Photo by Matthew Henry

About the Event:

The challenge of climate action and energy transition will entail a significant restructuring of economies and associated law and regulatory policy to achieve the global decarbonisation goals. The transformative environmental, social and economic policies necessary to achieve this green transition in a just and equitable manner will create tensions between countries’ climate pledges and policies and their obligations under international investment law.

This panel will feature presentations from two international investment law scholars investigating the impact of laws protecting foreign investment on national and international climate action and on the financing of global energy transition.

• Climate Action, Foreign Investment Protection and the Many Faces of De-Risking by Dr Anil Yilmaz-Vastardis, Essex Law School
• Environmental Clauses in Investment Arbitration and the Authority of Advisory Opinions on Climate Change by Dr Oliver Hailes, LSE Law School

See abstracts below.

About the Speakers:

Dr Anil Yilmaz Vastardis is Senior Lecturer at Essex Law School and Co-Director of the Essex Business and Human Rights Project. She is also Honorary Associate Professor at Warwick Law School based at the GLOBE Centre. She is a non-practising lawyer at the Istanbul Bar Association. Her main research interests are in the fields of international investment law and business and human rights. Her research bridges the gap between corporate law, international investment law, human rights law, and tort law. She is author of The Nationality of Corporate Investors under International Investment Law (2020).

Dr Oliver Hailes is Assistant Professor of Law at the LSE Law School with special interests in energy, investment, environment, and state and commercial arbitration. He has been Assistant General Editor of the ICSID Reports since 2018. Dr Hailes has previously clerked for an appellate judge, practised commercial litigation, volunteered for climate and trade NGOs, and held several research, teaching, and editorial roles.
 
Abstracts:

Climate Action, Foreign Investment Protection and the Many Faces of De-Risking by Dr Anil Yilmaz-Vastardis, Essex Law School

Tackling climate change and implementing a transition towards a low carbon economy requires major transformations of economies and societies with significant distributional impacts. This paper analyses the role played by laws protecting foreign investments, which shield investors from risks of loss in profits, in shaping such distributional impacts in the context of energy transition. It evaluates how certain legal interventions in international investment law (IIL) and corporate law function as de-risking devices alongside emerging climate finance deals that are guided by the principle of the de-risking state, to ultimately safeguard generous levels of profit as entitlements. The paper assesses two dimensions of climate action from the lenses of de-risking and of fair profits. On one hand, with oil and gas stranded assets estimated to cost over US$1 trillion to investors, a rise in investment disputes in this area is to be expected. The paper analyses how IIL’s approach to investor rights and valuation of damages in fossil fuel sectors shape distributional outcomes around climate action. On the other hand, there is an urgency to scale up financing and investments to reinvent energy and carbon emitting sectors and accelerate energy transition across the globe. The paper secondly analyses how the emerging financing models for green investments coupled with the legal protections offered to such investments by IIL play a role in shaping how losses and gains of the so called ‘green transition’ are allocated across society.

Environmental Clauses in Investment Arbitration and the Authority of Advisory Opinions on Climate Change by Dr Oliver Hailes, LSE Law School

Investment protection and the prevention of environmental harm are twin corollaries of territorial sovereignty. With the rise of investment treaty arbitration, however, some tribunals were seen to overprotect investment, leading many States to negotiate environmental clauses. This presentation introduces a typology of 10 clauses, ranging from the jurisdictional scope of treaties to express obligations on investors. To date, arbitral practice has mainly interpreted affirmations of the right to regulate, clarifications of indirect expropriation, and general exceptions adopted from trade law. It remains difficult to avoid the customary inquiry into whether an impugned measure was reasonable and not arbitrary; its adverse impact must not be manifestly excessive in relation to the purpose pursued. Yet, in the energy transition, several advisory opinions may ratchet the priority attached to the pursuit of climate mitigation, making it difficult for carbon-intensive investors to establish breach, regardless of whether the applicable treaty includes an environmental clause.

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