Research On Environmental Clauses In International Investment Agreements

The subjects of research in this thesis are environmental clauses in international investments agreements.What make this type of clauses special is that they cover both investment protection and environment protection,trying to strike a balance between the interests of invertors and host states.Currently,there are plenty of well-organized environmental clauses in typical International Investment Treaties(IIAs)including North America Free Trade Agreement(hereinafter referred to as NAFTA),Energy Charter Treaty(hereinafter referred to as ECT),2012 U.S.Model Bilateral Investment Treaty(hereinafter referred to as US 2012 BIT),and Comprehensive and Progressive Trans-Pacific Partnership(hereinafter referred to as CPTPP).Comparatively,the environmental clauses in the China's IIAs have not become a comprehensive system yet,which leads to problems like environment contamination during the process of boosting foreign investment.Taking due consideration of China's s current situation,this thesis,based on research of environmental clauses in treaties and relevant arbitration cases,aims at establishing a legal framework of environmental clauses which is suitable for China.This thesis comprise of three parts,the instruction,main part,and the closure.The main part consists of three chapters.The first chapter starts with a statistical analysis of environmental clauses in IIAs,providing a basic structure for the following analysis.The first section of thechapter indicates the main contribution and drawbacks of environmental clauses in NAFTA.The main contribution of NAFTA includes the first inclusion of environmental clauses in an investment instrument,the establishment of third-party participation,and the significance function of NAAEC.The drawbacks include lack of general environmental exception,and failure in compromising the relationship with other multilateral environmental treaties.Given the fact that most of NAFTA's environmental language was cited repeatedly in the following treaties,the repeated ones in other treaties will not be analyzed again in the following parts.Section two to section four are the analysis of ECT,2012 US Model BIT and CPTPP,laying special emphasis on the overall development of environmental clauses.ECT was the first energy-related treaty with environmental clauses,and it emphasize the energy sovereignty enjoyed by contracting states 2012 US Model BIT paid special attention to escalating arbitration transparency and reasserted the regulatory power of states.CPTPP has achieved reform of environment-related investment disputes resolution mechanism and make a clear definition of “environment law”.This chapter draws an outline of environmental clauses from four different IIAs of distinguished period,and the overall trend of environmental clauses includes the increased in the proportion of environmental clauses in IIAs,the clarification of environmental rights and obligations,general exceptions and increase in transparency.The second chapter illustrates the unbalance situation exists between investment and environment protection in international arbitration from four aspects.The first section points out the phenomenon in which host states were frequently sued by investors in recent years which might lead to major compromise of host states in environment protection.The second one is the conflicts between environmental clauses and expropriation clauses,which are reflected from the facts that the tribunal tends to consider environmental measure as expropriation,and weather regulatory expropriation is compensable remain unsure.This section analyze cases where environmental measures were supported or otherwise.When it comes to the question whether regulatory measures are compensable,the arbitral tribunal tends to consider four elements,including whether the state is exercising its police power,the degreethe interference,the nature and characters of the action.The third part is about the conflicts between environmental clauses and fair and equitable treatments,the main embodiment of which are ambiguity in interpretation and uncertainty in influence.The third chapter is based on the current situation of China,analyzing the current status and drawbacks of environmental clauses signed by China.We can tell from the environmental clauses signed by China that we have at least 4 problems,including being severe inexperienced,lack in uniform standards and vague in procedural rules.Aiming at solving the above-mentioned problem,the third section brings up with suggestions from procedural and substantive aspects.Procedurally,China should clarify rights and obligations enjoyed by host states and investors,establish standards of indirect expropriation,fix the relation between FET and environmental measures,set general exception rules and fix the relationship with international environment treaties.Procedurally,we should limit the sphere of arbitration,establish counter-claims system and increase transparency of arbitration.Only from these aspects can China finally strike the balance between investment protection and environment protection.The closure is the summary of the thesis.