legal Publishing‬‭, pp.339-356.‬
 ‭safeguards to ensure the proper execution of public policy.‬
‭Soft Law Instruments and Systemic Integration Approaches‬
‭Although‬ ‭binding‬ ‭International‬ ‭Investment‬ ‭Agreements‬‭(IIAs)‬‭are‬‭pivotal‬‭in‬‭governing‬‭foreign‬‭investments,‬
‭soft‬ ‭law‬ ‭instruments‬ ‭and‬ ‭systemic‬ ‭integration‬ ‭approaches‬ ‭provide‬ ‭essential‬ ‭mechanisms‬ ‭for‬ ‭harmonising‬
‭investment legislation with sustainable development objectives.‬
‭1.‬ ‭UNCTAD‬ ‭Reports‬ ‭and‬ ‭OECD‬ ‭Guidelines‬‭22‬ ‭:‬ ‭UNCTAD‬ ‭(United‬ ‭Nations‬ ‭Conference‬ ‭on‬ ‭Trade‬ ‭and‬
‭Development)‬ ‭and‬ ‭the‬ ‭OECD‬ ‭have‬ ‭been‬ ‭leaders‬ ‭in‬ ‭advancing‬ ‭sustainable‬ ‭investment‬ ‭policies.‬ ‭UNCTAD's‬
‭World‬ ‭Investment‬ ‭Reports‬ ‭promote‬ ‭reforms‬ ‭to‬ ‭International‬ ‭Investment‬ ‭Agreements‬‭(IIAs)‬‭that‬‭incorporate‬
‭sustainability‬ ‭objectives‬ ‭into‬ ‭investment‬ ‭treaties.‬ ‭They‬ ‭advocate‬ ‭for‬ ‭the‬ ‭incorporation‬ ‭of‬ ‭public‬ ‭interest‬
‭exceptions,‬ ‭transparency‬ ‭tools,‬ ‭and‬ ‭norms‬‭for‬‭ethical‬‭business‬‭conduct.‬‭Likewise,‬‭the‬‭OECD‬‭Guidelines‬‭for‬
‭Multinational‬ ‭Enterprises‬ ‭advocate‬ ‭for‬ ‭corporations‬ ‭to‬ ‭implement‬ ‭environmentally‬ ‭and‬ ‭socially‬‭responsible‬
‭practices, providing a framework for harmonising corporate conduct with public policy objectives.‬

‭2.‬ ‭Systemic‬ ‭Integration‬ ‭:‬ ‭The‬ ‭Vienna‬ ‭Convention‬ ‭on‬ ‭the‬ ‭Law‬ ‭of‬ ‭Treaties‬ ‭(VCLT)‬ ‭is‬ ‭essential‬ ‭for‬ ‭the‬
‭interpretation‬ ‭of‬ ‭international‬‭agreements‬‭23‬‭.‬‭Article‬‭31(3)(c)‬‭of‬‭the‬‭VCLT‬‭advocates‬‭for‬‭systemic‬‭integration‬
‭by‬ ‭mandating‬‭that‬‭treaties‬‭be‬‭construed‬‭in‬‭consideration‬‭of‬‭other‬‭pertinent‬‭international‬‭laws.‬‭This‬‭approach‬
‭permits‬‭arbitrators‬‭to‬‭evaluate‬‭environmental,‬‭human‬‭rights,‬‭and‬‭social‬‭norms‬‭in‬‭conjunction‬‭with‬‭investment‬
‭treaty requirements, thereby facilitating the harmonisation of conflicting legal frameworks.‬

‭In‬ ‭recent‬ ‭years,‬ ‭tribunals‬ ‭have‬ ‭progressively‬ ‭invoked‬ ‭systemic‬ ‭integration‬ ‭in‬ ‭their‬ ‭rulings.‬ ‭In‬ ‭Urbaser‬ ‭v.‬
‭Argentina‬‭24‬‭,‬ ‭the‬ ‭tribunal‬ ‭evaluated‬ ‭international‬ ‭human‬ ‭rights‬ ‭legislation‬ ‭to‬ ‭define‬ ‭investor‬ ‭obligations,‬
‭signifying‬ ‭a‬ ‭transition‬ ‭towards‬ ‭enhanced‬ ‭acknowledgement‬ ‭of‬ ‭public‬ ‭interest‬ ‭issues‬ ‭in‬ ‭ISDS‬ ‭proceedings.‬
‭Nonetheless,‬ ‭systemic‬ ‭integration‬ ‭is‬ ‭a‬ ‭developing‬ ‭notion,‬ ‭and‬ ‭its‬ ‭implementation‬ ‭differs‬ ‭based‬ ‭on‬ ‭the‬
‭particular situation and institution.‬

‭The‬ ‭incorporation‬ ‭of‬‭sustainable‬‭development‬‭ideas‬‭into‬‭investment‬‭legislation‬‭is‬‭still‬‭ongoing.‬‭Treaties‬‭like‬

‭CETA‬ ‭and‬ ‭the‬ ‭SADC‬ ‭Model‬ ‭BIT‬ ‭signify‬ ‭significant‬ ‭advancements‬ ‭in‬ ‭harmonising‬‭investment‬‭frameworks‬
‭with‬‭public‬‭policy‬‭objectives.‬‭Nonetheless,‬‭case‬‭law‬‭demonstrates‬‭that‬‭conflicts‬‭in‬‭regulatory‬‭space‬‭endure,‬‭as‬

‭22‬
‭Saldarriaga, A. and Magraw, K., 2015. UNCTAD’s effort to foster the relationship between international investment law and‬
‭sustainable development. In‬‭International Investment Law and Development‬‭(pp. 125-146). Edward Elgar Publishing.‬
‭23‬
‭Sheargold, E., 2021, September. The VCLT Rules on Interpretation and the Triangular Nature of Investment Treaties: State Control‬
‭Versus Investor Rights. In‬‭The Vienna Convention on the Law of Treaties in Investor-State Disputes: History, Evolution, and Future‬
‭(Kluwer Law International, Forthcoming)‬‭.‬
‭24‬
‭Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia v. Argentine Republic (2016) ICSID Case No. ARB/07/26.‬
 ‭evidenced in Philip Morris v. Uruguay and Vattenfall v. Germany.‬

‭CASE STUDIES : BALANCING PUBLIC AND PRIVATE INTEREST‬

‭The‬ ‭relationship‬ ‭between‬ ‭public‬ ‭policy‬ ‭objectives‬ ‭and‬ ‭private‬ ‭investment‬ ‭rights‬ ‭is‬ ‭a‬ ‭significant‬ ‭point‬ ‭of‬
‭dispute‬‭in‬‭international‬‭investment‬‭law‬‭25‬‭.‬‭Recent‬‭arbitral‬‭judgements‬‭illustrate‬‭how‬‭tribunals‬‭are‬‭managing‬‭the‬
‭intricate‬ ‭balance‬ ‭between‬ ‭safeguarding‬ ‭investor‬ ‭interests‬ ‭and‬ ‭enabling‬ ‭nations‬ ‭to‬ ‭achieve‬ ‭sustainable‬
‭development‬ ‭objectives.‬ ‭Urbaser‬ ‭v.‬ ‭Argentina,‬ ‭Bilcon‬ ‭v.‬ ‭Canada,‬ ‭and‬ ‭Bear‬ ‭Creek‬ ‭v.‬ ‭Peru‬ ‭exemplify‬ ‭the‬
‭shifting dynamics and difficulties in reconciling public and private interests.‬

‭1. Urbaser v. Argentina: Human Rights and Corporate Accountability‬

‭In‬ ‭Urbaser‬ ‭v.‬ ‭Argentina‬ ‭(ICSID‬ ‭Case‬ ‭No.‬ ‭ARB/07/26)‬‭26‬‭,‬ ‭a‬ ‭Spanish‬ ‭water‬ ‭services‬ ‭firm‬ ‭initiated‬ ‭an‬
‭investor-state‬‭dispute‬‭following‬‭Argentina's‬‭termination‬‭of‬‭its‬‭water‬‭concession‬‭agreement‬‭amid‬‭an‬‭economic‬
‭crisis.‬ ‭The‬ ‭argument‬ ‭focused‬ ‭on‬ ‭whether‬ ‭Argentina's‬ ‭choice‬ ‭to‬ ‭safeguard‬ ‭public‬ ‭access‬ ‭to‬ ‭water‬ ‭could‬
‭rationalise the purported violation of the concession agreement.‬

‭The‬‭tribunal‬‭rendered‬‭a‬‭seminal‬‭ruling‬‭by‬‭taking‬‭into‬‭account‬‭human‬‭rights‬‭obligations‬‭for‬‭private‬‭investors.‬
‭Although‬‭it‬‭finally‬‭determined‬‭that‬‭the‬‭investor‬‭was‬‭not‬‭accountable‬‭for‬‭neglecting‬‭Argentina's‬‭human‬‭right‬‭to‬
‭water‬ ‭commitments,‬ ‭it‬ ‭recognised‬ ‭that‬ ‭corporations‬ ‭may‬ ‭hold‬ ‭responsibilities‬ ‭under‬ ‭international‬ ‭law.‬ ‭The‬
‭tribunal‬ ‭determined‬ ‭that‬ ‭international‬ ‭investment‬ ‭legislation‬ ‭should‬ ‭be‬ ‭construed‬ ‭in‬ ‭alignment‬ ‭with‬ ‭human‬
‭rights standards, signifying a significant transition towards corporate accountability.‬

‭This‬ ‭case‬ ‭illustrates‬ ‭the‬ ‭emerging‬ ‭trend‬ ‭of‬ ‭reconciling‬ ‭investor‬ ‭rights‬ ‭with‬ ‭human‬ ‭rights‬ ‭considerations.‬ ‭It‬
‭indicates‬ ‭that‬ ‭tribunals‬ ‭may‬ ‭progressively‬ ‭hold‬ ‭capitalists‬ ‭responsible‬ ‭for‬ ‭their‬ ‭effects‬ ‭on‬ ‭public‬ ‭services,‬
‭especially‬ ‭in‬ ‭critical‬ ‭domains‬ ‭of‬ ‭human‬ ‭welfare,‬ ‭such‬ ‭as‬ ‭water‬ ‭and‬ ‭sanitation.‬ ‭Nonetheless,‬ ‭the‬ ‭tribunal's‬
‭hesitance‬ ‭to‬ ‭assign‬ ‭direct‬ ‭liability‬ ‭to‬ ‭Urbaser‬ ‭indicates‬ ‭the‬ ‭nascent‬ ‭phase‬ ‭of‬ ‭this‬‭developing‬‭legal‬‭standard.‬
‭Subsequently,‬ ‭further‬ ‭cases‬‭will‬‭likely‬‭investigate‬‭the‬‭extent‬‭of‬‭corporate‬‭responsibilities‬‭under‬‭international‬
‭law.‬

‭2. Bilcon v. Canada : Legitimate Expectations versus Environmental Assessment‬

‭25‬
‭Ren, Q., 2019.‬‭Public Interests in International Investment Law: Balancing Protection for Investor and Environment‬‭. Cambridge‬
‭Scholars Publishing.‬
‭26‬
‭Crow, K. and Escobar, L.L., 2018. International corporate obligations, human rights, and the urbaser standard: breaking new‬
‭ground.‬‭BU Int'l LJ‬‭,‬‭36‬‭, p.87.‬
 ‭The‬ ‭Bilcon‬ ‭v.‬ ‭Canada‬ ‭lawsuit‬ ‭(PCA‬ ‭lawsuit‬ ‭No.‬ ‭2009-04)‬‭27‬ ‭centres‬ ‭on‬ ‭a‬ ‭dispute‬ ‭between‬ ‭the‬ ‭investor's‬
‭legitimate‬‭expectations‬‭and‬‭Canada's‬‭environmental‬‭protection‬‭regulations.‬‭Bilcon,‬‭an‬‭American‬‭corporation,‬
‭aimed‬‭to‬‭establish‬‭a‬‭quarry‬‭and‬‭marine‬‭terminal‬‭in‬‭Nova‬‭Scotia.‬‭Canadian‬‭officials‬‭denied‬‭the‬‭project‬‭after‬‭an‬
‭environmental study, noting its detrimental effects on surrounding ecosystems and communities.‬

‭Bilcon‬‭commenced‬‭arbitration,‬‭contending‬‭that‬‭Canada‬‭had‬‭breached‬‭the‬‭Fair‬‭and‬‭Equitable‬‭Treatment‬‭(FET)‬
‭standard‬ ‭under‬ ‭the‬ ‭NAFTA‬ ‭agreement‬‭by‬‭not‬‭fulfilling‬‭the‬‭investor’s‬‭legitimate‬‭expectations‬‭28‬‭.‬‭The‬‭tribunal‬
‭decided‬ ‭in‬ ‭favour‬ ‭of‬ ‭Bilcon,‬ ‭determining‬ ‭that‬ ‭the‬ ‭environmental‬ ‭assessment‬‭process‬‭was‬‭done‬‭unfairly‬‭and‬
‭that the rejection of the project violated Bilcon's legitimate expectations.‬

‭This‬ ‭ruling‬ ‭elicited‬ ‭apprehensions‬ ‭regarding‬ ‭the‬ ‭regulatory‬ ‭chill‬ ‭effect—the‬ ‭apprehension‬ ‭that‬ ‭states‬ ‭could‬
‭hesitate‬‭to‬‭implement‬‭environmental‬‭restrictions‬‭due‬‭to‬‭fears‬‭of‬‭possible‬‭investor‬‭litigation.‬‭Critics‬‭contended‬
‭that‬‭the‬‭verdict‬‭favoured‬‭investor‬‭interests‬‭at‬‭the‬‭expense‬‭of‬‭public‬‭environmental‬‭safeguards,‬‭compromising‬
‭Canada’s‬ ‭policy‬ ‭independence.‬ ‭The‬ ‭dissenting‬ ‭tribunal‬ ‭member‬ ‭cautioned‬ ‭that‬ ‭such‬ ‭verdicts‬ ‭would‬ ‭deter‬
‭governments from performing comprehensive environmental evaluations in the future.‬

‭Bilcon‬ ‭v.‬ ‭Canada‬ ‭illustrates‬ ‭the‬ ‭conflict‬ ‭between‬ ‭investor‬ ‭protections‬ ‭and‬ ‭environmental‬ ‭policy‬ ‭goals.‬ ‭It‬
‭emphasises‬ ‭the‬ ‭necessity‬ ‭for‬ ‭more‬ ‭explicit‬ ‭treaty‬ ‭language‬ ‭that‬ ‭maintains‬ ‭the‬ ‭state's‬ ‭authority‬ ‭to‬ ‭regulate‬
‭while‬ ‭addressing‬ ‭investor‬ ‭expectations.‬ ‭The‬ ‭case‬ ‭underscores‬ ‭the‬ ‭significance‬ ‭of‬ ‭procedural‬ ‭fairness‬ ‭in‬
‭environmental‬ ‭evaluations,‬ ‭as‬ ‭procedural‬ ‭deficiencies‬ ‭can‬ ‭result‬ ‭in‬ ‭substantial‬ ‭legal‬ ‭and‬ ‭financial‬
‭repercussions.‬

‭3. Bear Creek v. Peru : Indigenous Peoples' Rights and Social License‬
‭In‬ ‭Bear‬ ‭Creek‬ ‭v.‬ ‭Peru‬ ‭(ICSID‬ ‭Case‬ ‭No.‬ ‭ARB/14/2)‬‭29‬‭,‬ ‭the‬ ‭Canadian‬ ‭mining‬ ‭firm‬ ‭Bear‬ ‭Creek‬ ‭commenced‬
‭arbitration‬‭against‬‭Peru‬‭following‬‭the‬‭government's‬‭annulment‬‭of‬‭its‬‭mining‬‭licence‬‭for‬‭the‬‭Santa‬‭Ana‬‭silver‬
‭project.‬‭The‬‭revocation‬‭ensued‬‭from‬‭violent‬‭demonstrations‬‭and‬‭social‬‭unrest‬‭instigated‬‭by‬‭local‬‭populations,‬
‭including‬ ‭indigenous‬ ‭groups,‬ ‭who‬ ‭rejected‬ ‭the‬ ‭project‬ ‭due‬ ‭to‬ ‭apprehensions‬ ‭of‬ ‭environmental‬ ‭and‬ ‭social‬
‭repercussions.‬

‭27‬
‭Bilcon of Delaware et al. v. Government of Canada (2015) PCA Case No. 2009-04.‬
‭28‬
‭ oelle, M., 2017. The Bilcon NAFTA Tribunal: A Clash of Investor Protection and Sustainability-Based Environmental‬
D
‭Assessments.‬
‭29‬
‭Bear Creek Mining Corporation v. Republic of Peru (2017) ICSID Case No. ARB/14/21.‬
 ‭The‬ ‭primary‬ ‭concern‬ ‭in‬ ‭this‬ ‭case‬ ‭was‬ ‭whether‬ ‭the‬ ‭investor‬ ‭had‬ ‭secured‬ ‭a‬ ‭"social‬ ‭licence‬ ‭to‬ ‭operate"—an‬
‭informal‬‭yet‬‭crucial‬‭element‬‭for‬‭achieving‬‭community‬‭acceptability‬‭for‬‭projects‬‭that‬‭substantially‬‭affect‬‭local‬
‭populations.‬ ‭The‬ ‭panel‬ ‭favoured‬ ‭Bear‬ ‭Creek,‬ ‭granting‬ ‭damages‬ ‭for‬ ‭the‬‭revoked‬‭licence,‬‭while‬‭emphasising‬
‭the significance of community engagement and consultation in investment initiatives‬‭30‬‭.‬

‭One‬ ‭of‬ ‭the‬ ‭arbitrators‬ ‭offered‬ ‭a‬ ‭dissenting‬ ‭opinion,‬‭contending‬‭that‬‭Bear‬‭Creek‬‭ought‬‭to‬‭have‬‭exerted‬‭more‬

‭effort‬ ‭to‬ ‭cultivate‬ ‭local‬ ‭confidence‬‭and‬‭address‬‭indigenous‬‭concerns.‬‭The‬‭dissent‬‭cited‬‭ILO‬‭Convention‬‭169‬
‭regarding‬ ‭the‬ ‭rights‬ ‭of‬ ‭indigenous‬‭peoples,‬‭indicating‬‭that‬‭**foreign‬‭investors‬‭could‬‭have‬‭responsibilities‬‭to‬
‭interact‬‭substantively‬‭with‬‭impacted‬‭populations.‬‭This‬‭indicates‬‭a‬‭wider‬‭trend‬‭in‬‭international‬‭investment‬‭law,‬
‭wherein social considerations are gaining prominence in arbitral proceedings.‬

‭Bear‬ ‭Creek‬ ‭v.‬ ‭Peru‬ ‭underscores‬ ‭the‬ ‭significance‬ ‭of‬ ‭social‬ ‭licences‬ ‭in‬ ‭the‬ ‭extractive‬ ‭sector‬ ‭and‬ ‭prompts‬
‭essential‬ ‭enquiries‬ ‭on‬ ‭the‬ ‭equilibrium‬ ‭between‬ ‭investor‬ ‭rights‬ ‭and‬ ‭community‬ ‭interests.‬ ‭The‬ ‭case‬ ‭indicates‬
‭that‬ ‭forthcoming‬ ‭tribunals‬ ‭may‬ ‭prioritise‬ ‭indigenous‬ ‭rights‬ ‭and‬ ‭public‬ ‭participation‬‭in‬‭investment‬‭conflicts.‬
‭Nevertheless,‬ ‭it‬ ‭also‬ ‭demonstrates‬ ‭the‬ ‭difficulties‬ ‭of‬ ‭incorporating‬‭community‬‭interests‬‭into‬‭legal‬‭structures‬
‭that conventionally emphasises investor safeguards.‬

‭Evaluation and Insights Gained‬

‭The‬ ‭instances‬ ‭of‬ ‭Urbaser‬ ‭v.‬ ‭Argentina,‬ ‭Bilcon‬ ‭v.‬ ‭Canada,‬ ‭and‬ ‭Bear‬ ‭Creek‬ ‭v.‬ ‭Peru‬ ‭illustrate‬ ‭the‬ ‭intricate‬
‭relationship‬‭between‬‭investment‬‭protection‬‭and‬‭public‬‭policy‬‭goals.‬‭Each‬‭case‬‭offers‬‭significant‬‭insights‬‭into‬
‭how‬ ‭tribunals‬ ‭are‬ ‭addressing‬ ‭the‬ ‭changing‬ ‭requirements‬ ‭of‬ ‭sustainable‬ ‭development‬ ‭and‬ ‭corporate‬
‭accountability.‬

‭1. Reconciling Human Rights and Investment Protections‬

‭Urbaser‬ ‭v.‬ ‭Argentina‬ ‭signifies‬ ‭a‬ ‭pivotal‬ ‭moment‬ ‭in‬ ‭international‬ ‭investment‬ ‭law‬ ‭by‬ ‭acknowledging‬ ‭that‬
‭businesses‬‭may‬‭possess‬‭human‬‭rights‬‭responsibilities.‬‭This‬‭decision‬‭did‬‭not‬‭establish‬‭direct‬‭accountability‬‭for‬
‭the‬ ‭investor,‬ ‭but‬ ‭it‬ ‭creates‬ ‭a‬ ‭precedent‬ ‭for‬ ‭future‬ ‭conflicts‬ ‭concerning‬ ‭important‬‭public‬‭services.‬‭As‬‭human‬
‭rights‬ ‭increasingly‬ ‭incorporate‬ ‭into‬ ‭investment‬ ‭frameworks,‬ ‭tribunals‬ ‭will‬ ‭undoubtedly‬ ‭encounter‬ ‭new‬
‭obstacles in delineating the parameters of corporate responsibility.‬

‭2. The Necessity for Regulatory Flexibility in Environmental Policy‬

‭30‬
‭Paine, J., 2018. Bear Creek Mining Corporation v Republic of Peru: Judging the social licence of foreign investments and applying‬
‭new style investment treaties.‬‭ICSID Review-Foreign Investment Law Journal‬‭,‬‭33‬‭(2), pp.340-348.‬
‭Bilcon‬ ‭v.‬ ‭Canada‬ ‭highlights‬ ‭the‬ ‭threat‬ ‭of‬ ‭regulatory‬ ‭chill‬ ‭when‬ ‭investor‬ ‭anticipations‬ ‭clash‬ ‭with‬
‭environmental‬‭regulations.‬‭The‬‭ruling‬‭underscores‬‭the‬‭necessity‬‭for‬‭more‬‭explicit‬‭treaty‬‭clauses‬‭that‬‭ensure‬‭a‬
‭state's‬‭authority‬‭to‬‭perform‬‭environmental‬‭assessments‬‭and‬‭preserve‬‭ecosystems.‬‭In‬‭the‬‭future,‬‭new‬‭IIAs‬‭must‬
‭include‬‭more‬‭robust‬‭regulatory‬‭exceptions‬‭to‬‭safeguard‬‭public‬‭interest‬‭objectives‬‭from‬‭being‬‭compromised‬‭by‬
‭investor claims.‬

‭3. Social License and Indigenous Rights‬

‭Bear‬‭Creek‬‭v.‬‭Peru‬‭exemplifies‬‭the‬‭increasing‬‭significance‬‭of‬‭social‬‭licences‬‭and‬‭community‬‭involvement‬‭in‬
‭investment‬ ‭initiatives.‬ ‭The‬ ‭dissenting‬ ‭opinion‬ ‭in‬ ‭this‬ ‭case‬ ‭indicates‬ ‭a‬ ‭developing‬ ‭perspective‬ ‭that‬‭investors‬
‭may‬ ‭be‬ ‭required‬ ‭to‬ ‭adhere‬ ‭to‬ ‭social‬ ‭and‬ ‭environmental‬ ‭standards,‬ ‭encompassing‬ ‭the‬ ‭rights‬ ‭of‬ ‭indigenous‬
‭populations.‬ ‭This‬ ‭case‬ ‭underscores‬ ‭the‬ ‭necessity‬ ‭for‬ ‭broad‬ ‭engagement‬ ‭processes‬ ‭and‬ ‭illustrates‬ ‭that‬
‭community opposition can yield substantial legal and financial repercussions for investors.‬

‭These‬ ‭decisions‬ ‭underscore‬ ‭the‬ ‭growing‬‭intricacy‬‭of‬‭reconciling‬‭private‬‭and‬‭public‬‭interests‬‭in‬‭international‬

‭investment‬‭law.‬‭Although‬‭tribunals‬‭are‬‭beginning‬‭to‬‭acknowledge‬‭human‬‭rights‬‭and‬‭environmental‬‭issues,‬‭the‬
‭legal‬ ‭frameworks‬ ‭continue‬ ‭to‬ ‭be‬ ‭significantly‬ ‭biassed‬ ‭towards‬ ‭investor‬ ‭protections.‬ ‭Future‬ ‭reforms‬ ‭must‬
‭rectify‬ ‭these‬ ‭inequalities‬ ‭by‬ ‭enhancing‬ ‭public‬ ‭policy‬ ‭exceptions,‬ ‭fostering‬ ‭corporate‬ ‭accountability,‬ ‭and‬
‭boosting‬ ‭community‬ ‭engagement.‬ ‭As‬ ‭investment‬ ‭legislation‬ ‭progresses,‬ ‭it‬ ‭must‬ ‭more‬‭effectively‬‭align‬‭with‬
‭sustainable‬‭development‬‭goals,‬‭guaranteeing‬‭that‬‭foreign‬‭investments‬‭are‬‭advantageous‬‭for‬‭both‬‭investors‬‭and‬
‭host communities.‬

‭CHALLENGES AND OPPORTUNITIES IN REFORMING IIA’s‬

‭CHALLENGES FOR REFORMS‬

‭1. Absence of Enforceable Sustainable Development Provisions‬
‭Sustainable‬ ‭development‬ ‭is‬ ‭frequently‬ ‭mentioned‬ ‭in‬ ‭contemporary‬ ‭International‬ ‭Investment‬ ‭Agreements‬
‭(IIAs),‬ ‭however‬ ‭these‬ ‭sections‬ ‭generally‬ ‭remain‬ ‭non-binding‬ ‭or‬ ‭merely‬ ‭aspirational.‬ ‭Numerous‬‭agreements‬
‭incorporate‬‭references‬‭to‬‭environmental‬‭or‬‭social‬‭aims‬‭solely‬‭in‬‭preambles,‬‭which‬‭are‬‭not‬‭enforceable‬‭in‬‭legal‬
‭disputes.‬ ‭This‬ ‭establishes‬ ‭a‬ ‭disparity‬ ‭between‬ ‭the‬ ‭discourse‬ ‭of‬ ‭sustainable‬ ‭development‬ ‭and‬ ‭the‬ ‭practical‬
‭implementation‬‭of‬‭investment‬‭regulation.‬‭Older‬‭Bilateral‬‭Investment‬‭Treaties‬‭(BITs),‬‭constituting‬‭the‬‭majority‬
‭of‬‭current‬‭agreements,‬‭fail‬‭to‬‭address‬‭sustainability,‬‭resulting‬‭in‬‭discrepancies‬‭between‬‭investment‬‭protection‬
 ‭and‬ ‭sustainable‬ ‭development‬‭objectives‬‭31‬‭.‬‭In‬‭the‬‭absence‬‭of‬‭obligatory‬‭clauses,‬‭investors‬‭are‬‭not‬‭responsible‬
‭for‬ ‭the‬ ‭environmental‬ ‭or‬ ‭social‬ ‭repercussions‬ ‭of‬ ‭their‬ ‭actions,‬ ‭and‬ ‭host‬ ‭nations‬ ‭encounter‬ ‭challenges‬ ‭in‬
‭implementing sustainable policies via investment frameworks.‬

‭2. ISDS Critique: Constrained Policy Autonomy for Nations‬

‭The‬‭Investor-State‬‭Dispute‬‭Settlement‬‭(ISDS)‬‭32‬ ‭system‬‭has‬‭encountered‬‭substantial‬‭criticism‬‭for‬‭constraining‬
‭the‬‭regulatory‬‭autonomy‬‭of‬‭states.‬‭Tribunals‬‭under‬‭ISDS‬‭frequently‬‭prioritise‬‭investor‬‭protection‬‭over‬‭public‬
‭policy‬ ‭objectives,‬ ‭resulting‬ ‭in‬ ‭a‬ ‭"regulatory‬ ‭chill"‬ ‭effect,‬ ‭wherein‬ ‭states‬ ‭refrain‬ ‭from‬ ‭implementing‬
‭progressive‬ ‭environmental‬ ‭or‬ ‭social‬ ‭rules‬ ‭to‬ ‭mitigate‬ ‭the‬ ‭danger‬ ‭of‬ ‭arbitration.‬ ‭Cases‬ ‭such‬ ‭as‬ ‭Vattenfall‬ ‭v.‬
‭Germany‬ ‭illustrate‬ ‭how‬ ‭investors‬ ‭have‬ ‭utilised‬ ‭ISDS‬ ‭to‬ ‭contest‬ ‭valid‬ ‭public‬ ‭interest‬ ‭measures,‬ ‭including‬
‭energy‬‭transition‬‭policies.‬‭This‬‭highlights‬‭apprehensions‬‭regarding‬‭the‬‭disparity‬‭of‬‭authority‬‭between‬‭private‬
‭investors‬‭and‬‭sovereign‬‭nations,‬‭especially‬‭in‬‭critical‬‭domains‬‭such‬‭as‬‭health,‬‭environment,‬‭and‬‭human‬‭rights.‬
‭Furthermore,‬ ‭ISDS‬ ‭awards‬ ‭can‬ ‭impose‬ ‭significant‬ ‭financial‬ ‭burdens‬ ‭on‬ ‭poor‬ ‭nations,‬ ‭deterring‬ ‭them‬ ‭from‬
‭enacting public-interest policies.‬

‭3. Democratic Deficit in Treaty Formation: Exclusion of Non-State Entities‬

‭A‬‭significant‬‭critique‬‭of‬‭IIAs‬‭is‬‭the‬‭democratic‬‭deficit‬‭in‬‭the‬‭treaty‬‭formulation‬‭process,‬‭as‬‭non-state‬‭entities,‬
‭including‬ ‭civil‬ ‭society‬ ‭organisations‬ ‭and‬ ‭local‬ ‭communities,‬ ‭are‬ ‭frequently‬ ‭marginalised‬‭from‬‭negotiations.‬
‭Investment‬‭treaties‬‭are‬‭typically‬‭negotiated‬‭in‬‭secrecy‬‭between‬‭governments,‬‭with‬‭minimal‬‭involvement‬‭from‬
‭parties‬ ‭directly‬ ‭impacted‬ ‭by‬ ‭foreign‬ ‭investments.‬ ‭The‬ ‭omission‬ ‭of‬ ‭indigenous‬ ‭communities,‬ ‭labour‬ ‭unions,‬
‭and‬‭environmental‬‭advocacy‬‭organisations‬‭leads‬‭to‬‭agreements‬‭that‬‭prioritise‬‭corporate‬‭interests‬‭above‬‭social‬
‭and‬ ‭environmental‬ ‭issues.‬ ‭The‬ ‭absence‬ ‭of‬ ‭inclusivity‬ ‭diminishes‬ ‭the‬ ‭validity‬ ‭of‬ ‭IIAs‬ ‭and‬ ‭heightens‬ ‭the‬
‭probability of public backlash against foreign investment initiatives, as evidenced in Bear Creek v. Peru.‬

‭OPPORTUNITIES FOR REFORMS‬

‭1. Enhanced Transparency and Inclusion of Amicus Curiae in Arbitration‬
‭One‬ ‭method‬ ‭to‬ ‭rectify‬ ‭the‬ ‭democratic‬ ‭deficit‬ ‭in‬ ‭the‬ ‭investment‬ ‭regime‬ ‭is‬ ‭by‬ ‭improving‬ ‭transparency‬ ‭and‬
‭public‬‭engagement‬‭in‬‭arbitration‬‭procedures.‬‭Permitting‬‭amicus‬‭curiae‬‭submissions‬‭allows‬‭non-state‬‭entities,‬
‭such‬ ‭as‬ ‭NGOs‬ ‭and‬ ‭impacted‬‭communities,‬‭to‬‭convey‬‭their‬‭viewpoints‬‭during‬‭legal‬‭disputes.‬‭The‬‭tribunal‬‭in‬
‭Philip‬ ‭Morris‬ ‭v.‬ ‭Uruguay‬ ‭accepted‬ ‭amicus‬ ‭briefs‬ ‭from‬ ‭health‬ ‭organisations,‬ ‭highlighting‬ ‭the‬ ‭public‬ ‭health‬

‭31‬
‭Levy, C.S., 2015. Drafting and interpreting International Investment Agreements from a sustainable development perspective.‬
‭Groningen Journal of International Law‬‭,‬‭3‬‭(1), pp.59-84.‬
‭32‬
‭Alvarez, J.E., 2021. ISDS reform: the long view.‬‭ICSID Review-Foreign Investment Law Journal‬‭,‬‭36‬‭(2), pp.253-277.‬
‭ramifications‬ ‭of‬ ‭the‬ ‭case.‬ ‭Enhancing‬ ‭public‬ ‭access‬ ‭to‬ ‭arbitration‬ ‭documents‬ ‭and‬ ‭hearings‬ ‭can‬ ‭augment‬
‭accountability‬ ‭and‬ ‭credibility‬ ‭in‬ ‭ISDS‬ ‭procedures.‬ ‭Certain‬ ‭contemporary‬ ‭treaties,‬ ‭including‬ ‭CETA,‬ ‭have‬
‭included‬ ‭transparency‬ ‭requirements‬ ‭to‬ ‭enhance‬ ‭public‬ ‭engagement,‬ ‭establishing‬ ‭a‬ ‭favourable‬ ‭precedent‬ ‭for‬
‭subsequent agreements.‬

‭2. Proposals for Multilateral Investment Courts to Supplant ISDS‬

‭In‬‭reaction‬‭to‬‭extensive‬‭criticism‬‭of‬‭ISDS,‬‭some‬‭governments‬‭and‬‭international‬‭organisations‬‭have‬‭suggested‬
‭establishing‬ ‭a‬ ‭multilateral‬ ‭investment‬‭court‬‭(MIC)‬‭to‬‭supplant‬‭ad‬‭hoc‬‭arbitration.‬‭The‬‭MIC‬‭would‬‭provide‬‭a‬
‭permanent‬‭and‬‭transparent‬‭judicial‬‭framework‬‭featuring‬‭independent‬‭judges‬‭and‬‭appeals‬‭systems,‬‭addressing‬
‭issues‬ ‭of‬‭inconsistency‬‭and‬‭arbitrator‬‭bias‬‭in‬‭ISDS‬‭verdicts.‬‭This‬‭reform‬‭seeks‬‭to‬‭improve‬‭predictability‬‭and‬
‭accountability,‬ ‭guaranteeing‬ ‭that‬ ‭tribunals‬ ‭take‬ ‭into‬ ‭account‬ ‭public‬ ‭policy‬ ‭objectives‬ ‭in‬ ‭conjunction‬ ‭with‬
‭investment‬‭protection.‬‭The‬‭European‬‭Union‬‭has‬‭vigorously‬‭advocated‬‭for‬‭the‬‭establishment‬‭of‬‭a‬‭multilateral‬
‭investment court, incorporating this initiative into its contemporary trade and investment accords.‬

‭The‬‭MIC‬‭plan‬‭signifies‬‭a‬‭comprehensive‬‭transition‬‭towards‬‭reconciling‬‭state‬‭sovereignty‬‭with‬‭investor‬‭rights‬
‭by‬ ‭maintaining‬ ‭the‬ ‭essential‬ ‭policy‬ ‭space‬ ‭for‬ ‭sustainable‬ ‭growth.‬ ‭Should‬ ‭it‬ ‭be‬ ‭adopted,‬ ‭the‬ ‭MIC‬ ‭might‬
‭facilitate‬‭the‬‭alignment‬‭of‬‭the‬‭global‬‭investment‬‭framework‬‭with‬‭the‬‭Sustainable‬‭Development‬‭Goals‬‭(SDGs)‬
‭by safeguarding public interest measures from unjust penalties in arbitration.‬

‭The‬ ‭obstacles‬ ‭confronting‬ ‭IIAs‬ ‭illustrate‬ ‭a‬ ‭conflict‬ ‭between‬ ‭investment‬ ‭liberalisation‬ ‭and‬ ‭sustainable‬
‭development.‬‭The‬‭lack‬‭of‬‭enforceable‬‭sustainability‬‭provisions,‬‭the‬‭constraints‬‭of‬‭ISDS,‬‭and‬‭the‬‭exclusion‬‭of‬
‭non-state‬ ‭entities‬ ‭from‬ ‭treaty‬ ‭formulation‬ ‭diminish‬ ‭the‬ ‭efficacy‬ ‭of‬ ‭IIAs‬‭in‬‭fostering‬‭sustainable‬‭investment.‬
‭Nonetheless,‬‭prospects‬‭for‬‭reform‬‭are‬‭available‬‭via‬‭enhanced‬‭transparency‬‭in‬‭arbitration‬‭and‬‭the‬‭establishment‬
‭of‬ ‭multilateral‬ ‭investment‬ ‭tribunals.‬ ‭These‬ ‭reforms‬ ‭signify‬ ‭crucial‬ ‭advancements‬ ‭in‬ ‭establishing‬ ‭an‬
‭investment‬‭environment‬‭that‬‭equilibrates‬‭corporate‬‭and‬‭public‬‭interests,‬‭guaranteeing‬‭that‬‭foreign‬‭investments‬
‭foster sustainable growth.‬

‭RECOMMENDATIONS : TOWARDS A SUSTAINABLE INVESTMENT REGIME‬

‭The‬ ‭global‬ ‭community's‬ ‭pursuit‬ ‭of‬ ‭balancing‬ ‭investment‬ ‭liberalisation‬ ‭with‬ ‭sustainable‬ ‭development‬
‭necessitates‬ ‭the‬ ‭reform‬ ‭of‬ ‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs).‬ ‭The‬ ‭subsequent‬ ‭proposals‬ ‭provide‬
 ‭methods‬ ‭to‬ ‭redefine‬ ‭IIAs‬‭33‬‭,‬‭promote‬‭responsible‬‭investment‬‭practices,‬‭and‬‭improve‬‭regulatory‬‭flexibility‬‭for‬
‭states, ensuring that investments significantly contribute to economic, environmental, and social goals.‬

‭1. Redefining International Investment Agreements with Sustainable Development as the Central Focus‬
‭To‬ ‭connect‬ ‭IIAs‬ ‭with‬ ‭Sustainable‬ ‭Development‬ ‭Goals‬ ‭(SDGs),‬ ‭it‬ ‭is‬ ‭essential‬ ‭to‬ ‭incorporate‬ ‭sustainability‬
‭principles‬ ‭into‬ ‭all‬ ‭facets‬ ‭of‬ ‭these‬ ‭agreements.‬ ‭This‬ ‭entails‬ ‭advancing‬ ‭from‬ ‭introductory‬ ‭commitments‬ ‭to‬
‭incorporate‬‭substantive,‬‭public‬‭interest,‬‭and‬‭procedural‬‭provisions‬‭in‬‭Bilateral‬‭Investment‬‭Treaties‬‭(BITs)‬‭and‬
‭other investment agreements.‬

‭Substantive‬ ‭Provisions‬ ‭:‬ ‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs)‬ ‭must‬ ‭explicitly‬ ‭incorporate‬
‭environmental‬ ‭protection,‬ ‭human‬ ‭rights,‬ ‭and‬ ‭labour‬ ‭standards‬ ‭as‬ ‭fundamental‬ ‭concepts.‬ ‭The‬ ‭SADC‬ ‭Model‬
‭BIT‬ ‭mandates‬ ‭environmental‬ ‭impact‬ ‭assessments‬ ‭(EIAs),‬ ‭whereas‬ ‭treaties‬ ‭such‬ ‭as‬ ‭CETA‬ ‭acknowledge‬ ‭a‬
‭state's‬ ‭authority‬ ‭to‬ ‭regulate‬ ‭for‬ ‭public‬ ‭policy‬ ‭objectives,‬ ‭establishing‬ ‭precedents‬ ‭for‬ ‭the‬ ‭incorporation‬ ‭of‬
‭sustainability‬‭into‬‭treaty‬‭provisions.‬‭By‬‭including‬‭these‬‭rules,‬‭IIAs‬‭can‬‭protect‬‭public‬‭interests‬‭while‬‭fostering‬
‭sustainable economic growth.‬

‭Public‬‭Interest‬‭Clauses‬‭:‬‭Incorporating‬‭exemptions‬‭for‬‭public‬‭policy‬‭goals—including‬‭health,‬‭environmental‬
‭conservation,‬ ‭and‬ ‭climate‬ ‭initiatives—can‬ ‭guarantee‬ ‭that‬ ‭states‬ ‭maintain‬ ‭regulatory‬ ‭independence.‬ ‭Recent‬
‭accords‬ ‭such‬ ‭as‬ ‭CETA‬ ‭have‬ ‭provisions‬ ‭for‬ ‭reasonable‬ ‭public‬ ‭policy‬ ‭initiatives,‬ ‭signifying‬ ‭advancement‬ ‭in‬
‭reconciling‬ ‭investor‬ ‭protections‬ ‭with‬ ‭public‬ ‭benefit.‬ ‭Future‬ ‭IIAs‬ ‭should‬ ‭broaden‬‭these‬‭exceptions‬‭to‬‭ensure‬
‭that sustainable development initiatives are not impeded by investment disputes.‬

‭Procedural‬ ‭Provisions‬ ‭:‬ ‭Augmented‬ ‭procedural‬ ‭fairness,‬ ‭including‬ ‭increased‬ ‭transparency‬ ‭and‬ ‭stakeholder‬
‭engagement‬‭decision-making‬‭is‬‭vital‬‭for‬‭cultivating‬‭trust‬‭in‬‭the‬‭investment‬‭framework.‬‭Incorporating‬‭tools‬‭for‬
‭amicus‬ ‭curiae‬‭participation‬‭in‬‭arbitration‬‭guarantees‬‭the‬‭inclusion‬‭of‬‭civil‬‭society‬‭perspectives,‬‭as‬‭evidenced‬
‭in‬ ‭Philip‬ ‭Morris‬ ‭v.‬ ‭Uruguay.‬ ‭Procedural‬ ‭improvements‬ ‭must‬ ‭prioritise‬ ‭transparent‬ ‭hearings‬ ‭and‬ ‭public‬
‭disclosure to enhance accountability and legitimacy in dispute resolution.‬

‭2. Promote Prudent Investment Strategies‬

‭Investors‬‭are‬‭essential‬‭in‬‭promoting‬‭sustainable‬‭development‬‭via‬‭responsible‬‭business‬‭practices.‬‭International‬
‭Investment‬ ‭Agreements‬ ‭(IIAs)‬ ‭should‬ ‭advocate‬ ‭for‬ ‭Corporate‬ ‭Social‬ ‭Responsibility‬ ‭(CSR)‬ ‭concepts‬ ‭and‬

‭33‬
‭Zagel, G.M., 2021. Achieving Sustainable Development Objectives in International Investment Law. In‬‭Handbook of International‬
‭Investment Law and Policy‬‭(pp. 1933-1985). Singapore: Springer Singapore.‬
‭mandate‬ ‭that‬ ‭investors‬ ‭exhibit‬ ‭due‬ ‭diligence‬ ‭in‬ ‭adhering‬ ‭to‬ ‭environmental,‬ ‭social,‬ ‭and‬ ‭governance‬ ‭(ESG)‬
‭norms.‬

‭Integrate‬ ‭CSR‬ ‭Guidelines‬ ‭:‬ ‭Future‬ ‭IIAs‬ ‭can‬ ‭promote‬ ‭business‬ ‭compliance‬ ‭with‬ ‭International‬ ‭CSR‬
‭frameworks,‬ ‭such‬ ‭the‬ ‭OECD‬ ‭Guidelines‬ ‭for‬ ‭Multinational‬ ‭Enterprises‬ ‭and‬ ‭the‬ ‭UN‬ ‭Guiding‬ ‭Principles‬ ‭on‬
‭Business‬ ‭and‬ ‭Human‬ ‭Rights.‬ ‭These‬ ‭rules‬‭delineate‬‭the‬‭obligations‬‭of‬‭enterprises‬‭in‬‭upholding‬‭human‬‭rights‬
‭and‬ ‭alleviating‬ ‭environmental‬ ‭damage‬ ‭across‬ ‭their‬ ‭operations.‬ ‭Incorporating‬ ‭these‬ ‭principles‬ ‭into‬ ‭IIAs‬‭will‬
‭promote‬ ‭responsible‬ ‭conduct‬ ‭among‬ ‭investors‬ ‭and‬ ‭assist‬ ‭in‬ ‭alleviating‬ ‭conflicts‬‭between‬‭private‬‭and‬‭public‬
‭interests.‬

‭Standards‬‭for‬‭Investor‬‭Due‬‭Diligence‬‭:‬‭IIAs‬‭may‬‭mandate‬‭investors‬‭to‬‭perform‬‭comprehensive‬‭due‬‭diligence‬
‭evaluations‬‭before‬‭entering‬‭new‬‭markets,‬‭particularly‬‭in‬‭industries‬‭that‬‭provide‬‭hazards‬‭to‬‭local‬‭communities‬
‭or‬ ‭ecosystems.‬ ‭Cases‬ ‭such‬ ‭as‬ ‭Bear‬ ‭Creek‬ ‭v.‬ ‭Peru‬ ‭underscores‬ ‭the‬ ‭necessity‬ ‭of‬ ‭securing‬ ‭a‬ ‭social‬ ‭licence‬ ‭to‬
‭operate‬ ‭via‬‭proactive‬‭engagement‬‭with‬‭local‬‭communities‬‭and‬‭timely‬‭resolution‬‭of‬‭their‬‭concerns‬‭during‬‭the‬
‭investment‬ ‭process.‬ ‭By‬ ‭necessitating‬ ‭sustainability‬ ‭impact‬ ‭assessments‬ ‭and‬ ‭demanding‬ ‭the‬ ‭disclosure‬ ‭of‬
‭potential‬ ‭social‬ ‭or‬ ‭environmental‬ ‭hazards,‬ ‭IIAs‬ ‭can‬ ‭promote‬ ‭responsible‬ ‭investments‬ ‭that‬ ‭correspond‬ ‭with‬
‭public interests.‬

‭Enforce‬ ‭Investor‬ ‭Accountability‬ ‭:‬ ‭IIAs‬ ‭shall‬ ‭ensure‬ ‭investors‬ ‭are‬ ‭held‬ ‭accountable‬ ‭for‬ ‭violations‬ ‭of‬ ‭their‬
‭commitments,‬ ‭including‬ ‭noncompliance‬ ‭with‬ ‭environmental‬ ‭or‬ ‭social‬ ‭norms.‬ ‭The‬ ‭precedent‬ ‭established‬ ‭in‬
‭Urbaser‬‭v.‬‭Argentina,‬‭wherein‬‭the‬‭tribunal‬‭recognised‬‭that‬‭companies‬‭may‬‭possess‬‭human‬‭rights‬‭obligations,‬
‭lays‬‭the‬‭groundwork‬‭for‬‭forthcoming‬‭treaties‬‭aimed‬‭at‬‭enforcing‬‭investor‬‭responsibility‬‭via‬‭counterclaims‬‭and‬
‭other legal instruments.‬

‭Encourage state adaptability in regulatory frameworks.‬

‭A‬‭sustainable‬‭investment‬‭system‬‭must‬‭enable‬‭states‬‭to‬‭modify‬‭regulatory‬‭frameworks‬‭in‬‭response‬‭to‬‭changing‬
‭public‬ ‭policy‬ ‭requirements‬ ‭without‬ ‭the‬ ‭apprehension‬ ‭of‬ ‭violating‬ ‭treaty‬ ‭obligations.‬ ‭This‬ ‭necessitates‬
‭providing‬ ‭governments‬‭with‬‭enhanced‬‭latitude‬‭in‬‭executing‬‭initiatives‬‭that‬‭advance‬‭sustainable‬‭development‬
‭goals.‬

‭Incorporate‬‭Exceptions‬‭for‬‭Public‬‭Policy‬‭Objectives‬‭:‬‭IIAs‬‭must‬‭contain‬‭explicit‬‭exceptions‬‭permitting‬‭states‬
‭to‬ ‭implement‬ ‭and‬ ‭enforce‬ ‭legislation‬ ‭that‬ ‭fit‬ ‭with‬ ‭health,‬ ‭environmental,‬ ‭and‬ ‭social‬ ‭objectives.‬ ‭These‬
‭exceptions‬ ‭ought‬ ‭to‬ ‭protect‬ ‭public‬ ‭policy‬ ‭from‬ ‭investor‬ ‭claims,‬ ‭as‬ ‭demonstrated‬ ‭in‬ ‭CETA‬ ‭and‬ ‭other‬
‭contemporary‬ ‭agreements.‬ ‭A‬ ‭comprehensive‬ ‭system‬ ‭of‬ ‭exclusions‬ ‭will‬ ‭guarantee‬ ‭that‬ ‭nations‬ ‭can‬ ‭fulfil‬
‭international climate commitments and human rights duties without encountering arbitration risks.‬

‭Incorporate‬ ‭Precautionary‬ ‭Principles‬ ‭in‬‭Treaty‬‭Formulation‬‭:‬‭International‬‭Investment‬‭Agreements‬‭(IIAs)‬

‭should‬‭enable‬‭states‬‭to‬‭implement‬‭precautionary‬‭measures,‬‭even‬‭in‬‭the‬‭absence‬‭of‬‭scientific‬‭clarity‬‭regarding‬
‭potential‬‭dangers.‬‭This‬‭principle‬‭is‬‭particularly‬‭pertinent‬‭in‬‭tackling‬‭climate‬‭change,‬‭biodiversity‬‭decline,‬‭and‬
‭public‬ ‭health‬ ‭issues.‬ ‭The‬ ‭SADC‬ ‭Model‬ ‭BIT‬‭permits‬‭governments‬‭to‬‭implement‬‭precautionary‬‭measures‬‭for‬
‭the protection of natural resources, establishing a significant precedent for future treaty formulation.‬

‭Encourage‬ ‭Sustainable‬ ‭Investments‬ ‭:‬ ‭IIAs‬ ‭can‬ ‭foster‬ ‭eco-friendly‬ ‭investments‬‭by‬‭incorporating‬‭incentives‬

‭for‬ ‭projects‬ ‭that‬ ‭conform‬ ‭to‬ ‭SDGs.‬ ‭For‬ ‭example,‬ ‭tax‬ ‭incentives‬ ‭or‬ ‭diminished‬ ‭regulatory‬‭obstacles‬‭may‬‭be‬
‭provided‬ ‭to‬ ‭investors‬ ‭who‬ ‭satisfy‬ ‭particular‬ ‭sustainability‬ ‭standards,‬ ‭such‬ ‭as‬ ‭lowering‬ ‭carbon‬ ‭emissions‬ ‭or‬
‭enhancing‬ ‭local‬ ‭employment.‬ ‭By‬ ‭synchronising‬ ‭investment‬ ‭incentives‬ ‭with‬ ‭sustainable‬ ‭development,‬
‭governments can draw foreign money while promoting public policy objectives.‬

‭To‬ ‭establish‬ ‭a‬ ‭sustainable‬ ‭investment‬ ‭framework,‬ ‭revisions‬ ‭in‬ ‭International‬ ‭Investment‬ ‭Agreements‬ ‭(IIAs)‬
‭must‬‭transcend‬‭cosmetic‬‭commitments‬‭and‬‭prioritise‬‭sustainable‬‭development‬‭within‬‭investment‬‭governance.‬
‭Incorporating‬‭substantive,‬‭procedural,‬‭and‬‭public‬‭interest‬‭provisions‬‭into‬‭treaties‬‭will‬‭augment‬‭the‬‭legitimacy‬
‭of‬ ‭the‬ ‭investment‬ ‭regime‬ ‭and‬ ‭mitigate‬ ‭tensions‬ ‭between‬ ‭investor‬ ‭rights‬ ‭and‬ ‭public‬ ‭policy‬ ‭objectives.‬
‭Concurrently,‬ ‭advocating‬ ‭for‬ ‭responsible‬ ‭investment‬ ‭practices‬ ‭via‬ ‭CSR‬ ‭norms‬ ‭and‬ ‭due‬ ‭diligence‬ ‭mandates‬
‭will incentivise enterprises to conform to global sustainability objectives.‬

‭Ultimately,‬‭providing‬‭enhanced‬‭regulatory‬‭flexibility‬‭to‬‭states‬‭will‬‭allow‬‭them‬‭to‬‭enact‬‭policies‬‭that‬‭fulfil‬‭their‬
‭environmental‬ ‭and‬ ‭social‬ ‭obligations‬ ‭without‬‭apprehension‬‭of‬‭investor‬‭reprisal.‬‭Future‬‭treaties‬‭must‬‭include‬
‭explicit‬ ‭exclusions‬ ‭for‬ ‭public‬ ‭policy‬ ‭purposes‬ ‭and‬ ‭enable‬ ‭nations‬ ‭to‬ ‭implement‬ ‭precautionary‬ ‭measures‬ ‭if‬
‭necessary.‬ ‭By‬ ‭incorporating‬ ‭these‬ ‭guidelines,‬ ‭IIAs‬ ‭can‬ ‭transform‬ ‭into‬ ‭mechanisms‬ ‭that‬ ‭foster‬ ‭responsible‬
‭investment‬ ‭while‬ ‭advancing‬ ‭the‬ ‭sustainable‬ ‭development‬ ‭goal,‬ ‭so‬ ‭securing‬ ‭long-term‬ ‭advantages‬ ‭for‬ ‭both‬
‭investors and host nations.‬

‭CONCLUSION‬

‭This‬‭article‬‭has‬‭examined‬‭the‬‭alignment‬‭or‬‭conflict‬‭between‬‭International‬‭Investment‬‭Agreements‬‭(IIAs)‬‭and‬
‭the‬ ‭ideals‬ ‭of‬ ‭sustainable‬ ‭development.‬ ‭Despite‬ ‭the‬ ‭advancements‬ ‭in‬ ‭recent‬ ‭IIAs,‬ ‭such‬ ‭as‬ ‭the‬ ‭Canada-EU‬
‭Comprehensive‬ ‭Economic‬ ‭and‬ ‭Trade‬ ‭Agreement‬ ‭(CETA)‬ ‭and‬ ‭the‬ ‭SADC‬ ‭Model‬ ‭BIT,‬ ‭which‬ ‭integrate‬
‭sustainability‬ ‭provisions,‬ ‭the‬ ‭predominant‬ ‭focus‬ ‭of‬ ‭most‬ ‭treaties‬ ‭remains‬ ‭on‬ ‭investor‬ ‭protection‬‭rather‬‭than‬
‭public‬ ‭policy‬ ‭objectives.‬ ‭Significant‬ ‭obstacles‬ ‭emerge‬ ‭when‬ ‭public‬ ‭policies—such‬ ‭as‬ ‭environmental‬
‭restrictions‬ ‭or‬ ‭human‬ ‭rights‬ ‭protections—conflict‬‭with‬‭investor‬‭expectations,‬‭resulting‬‭in‬‭disputes‬‭that‬‭deter‬
‭nations‬‭from‬‭implementing‬‭essential‬‭reforms.‬‭Case‬‭studies‬‭such‬‭as‬‭Philip‬‭Morris‬‭v.‬‭Uruguay‬‭and‬‭Vattenfall‬‭v.‬
‭Germany‬ ‭exemplifies‬ ‭the‬ ‭regulatory‬ ‭conflicts‬ ‭that‬ ‭arise‬ ‭between‬ ‭private‬ ‭interests‬ ‭and‬ ‭public‬ ‭welfare‬
‭objectives.‬ ‭Furthermore,‬ ‭ISDS‬ ‭mechanisms‬ ‭pose‬ ‭a‬ ‭considerable‬ ‭issue,‬ ‭since‬ ‭they‬ ‭frequently‬ ‭restrict‬ ‭states’‬
‭policy‬ ‭autonomy,‬ ‭hindering‬ ‭their‬ ‭ability‬ ‭to‬ ‭implement‬ ‭ambitious‬ ‭initiatives‬ ‭consistent‬ ‭with‬ ‭Sustainable‬
‭Development Goals (SDGs).‬
‭Although‬‭several‬‭treaties‬‭have‬‭non-binding‬‭allusions‬‭to‬‭sustainable‬‭development‬‭in‬‭their‬‭preambles,‬‭the‬‭lack‬
‭of‬‭enforceable‬‭sections‬‭results‬‭in‬‭a‬‭disjunction‬‭between‬‭international‬‭investment‬‭law‬‭and‬‭the‬‭SDG‬‭framework.‬
‭The‬ ‭task‬ ‭is‬ ‭to‬ ‭ensure‬ ‭that‬ ‭investment‬ ‭treaties‬ ‭serve‬ ‭as‬ ‭instruments‬ ‭for‬ ‭sustainable‬ ‭development‬ ‭instead‬ ‭of‬
‭hindrances to it.‬

‭Prospective Trajectories‬
‭Attaining‬ ‭equilibrium‬ ‭between‬‭private‬‭and‬‭public‬‭interests‬‭is‬‭crucial‬‭for‬‭the‬‭development‬‭of‬‭investment‬‭law.‬
‭International‬ ‭Investment‬ ‭Agreements‬ ‭must‬‭guarantee‬‭that‬‭investor‬‭rights‬‭do‬‭not‬‭compromise‬‭states'‬‭capacity‬
‭to‬ ‭regulate‬ ‭in‬‭domains‬‭such‬‭as‬‭health,‬‭environment,‬‭and‬‭social‬‭welfare.‬‭This‬‭necessitates‬‭a‬‭transition‬‭from‬‭a‬
‭system‬ ‭that‬ ‭emphasises‬ ‭investment‬ ‭liberalisation‬ ‭to‬ ‭one‬ ‭that‬ ‭incorporates‬ ‭sustainability‬ ‭at‬ ‭its‬ ‭foundation.‬
‭Policymakers,‬ ‭investors,‬ ‭and‬ ‭arbitrators‬ ‭each‬ ‭contribute‬ ‭to‬ ‭the‬ ‭establishment‬ ‭of‬ ‭a‬ ‭sustainable‬ ‭investment‬
‭framework:‬
‭For‬‭State‬‭Actors‬‭:‬‭States‬‭ought‬‭to‬‭amend‬‭antiquated‬‭BITs‬‭to‬‭incorporate‬‭enforceable‬‭public‬‭policy‬‭exceptions‬
‭and‬ ‭regulatory‬‭adaptability‬‭to‬‭fulfil‬‭environmental‬‭and‬‭social‬‭goals.‬‭They‬‭must‬‭also‬‭involve‬‭non-state‬‭actors‬
‭in treaty talks to augment legitimacy and accountability.‬
‭For‬ ‭Investors‬ ‭:‬ ‭Enterprises‬ ‭must‬ ‭implement‬ ‭responsible‬ ‭investment‬ ‭practices,‬ ‭conforming‬ ‭to‬ ‭CSR‬
‭frameworks and due diligence standards to mitigate social and environmental damage.‬
‭For‬ ‭Arbitrators‬ ‭:‬ ‭Tribunals‬ ‭ought‬ ‭to‬ ‭implement‬ ‭systemic‬ ‭integration‬ ‭approaches,‬ ‭taking‬ ‭into‬ ‭account‬
‭international‬‭human‬‭rights‬‭and‬‭environmental‬‭laws‬‭during‬‭treaty‬‭interpretation,‬‭as‬‭demonstrated‬‭in‬‭Urbaser‬‭v.‬
‭Argentina. Enhanced transparency in arbitration hearings will foster trust in the investment framework.‬
‭Implementing‬ ‭these‬ ‭reforms‬ ‭will‬ ‭enable‬ ‭the‬‭investment‬‭system‬‭to‬‭connect‬‭more‬‭effectively‬‭with‬‭sustainable‬
‭development goals, ensuring that foreign investments benefit both private interests and host communities.‬