Addressing the Clash of Interests Between Investment Treaty Law and International Climate Change Law

AutorDiego Piedra Trejos
CargoCosta Rican attorney. He holds an LL.M. degree in Public International Law from the London School of Economics and Political Science
X Edición, I semestre 2020
Addressing the Clash of Interests Between In-
vestment Treaty Law and International Climate
Change Law
Diego Piedra Trejos*
El derecho internacional de inversión ha sido ampliamente criticado por priorizar intereses económicos y colocar
al poder regulatorio en segundo plano. Estas críticas incrementarán con la intensificación de los efectos de la crisis climática
donde los Estados necesitan modificar y emitir nuevas regulaciones para cumplir con el derecho internacional de cambio
climático. Esta situación tenderá a cambiar la situación de muchas industrias de alta emisión de carbono y, por ende, nuevos
casos de arbitraje de inversión. En este contexto, el presente artículo cuestiona cuáles serían algunos de los choques de intereses
entre el derecho de inversión y el de cambio climático. El artículo compara los fundamentos de ambos regímenes de derecho
internacional para examinar cuáles choques de intereses pueden debilitar el desarrollo sostenible.
Palabras claves:
cambio climático, derecho de inversión, derecho internacional, arbitraje internacional, tratados de
inversión, desarrollo sostenible.
Investment treaty law is criticised for having a bias in favour of economic interests where the regulatory power
occupies a second place. Critics will increase with the climate crisis on the rise as States need to amend or issue new regulations
to comply with international climate change obligations. This situation is likely to trigger changes in some carbon-intensive
foreign investments and, therefore, new cases of investment arbitration. With these points in mind, the present article questions
what kind of clash occurs between investment treaty law and climate change law. The article compares the rationales of both
regimes of international law to examine what are the causes that can undermine sustainable development.
Key words:
climate change, investment law, international law, international arbitration, investment treaties, sustainable
* Diego Piedra Trejos is a Costa Rican attorney. He holds an LL.M. degree in Public International Law from the London School
of Economics and Political Science. Contact information:
Fecha de postulación del artículo: 9 de septiembre de 2019. Fecha de aprobación del artículo: 1 de marzo de 2020
X Edición, I semestre 2020
1-) Introduction
The interaction between Investment Treaty Law
(ITL) and International Climate Change Law
(ICCL) is a matter of current concern in the inter-
national scholarship. Despite the early stage of cli-
mate change related disputes in Investor-State Dis-
pute Settlement (ISDS), the debate originates be-
cause both regimes of Public International Law
(PIL) represent different international obligations
for the State with a potential clash between them.
On the one hand, ICCL fosters a shift of the global
economy and challenges carbon-intensive indus-
tries. On the other hand, ITL emerged to protect the
economic stability of many of those industries (e.g.
fossil fuels and coal) from developed countries op-
erating in developing countries.
Climate change is changing law, regulation and
economics as its effects become more tangible and
significant. In this regard, climate change is on the
two sides of the same coin of international invest-
ment law. On one side, climate change provides in-
vestors with an opportunity for growth. The ur-
gency of response and the obligations that States
have acquired under ICCL indicate a favourable
scenario for promoting low-carbon investments.
As one of the global leaders on climate change,
Christiana Figueres, argues:
Fiona Harvey, ‘Businesses will act on c limate despite
Trump, says ex-UN climate chief’ The Guardian (London, 1
“Investors are seeing a tipping point in terms of cli-
mate change and more investors are now taking the
risks into account when allocating funds (…) The
growing interest of investors in low-carbon activity
will (…) determine the global response to climate
change much more than the actions.”
On the other side, it is common to hear that climate
change matters more than anything else and thus
States will drastically take measures to control
GHG emissions and to adapt to climate change.
This will generate negative impacts on different in-
dustries. For example, Joshua Busby states:
there are myriad potentially contentious poli-
cies governments might enact in response to
changing climate conditions. Banning exports of
newly scarce resources, acquiring land overseas,
mandating the use of biofuels, enacting rules to
conserve forests, and a thousand other choices will
all create winners and losers and inflame domestic
and international tensions. As fears grow of runa-
way climate change, governments will be increas-
ingly tempted to take drastic unilateral steps such
June, 2018) <
trump-says-ex-un-climate-chief> accessed 1 August 2018.

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