International Investment Law and Non-Economic Issues

Abstract

Arbitral tribunals have misconstrued the purpose of international investment agreements (IIAs) by failing to factor in the development aspect of these agreements into their analysis. IIAs were constituted to protect foreign investment in order to promote economic development, meaning that there is a nexus between international investment and development. However, arbitral tribunals have focused primarily on the investor protection elements of IIAs, leading to impingements on human rights and the environment, leaving IIAs as a threat to sustainable development. Drawing from all publicly available investment awards, a review of these awards found 56 awards in which human rights and environmental issues were implicated in investment disputes. The article then engaged in a textual analysis of these awards as well, finding that in many instances, arbitral tribunals downplay or dismiss non-economic issues leaving compromises to both human rights and environmental issues and constraints on state ability to regulate these areas. Based on the findings of the review of the arbitral awards, the article makes suggestions for how best states can reform IIAs to help them better align with the development aspects of these agreements. Ultimately, the article concludes that although states can anticipate IIA impediments to their development goals by redrafting treaty language, it cannot anticipate every impediment. Therefore, only with a substantial change to the procedural elements of investment arbitration can the development aspects of IIAs finally be realized alongside the already well-established investor protection aspects.