Download Barriers to Addressing Climate Change

Foreign Investment Law and the
UNFCCC/Kyoto Protocol: Barriers
to Addressing Climate Change
British Institute of International and Comparative Law
Annual Conference, October 2008
Kate Miles
Investment and Climate Change:
Modes of Interaction
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Opportunities for investors
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Markets in renewable energy sector;
Flexible mechanisms under Kyoto Protocol;
Innovation in eco-efficient technology.
More stringent restrictions on carbon-emitting
activities
Regulatory Changes in a
Low Carbon Economy
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Energy efficiency standards;
Prohibitions on the use of products and activities;
Withdrawal of rights to emit at current levels;
Emission trading schemes;
Requirements to obtain electricity from renewable
sources;
New regulation to support Clean Development
Mechanism (CDM) projects;
Incentives to invest in renewable energy;
Changes to tax, exemptions and subsidies.
Environmental Regulation as Treaty
Violation
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Indirect expropriation;
Discriminatory treatment;
Fair and equitable treatment
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Azurix
Tecmed
Investor-State Disputes
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Azurix
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Looked to the Tecmed award for guidance;
Tecmed – an expansive interpretation;
Tribunals cannot agree on effects/purpose;
Tecmed
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no principle stating that regulatory administrative actions
are per se excluded from the scope of the treaty, even if
they are beneficial to society as a whole – such as
environmental protection …
Fair and Equitable Treatment
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Legitimate expectations of the investor;
Stable legal and business environment;
Tecmed
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Not affect the basic expectations in entering the
investment;
Consistency;
Free from ambiguity;
Transparency;
Know all regulations that will govern the investment for
the life of the investment.
Endorsed by Azurix.
Climate Change
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Claims of discriminatory treatment;
Arcelor and the European Emissions Trading
Scheme;
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Discrimination as between sectors;
Political constraints in EU – not applicable in ad
hoc system of investor-state arbitration.
Potential for Claims re Climate Change
Mitigation Measures
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Follow Tecmed and Azurix?
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Effects of regulation;
Expectations of the investor;
Stable legal and business environment;
Stabilisation clauses;
Claims of discrimination;
Measures favourable to CDM projects;
‘Like circumstances’
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Parkerings Award
Conclusions
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Ways forward?
Win-win situation?
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Carve-outs for public welfare regulation;
Re-framing of fair and equitable treatment standard;
Ecological impacts in criteria for ‘like circumstances’;
Energy from renewables not ‘like’ energy from carbonintensive sources;
Balance competing interests in investor-state arbitration;
Host states to signal with transparency and advance notice
the regulatory changes to be made in the move to a low
carbon economy.