Investor-State Dispute Settlement and the Future of the Precautionary Principle
| Author | Haydn Davies |
| Position | Associate Professor and Director of Research at the School of Law at Birmingham City University, UK; Assistant Vice-Chair of the UK Environmental Law Association. PhD in Biochemistry (University College, Cardiff, 1988) |
| Pages | 449-486 |
Investor-state DIspute settlement anD the Future oF
the precautIonary prIncIple
Haydn Davies*
Birmingham City University, UK
ABSTRACT
The proliferation of bilateral investment treaties and investment chapters in trade mega-
treaties and the associated increase in the preference of investors for investor-state
dispute settlement has given rise to concerns that the regulatory sovereignty of both
developed and developing states might be compromised. In response to these concerns
many trade agreements (including the recently concluded Comprehensive Economic
Trade Agreement between the European Union (EU) and Canada) have incorporated
provisions designed to protect the regulatory sovereignty of nation states, especially in
relation to labour standards, public health, phytosanitary and environmental protection.
This paper examines the nature and scope of environmental protection measures in
investment chapters and attempts to analyse the extent to which these measures will,
in practice, prevent challenges by investors seeking to chill or prevent environmental
regulations which might threaten their investments. The analysis concentrates
particularly on measures based on the precautionary principle and uses the current
EU restrictions on neonicotinoid pesticides as a case study. The paper concludes that
the measures included in investment chapters designed to prevent such challenges by
investors will not necessarily achieve the desired level of protection for environmental
regulatory sovereignty.
CONTENTS
I. IntroDuctIon …………………………............................................……451
II. Investment chapters anD the Balance Between prIvate anD puBlIc
Interests In an envIronmental context ………............................…….455
III. Investor-state DIspute settlement anD the threat to envIronmental
sovereIgnty …………........................................................................…460
Iv. the precautIonary prIncIple - a BrIeF BackgrounD ……......................468
Br. J. Am. Leg. Studies 5 (2016), DOI: 10.1515/bjals-2016-0016
© 2016 Haydn Davies, published by De Gruyter Open.
This work is licensed under the Creative Commons Attribution-NonCommercial-NoDerivs 3.0 License.
* Associate Professor and Director of Research at the School of Law at Birmingham City University,
UK; Assistant Vice-Chair of the UK Environmental Law Association. PhD in Biochemistry
(University College, Cardiff, 1988), LLB (University of Central England, 1999) BSc Biochemistry
(University College, Cardiff, 1983). He can be reached at haydn.davies@bcu.ac.uk.
5 Br. J. Am. Leg. Studies (2016)
v. the neonIcotInoIDs restrIctIons In the european unIon anD how
they mIght Fare unDer the proposeD ttIp Investment protectIon
provIsIons ……..............................................................................…472
A. Establishing Standing: Investors, Investments and Covered
Investments ..................................................................................475
B. Fair and equitable treatment ……...........................................….478
C. Expropriation ….......................................................................…480
D. The Environment Chapter in the TTIP …….............................…483
E. Inuence of the EU Commission’s Proposed Independent Arbitral
Tribunal ………….......................................................................484
VI. conclusIon …………………………..................................................485
450
Investor-state DIspute settlement anD the Future oF the precautIonary prIncIple
I. IntroDuctIon
Free trade agreements can be traced back to the ancient empires which existed before
the Common Era.1 However, the heyday of trade expansion came in the nineteenth
century when the transport innovations of the industrial revolution, combined with
Empire, and an adherence to laissez-faire economics - particularly in Great Britain
- opened up enormous trade opportunities across the world.2 An early example of
bilateralism, which featured the now-familiar most favoured nation status, was the
Cobden-Chavalier agreement of 1860 between Great Britain and France. This led
to a series of similar European agreements which created something of a golden era
of trade in Europe. Unfortunately this was short-lived; an economic depression in
the 1870s ushered in a period of increasing protectionism which was ultimately to
lead to great instability and nationalism culminating in a half-century of economic
and military conict in the twentieth century.3 Following World War II, the General
Agreement on Tariffs and Trade - the rst major multilateral trade agreement and
the forerunner of the WTO4 - was created in 1948, having been salvaged from the
failed attempt to create an international trade organisation at a conference of states
in the Cuban capital in 1947.5
GATT, and later, the WTO, facilitated the growth of the global economy
in the later twentieth and twenty-rst centuries, and offered an independent
dispute settlement service in the form of the WTO’s dispute settlement body and
appellate panel. These offered a means of settlement of trade disputes that avoided,
initially at least, some of the political and diplomatic hurdles presented by state-
state negotiation. However, the WTO seems to have become a victim of its own
success. Viviane de Beaufort takes the view that despite its considerable success
in attempting to broker agreements between 159 states, progress at the WTO has
foundered on: “confrontations between states”; the increasingly complex nature
of the negotiations which have moved from concerns with tariffs to complex
technical matters such as phytosanitary protection and intellectual property; and the
rise of “concerns on sovereignty.” 6 As a result multilateralism on the WTO model
has suffered a decline in popularity originating in “a general lack of enthusiasm
from states and … WTO governance issues.” 7 Consequently states have moved
towards bilateral or multilateral free trade agreements, including the recent so-
called Mega-Treaties, brokered without direct input from the WTO. A number of
such agreements also contain provisions on investment and these tend to follow
established patterns in bilateral investment treaties (BITs), and commonly dene
1 worlD traDe organIsatIon, worlD traDe report 2011, 49, available at https://www.
wto.org/english/res_e/booksp_e/anrep_e/world_trade_report11_e.pdf (last visited May
4, 2016).
2 Id.
3 Id. at 50-51.
4 Which replaced GATT in 1995.
5 See The GATT years: from Havana to Marrakesh, worlD traDe organIsatIon, https://
www.wto.org/english/thewto_e/whatis_e/tif_e/fact4_e.htm (last visited May 4, 2016)
6 Viviane de Beaufort, The European Union and the New Face(s) of International Trade,
1 Int. Bus. l. J. 39, 41 (2015).
7 Id.
451
To continue reading
Request your trial