INTRODUCTION
In today's interconnected global economy, international investment plays a crucial role in driving economic growth, fostering innovation, and facilitating cross-border collaborations.1 Governments around the world recognize the significance of attracting foreign investments to stimulate their domestic economies and create employment opportunities.2 On the same note, there is increasing concern on the environment and ensuring it is kept safe for use by generations to come. Indeed, there emerged another major issue of policy and legal concern – achieving an optimal level of international investment promotion that does not compromise the state's ability to protect the environment.
To kick off this exploration of the current legal and policy environment of IIA laws and climate change, this section presents the following. Laws on international investment agreements pertain to the body of rules or regulations guiding investment relations between nations, which are contained in whatever bilateral or multilateral treaties exist on the subject. These agreements to identify certain known and stable legal framework to investors calling for protection of their foreign investment and encouraging a good business climate.
However, environmentalism is the conservation of the environment through reducing the adverse effects of climate change, protecting the environment and its ecosystems to enhance a sustainable environment. International environmental conventions and treaties have been adopted, and many laws have been enacted domestically to deals with the environment issues.
The presently existing legal regulation of the international investment agreement laws and their interaction with the environmental protection principles has been the subject of the number of significant questions. In what ways can the interest of learning from other nations' development models with foreigners' investment be aligned with the interest of guaranteeing sufficient protection to the environment? Interests that trigger conflicts between investment and the environment Which are the potential conflicts and challenges likely to emerge when investment and environmental interests are in conflict? Can this paper capture best practices regarding integrated investment laws and environmental management?
In order to address these vital questions of concern, the following paper analyses the legal and policy factors that regulate IIA laws and the environment. They describe the essence and regime of the IIAs, encompassing the general principles, main provisions, and stated aims while clarifying the sources of international and domestic environmental law. In addition, it examines the relations between investment laws and the environment to determine what may be a conflict of interest or a challenge when investing in the green objectives and where there has been a success in implementing both investment laws and environmental objectives.
LEGAL AND POLICY FRAMEWORK FOR INTERNATIONAL INVESTMENT AGREEMENT LAWS
Great changes in foreign investment policies and legal structures occurred in the last two decades of the twentieth century.3 Numerous bilateral and multilateral investment treaties have been drafted to address the fast changes in foreign investment.4 The spread of such instruments has a direct impact on national sovereignty, federalism, and the ability of states to govern in areas such as environmental protection and human health. Foreign investment was once heavily regulated on a domestic level.5 Sovereignty is impacted by the international investment agreement was elaborated in the case of Técnicas Medioambientales Tecmed S.A, v. The United Mexican States,6 wherein although the Tribunal found an expropriation, it has stated that: "the principle that the State's exercise of its sovereign power within the framework of its police power may cause economic damage to those subject to its powers as administrator without entitling them to any compensation whatsoever is undisputable."
In general, the only international laws that applied to certain areas of foreign investment were those of customary international law, and their application was limited to extraordinary circumstances.7 Beginning in the 1980s, with the establishment of bilateral investment treaties, an international legal framework began to form.8 They believe that the presence of an investment treaty influences an investor's decision to invest or not, and that increased foreign investment will lead to rapid economic development.9 It is debated whether investment treaties help potential host countries. According to a recent World Bank analysis, research substantially calls into question the usefulness of existing bilateral investment treaties in supporting developing nations in obtaining fresh investment flows.10 According to the paper, "unilateral changes to liberalise foreign direct investment (FDI) are likely to have the biggest and most direct advantage for the reforming country."11 Other factors that investors evaluate when considering whether or not to invest in a country include political instability, infrastructure, labour costs, and the availability of trained labour.
Bilateral and Regional Investment Treaties
Over 2000 bilateral investment treaties (BITs) have been signed around the world to far. Over the last 20 years, the number of investment treaties has expanded quickly, with an acceleration in the last five years.12 Figures show that 158 new BITs were adopted in 2001 alone.13 Furthermore, regional investment treaties – "involving more than two governments have increased dramatically over the last decade. One such example is the North American Free Trade Agreement (NAFTA),14 which includes an investment chapter and was negotiated by the United States, Canada, and Mexico. The Colonia Protocol on the Reciprocal Promotion and Protection of Investments Within Mercosur,15 the Buenos Aires Protocol on the Promotion and Protection of Investments Made by Countries Not Parties to Mercosur,16 the Treaty on Free Trade Between Colombia, Mexico, and Venezuela,17 and the Energy Charter Treaty18 are among others. The Americas Free Trade Agreement (FTAA),19 which contains an investment chapter in its current draught, is currently being negotiated among 34 countries." This is the most ambitious endeavour to standardise international investment rules at the moment. While all of these multilateral agreements are limited to a certain region, there is currently no worldwide investment pact. "Negotiations to adopt a global agreement on investment under the auspices of the Organisation for Economic Cooperation and Development (OECD) ended in 1998 when countries realised that granting extensive investor protection could lead to serious problems for the host state to regulate in areas such as the environment and public health, and that the negative effects of a far-reaching investment agreement could outweigh the benefits of investment liberalisation.20 Members of the World Trade Organisation (WTO) will vote whether to begin discussions for a worldwide agreement on investment in September 2003."
Footnotes
1. Michael Mussa, Factors Driving Global Economic Integration – by Michael Mussa, Economic Counselor and Director of Research, IMF, International Monetary Funds, (Aug. 25, 2000), https://www.imf.org/en/News/Articles/2015/09/28/04/53/sp082500.
2. Foreign Direct Investment for Development – Maximising Benefits, Minimising Costs, Organisation for Economic Co-Operation and Development (2002), https://www.oecd.org/investment/investmentfordevelopment/1959815.pdf.
3. Federico Carril-Caccia and Elena Pavlova, Foreign direct investment and its drivers: a global and EU perspective, European Central Bank (April 2018), https://www.ecb.europa.eu/pub/economic-bulletin/articles/2018/html/ecb.ebart201804_01.en.html.
4. Trends In International Investment Agreements: An Overview, United National Conference On Trade And Development (1999), https://unctad.org/system/files/official-document/iteiit13_en.pdf.
5. Ha-Joon Chang, Regulation of Foreign Investment in Historical Perspective, The European Journal of Development Research, Vol.16, No.3, Autumn 2004, pp.687–715. DOI: 10.1080/0957881042000266660.
6. Técnicas Medioambientales Tecmed, S.A. v. The United Mexican States, ICSID Case No. ARB (AF)/00/2.
7. OECD (2004), Fair and Equitable Treatment Standard in International Investment Law, OECD Working Papers on International Investment, 2004/03, OECD Publishing. http://dx.doi.org/10.1787/675702255435.
8. Vandevelde, Kenneth J., A Brief History of International Investment Agreements, The Effect of Treaties on Foreign Direct Investment: Bilateral Investment Treaties, Double Taxation Treaties, and Investment Flows (New York, 2009; online edn, Oxford Academic, 1 May 2009), https://doi.org/10.1093/acprof:oso/9780195388534.003.0001.
9. Josef C. Brada, Zdenek Drabek, Ichiro Iwasaki, Does investor protection increase foreign direct investment? A meta-analysis, Journal of Economic Surveys (Feb. 2021) pp. 34-70, https://doi.org/10.1111/joes.12392.
10. Hallward-Driemeier, Mary, Do Bilateral Investment Treaties Attract Foreign Direct Investment? Only a Bit ... and They Could Bite, Policy Research Working Paper No. 3121, World Bank, Washington, DC, http://hdl.handle.net/10986/18118 License: CC BY 3.0 IGO.
11. Id.
12. For a list of bilateral investment treaties and related information, see http://www.worldbank.org/icisid/treaties/intro htm.
13. United Nations Conference on Trade and Development, World Investment Report 2002: Transnational Corporations and Export Competitiveness, available at www.unctad.org/wir/.
14. North American Free Trade Agreement, December 17, 1992, Can.-Mex.-U.S., Pub. L. No. 103-182, 107 Stat. 2047 (NAFTA), reprinted in 32 ILM 289, text is also available at http://www.nafta-sec-alena.org.
15. The Colonia Protocol on the Reciprocal Promotion and Protection of Investments within Mercosur, signed on January 17, 1994 and the Buenos Aires Protocol on the Promotion and Protection of Investments Made by Countries That are not Parties to the Mercosur, signed on August 8, 1994. Both protocols were concluded under the Asuncion Treaty Establishing a Common Market Between Argentina, Brazil, Paraguay and Uruguay (Mercosur), signed on March 26, 1991.
16. The Colonia Protocol on the Reciprocal Promotion and Protection of Investments within Mercosur, singed on January 17, 1994 and the Buenos Aires Protocol on the Promotion and Protection of Investments Made by Countries That are not Parties to the Mercosur, signed on August 8, 1994. Both protocols were concluded under the Asuncion Treaty Establishing a Common Market Between Argentina, Brazil, Paraguay and Uruguay (Mercosur), signed on March 26, 1991.
17. Treaty on Free Trade Between Colombia, Mexico and Venezuela, singed on June 13, 1994.
18. Energy Charter Treaty, reprinted in 34 ILM 381 (1995).
19. U.S.-CAN. FTAA Free Trade Agreement of the Americas.
20. Members of the Organization for Economic Cooperation and Development (OECD) decided to discontinue negotiations on the Multilateral Agreement on Investment (MAI), see UNCTAD, Lessons from the Mai, New York and Geneva, 1999.
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