A Study On The Risk Law Of Environmental Measures In Overseas Direct Investment

Nowadays, environmental protection becomes a sensitive topic. In context of increased concern over environmental problem, host governments put great efforts to enhance their environmental regulatory power over foreign investors and thus triggered a lot of host government and foreign investor conflicts. In these cases, environmental regulatory measures have either caused great threaten or damage to foreign investors. The research topic of this paper is investment risk triggered by the environmental measures. The legality and effect of environmental measures will be analyzed according to international investment agreements and also through international investment arbitration case studies. Advises on how to mitigate the risk of environmental measures will be provided too. Therefore, the paper is divided into four chapters.The first chapter generally introduces the meaning of the risk of environmental measures as well as the nature and causes of such risk. Specific examples of environmental measures will also be provided in this chapter. Besides, this chapter will discuss why it is important to do research on this topic.The second chapter carries out studies on the articles of international investment treaties related to environmental measures. Such articles are legal basis for the host state to take environmental measures. This chapter will first introduce the form and content of articles related to environmental measures and then analyze how many international investment treaties have incorporated such articles and to what extent the investors will be affected. Finally this chapter will introduce the development of articles related to environmental measures and how this would affect investors.The third chapter analyzes the risk of environmental measures according to the practice of international investment dispute arbitration. This chapter begins by case studies and reveals the standards for legitimate environmental measures. Investment treaties do not directly provide such standards and therefore international tribunal’s interpretation shall have great significance. Furthermore, because indirect expropriation is a hot issue in international investment disputes, this chapter will specifically analyze the legality of environmental measures from the perspective of indirect expropriation. The fourth chapter will, based on China’s problems and realities, provide the investors and Chinese government with several suggestions with respect to prevention of risk of environmental measures. Investors can assume environmental responsibility more actively or control environmental measures risk by incorporating stable terms or obtaining government guarantee. The Chinese government should establish effective control over its nationals to make sure that they will behave in an environment-friendly way whiling doing outbound investment.