In the Brundtland Report, Sustainable Development was defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs". In this sense, the notion of Sustainable Development encompasses a balance between three "interdependent and mutually reinforcing" pillars: economic development, social development and environmental protection.
Contributor: Christoph Greil
In the Brundtland Report, Sustainable Development was defined as "development that meets the needs of the present without compromising the ability of future generations to meet their own needs".[1] In this sense, the notion of Sustainable Development encompasses a balance between three "interdependent and mutually reinforcing" pillars: economic development, social development and environmental protection.[2]
Even if investment tribunals – due to lack of party consent – rarely have jurisdiction over Sustainable Development related disputes such as environmental or human rights claims as independent heads of claim, Sustainable Development related norms can be relevant as external rules according to customary principles of treaty interpretation. Therefore, these external rules can inform the meaning of generic or relative terms and can become relevant via Article 31 (3) (c) of the Vienna Convention on the Law of Treaties as "relevant rules of international law applicable in the relations between the parties".[3]
The progress of investment arbitration with regard to the integration of Sustainable Development is evidenced by the growing importance of transparency and amicus curiae participation in arbitral proceedings as well as by an increasing inclination of tribunals to consider non-investment priorities in the interpretation of common substantive IIA standards of investment protection.
A willing tribunal can channel aspects of Sustainable Development through various substantive entry points:
- In the context of the "expropriation" standard, the "police powers" doctrine is both method and attitude for safeguarding an appropriate portion of regulatory space for the host state.
- Regarding "fair and equitable treatment", tribunals have started to search for a balance between the foreign investor’s legitimate expectations and the public interest.
- Concerning "full protection and security", tribunals can take the host state’s stage of development into account when determining the required levels of the state’s diligence and protection of investments against physical violence.
- In the context of non-discrimination standards like "most favoured nation treatment" and "national treatment", the definition of "like circumstances" is a valuable tool to ensure that socially or environmentally irresponsible investor behavior is a category that matters when determining the relevant comparator.
Apart from the level of liability, Sustainable Development considerations can be taken into account in the quantum phase when it comes to calculating the amount of compensation or damages due. Hence, not only factors such as the investor’s contributory fault or failure to mitigate damages, vague formulation of IIA obligations or the non-passage of a minimum threshold of seriousness, but also the level of development and the financial capabilities of the host state can be harnessed to reduce the amount of payment to be awarded.
In any event, interpreting IIAs in the light of Sustainable Development purposes will always involve a careful balancing between investor and host state interests while taking into account the position of all affected systems and stakeholders. The decisive variable in this balancing endeavor is the mindset of the interpreter. Ultimately, it is a question of personal values where he or she finds the balance between economic, social and ecological priorities.
[1] Our Common Future: Report of the World Commission on Environment and Development, Oslo, 20 March 1987, Chapter 2, para 1, available at http://www.un-documents.net/our-common-future.pdf
[2] UN General Assembly Resolution S-19/2, 19 September 1997, para 23, available at www.un.org/ga/search/view_doc.asp
[3] International Law Commission (ILC), Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law, 13 April 2006, UN Doc A/CN.4/L.682, para 419, available at legal.un.org/ilc/documentation/english/a_cn4_l682.pdf