| Abstract [eng] |
Climate change is a critical and urgent global challenge with the potential to disrupt traditional domains of international law, including international investment law. International investment protection agreements provide legal safeguards for all forms of foreign investment, including those that, over time, may need to be banned in order to stay within the 2°C global warming limit set by the Paris Agreement. Most investment treaties grant investors access to investor-state dispute settlement (ISDS) mechanisms. In doing so, international arbitration tribunals play a key role in interpreting investment treaties, which are often drafted in broad terms and leave considerable space for interpretation. In this work the fair and equitable treatment (FET) has been chosen as the main focus due to its wide applicability in both investment treaties and arbitral jurisprudence, making it a key factor in the assessment of state regulatory actions. States face uncertainty because they cannot predict which actions might be interpreted as a violation of the FET. This tension becomes particularly evident in climate – related disputes, where states may be required to tighten environmental regulations in pursuit of climate objectives – measures that could be perceived by investors as conflicting with their legitimate expectations and the principle of regulatory stability under FET. Such interpretations may hinder the global climate agenda, as governments might refrain from adopting ambitious environmental or climate policies out of fear of legal disputes. The thesis explores the significance of the FET in investment protection and its evolution within international investment law. It argues that the interpretation of legitimate expectations under FET creates significant challenges in balancing states’ regulatory powers and investor protection in decarbonization-related disputes. The analysis includes the hypothesis of regulatory chill and highlights the need to establish a clearer standard in arbitral practice – one that balances investor protection with the sovereign right of states to regulate in the public interest. It is especially important that arbitral tribunals take into account current climate change objectives and related international commitments undertaken by states. New legislative solutions are required, particularly the modification of investment treaties to introduce clearer boundaries for state regulatory freedom, including recognition of climate priorities. Harmonized treaty interpretation and the systemic integration of various fields of international law could help bridge the gap between investment law and environmental protection. |
