On The Improvement Of International Investment Agreements In Mitigating And Adapting To Climate Change

Climate change is now recognized as one of the greatest,if not the greatest challenges in the world.In its fifth assessment report,the IPCC found that warming of the climate system is unequivocal and its potential effects on global natural environment and the economic and social development are likely to be far-reaching and devastating.Therefore,all countries should take measures to mitigate and adapt to climate change without delay.The international investment law mechanism has a key role to play in meeting the challenges presented by climate change.On the one hand,it can help to reduce greenhouse gas emissions by promoting climate-friendly investment.On the other hand,the investment protections contained in the IIAs have the potential to impede host States taking measures to mitigate or adapt to climate change.In the context of climate change,measures taken by host countries to mitigate and adapt climate change are likely to undermine the interests of investors.As a result,investors may choose to find compensation by filing international investment arbitration.International tribunals may find host states responsible for investors‘ losses since IIAs don‘t pay much attention to the host countries‘ public interest.The international investment law is in the critical period of adjustment and renewal,and a new generation of IIAs incorporating the principle of sustainable development is gradually developing.In this context,the importance of reviewing existing investment agreements,guided by the principle of sustainable development,and examining how to draft a new generation of investment agreements that integrate into the public interest such as climate concerns,is unmistakable.This paper examined the potential barriers that existing IIAs might present to host States taking measures to address climate change.It noted that the lack of a doctrine of precedent in international investment arbitration has resulted in tribunals taking inconsistent,sometimes irreconcilable,interpretations of the standard investment protections.As a result,there is a risk that each of the investment protections examined—national treatment,most favored nation treatment,fair and equitable treatment,expropriation and stabilization clauses—could potentially impede a host State?s ability to take measures to address climate change,depending on which of the earlier tribunals‘ interpretations the tribunal prefers to follow.In sum,the only way to ensure that host States have the policy space to take measures to mitigate or adapt climate change unimpeded is by explicitly stipulating this in the IIAs themselves.With this in mind,the paper showed how the standard IIA provisions could be redrafted,sometimes in very minor ways,to ensure that host States have the necessary policy space to take measures to address climate change without risking an arbitration award against them.It also drew together provisions from the UNFCCC and existing IIAs that states negotiating an IIA might wish to consider with respect to addressing climate change more generally.Lastly,the paper explored a number of options for what an IIA specifically designed to promote increased inflows of climate-friendly investment might look like.In addition to the introduction and conclusion,this paper is divided into four parts:The first part mainly analyzes the relationship between IIAs and climate change.It explains why IIAs need to reflect climate concerns from three perspectives,namely,the integration of sustainable development and the international investment law,the severity of climate change and the crucial influence of international investment system on climate change.The second part examines the key provisions of IIAs that used by investors to challenge climate-related measures,including substantive provisions such as expropriation and investor-state dispute settlement mechanisms.The third part discusses how to make IIAs more conducive to addressing climate change in terms of three aspects,namely,improving the key provisions of investment agreements,posing obligations on investors and its home countries and promoting climate-friendly investment by using investment incentives.The fourth part analyzes how to improve the investment agreements signed by China in order to deal with the climate change and the problems that enterprises should pay attention to under the background of climate change.