international investment agreements – balancing sustainable development and investment protection...

International Investment Agreements

–

Balancing Sustainable Development

and Investment Protection

10–11 October 2013, Berlin

Treaty Interpretation

Katharina BernerHumboldt-Universität zu Berlin

Introduction

• Is it possible to reconcile sustainable development

concerns and investment protection by using the Vienna

rules on interpretation?

• Do arbitral tribunals actually use the Vienna rules‘

potential to reconcile sustainable development concerns

and investment protection?

Introduction

How the Vienna rules operate

• the object & purpose

• Article 31(1) VCLT: A treaty shall be interpreted in good faith in

accordance with the ordinary meaning to be given to the terms of

the treaty in their context and in the light of its object and

purpose.



• one-dimensional object & purpose of IIAs?

• Lemire v Ukraine

• ‘…”promote greater economic cooperation” between the Parties. … And

the purpose of Article II.6 is trade-related: to avoid that States impose

local content requirements as a protection of local industries against

competing imports. When in 2006 Ukraine amended the Law …, the

underlying reasons were not to protect local industries and restrict

imports, but rather to promote Ukraine’s cultural inheritance, a purpose

which is compatible with … the BIT.’



• the context:

• Article 31(1) VCLT: A treaty shall be interpreted in good faith in

accordance with the ordinary meaning to be given to the terms

of the treaty in their context and in the light of its object and

purpose.

• Article 31(3)(c) VCLT: There shall be taken into account, together

with the context … any relevant rules of international law

applicable in the relations between the parties.



• potentially relevant ‘other rules’:

• Convention on Long-range Transboundary Air Pollution

• Convention for the Protection of the Ozone Layer

• Convention on Biological Diversity

• Convention on the Protection of the Underwater Cultural Heritage

• Convention for the Safeguarding of Intangible Cultural Heritage

• Convention concerning the Protection of the World Cultural and

Natural Heritage

• …


Arbitral jurisprudence

• outcome of arbitral awards

• no inherent bias towards investment protection

• ‘all or nothing’ approach predominating

• ‘balanced’ approach the exception

Review of arbitral jurisprudence


• the ‘single combined operation’

• no hierarchy within Article 31 VCLT

• all relevant means must be applied

• example 1: Biwater Gauff (Tanzania) Ltd v Tanzania



• example 2: Unglaube and Unglaube v Costa Rica

• ‘Expropriatory environmental measures – no matter how laudable

and beneficial to society as a whole – are … similar to any other

expropriatory measures that a state may take in order to implement

its policies…’

• example 3: Methanex v United States

• ‘As a matter of general international law, a non-discriminatory

regulation for a public purpose, which is enacted in accordance with

due process and which affects, inter alios, a foreign investor or

investment is not deemed expropriatory and compensable…’



• Article 1110 NAFTA : Expropriation and Compensation

1. No Party may directly or indirectly nationalize or expropriate an

investment of an investor of another Party in its territory or take a

measure tantamount to nationalization or expropriation of such an

investment ("expropriation"), except:

(a) for a public purpose;

(b) on a non-discriminatory basis;

(c) in accordance with due process of law and Article 1105(1); and (d)

on payment of compensation in accordance with paras 2 – 6.


• inadequate consideration of contextual arguments

• example: Chemtura v Canada

• 1998 Protocol on Persistent Organic Pollutants; 1979 Convention on

Long-range Transboundary Air Pollution; 2001 Convention on

Persistent Organic Pollutants

• (+)


Conclusion

• Investor-state arbitration is not inherently biased towards

investment protection or sustainable development concerns.

• The Vienna rules have the potential to reconcile investment

protection and sustainable development concerns.

• Arbitral tribunals do not use this potential, see esp.

• interpretation not approached as single combined operation

• inadequate consideration of contextual arguments

Critical appraisal

international investment agreements – balancing sustainable development and investment protection...

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