Workshop on International Law, Natural Resources and Sustainable
Development
Freezing Sustainable Development: A Critical Look at the Use of Investment Treaties to
Protect “Specific Commitments” in the Use and Management of Natural Resources
Lise Johnson
Vale Columbia Centre for Sustainable International Investment, Columbia University,
New York
A new rule has emerged in international investment law that emphasizes and prioritizes
stability, imposing liability on host governments for a wide range of public interest measures
deemed to interfere with “commitments” given to foreign investors by host governments
through contracts, permits, and legislation. The arbitral decisions from which this new rule
has emanated frequently involve contracts or permits relating to use of natural resources,
and have the effect of altering, and ratcheting up, the legal force and immutability of the
“commitments” made in those instruments. This development, in turn, has important
implications for States’ regulatory flexibility as new laws or regulations, or new
interpretations of existing laws or regulations, which impact the operation of contracts with
or permits issued to foreign investors, may give rise to liability under investment treaties.
Yet as this paper describes, the primacy given in arbitral decisions to the goal of ensuring
“stability” through strong protection of contractual or quasi-contractual “commitments” in
natural resource and other contracts and agreements subjects respondent governments to
a much broader standard of liability than the more cautious and deferential stance toward
policy making and implementation that has been adopted and refined over time by a
number of developed countries through their domestic legal frameworks. In contrast to
practice under those developed country jurisdictions, international tribunals’ approaches in
treaty-based investor-state arbitrations largely shift the risk of regulatory change from
investors to states (and taxpayers), potentially putting greater pressure on governments to
refrain from taking action to harness and use their natural resources for long-term
sustainable development. The findings of this comparative law analysis raise critical
questions about the principles and justifications underlying this new rule of stability
pronounced by investment tribunals, the potential disparate impacts on developing and
developed country governments, and the legitimacy and desirability of this new rule’s
continued application.