Rethinking investment treaties and dispute settlement in the light of sustainable development
International investment treaties are a key part of the legal architecture that underpins the global economy. IIED works with partners to realign these legal documents with sustainable development.
Principal researcher and head of law, economies and justice programme, Natural Resources research group
Growing concerns that the pressures that human activities place on the world’s ecosystems may be reaching a tipping point have prompted important advances in international environmental diplomacy, including the Paris Agreement.
The Sustainable Development Goals (SDGs) have charted a new bold sustainable development agenda that encompasses the major social, economic and environmental challenges the world faces. Translating these advances into real change requires aligning sustainable development with the legal architecture of global economic governance.
The 2015 plan of action underpinning the SDGs recognises the role of private investment in strategies to realise the goals. This raises questions about designing international legal frameworks that can promote the right types of investments in response to local development agendas, and ensure that business activity is aligned with the SDGs and contributes to achieving them.
At the same time, a growing number of investment disputes has shown how tensions can arise between commercial and sustainable development objectives, with action to promote public health, protect the environment or advance indigenous peoples’ rights having led to investor lawsuits.
Also, growing evidence suggests that, on several occasions, the prospect or threat of suits has discouraged authorities from acting in the first place.
In other words, global economic governance shapes room for states to take action, it influences the ways in which the costs of reorienting unsustainable development patterns are shared between businesses and states and, ultimately, it affects the balance of public and commercial interests in global society.
A rapidly evolving international policy context has created openings for reform of the international investment regime. Many states have been reviewing their investment treaty policies.
At the multilateral level, United Nations member states gathered in the Working Group on ISDS Reform of the United Nations Commission on International Trade Law (UNCITRAL) are exploring options to reform the investor-state dispute settlement system associated with international investment treaties.
Meanwhile, the United Nations Conference on Trade and Development (UNCTAD)’s International Investment Agreements Reform Forum and the OECD's longstanding work on investment law reform have established and consolidated important forums for multilateral reform debates.
What is IIED doing?
We support global efforts to reform the international investment regime by contributing technical analysis to ongoing reform processes, and promoting informed public debate about policy reform issues.
Contributions to the UNCITRAL reform process
- In November 2021, IIED, the Columbia Center on Sustainable Investment (CCSI) and the International Institute for Sustainable Development (IISD) made a submission commenting on the assessment of damages and compensation.
- In July 2021, IIED, CCSI and IISD made a submission commenting on the reform process of third-party funding.
- In March 2021, IIED, CCSI and IISD made a submission to provide comments on the UNCITRAL working group’s draft work and resourcing plan (PDF). The submission outlines ways to increase inclusiveness of process and ensure developing countries’ issues are duly considered.
- In July 2019, IIED, CCSI and IISD contributed four technical submissions on issues relating to the deliberations of the UNCITRAL working group discussing reform of investor-state dispute settlement
- In March 2019, we worked with the South Centre on a policy briefing on the UNCITRAL working group could consider investor obligations in its reform agenda (PDF)
- In October 2018, IIED – with the Columbia Center on Sustainable Investment, and the International Institute for Sustainable Development – organised an open forum at UNCITRAL's Working Group III 36th session in Vienna, Austria. The event was designed to give interested members of the public (such as civil society organisations, academics and practitioners) and government officials an opportunity to present their views on the reform of investor-state arbitration. A similar event was organised during the 35th session in New York the previous April.
News and updates
Fossil fuel companies rake in $80 billion of taxpayers’ money through shadowy investment tribunals
Press release, 23 November 2023
ICJ should address legal contradictions holding back action on climate change
Press release, 17 October 2023
We need to rethink investment treaties to ensure a rapid and just energy transition
Blog, 21 April 2021
Investor-state dispute settlements: a hidden handbrake on climate action
Publication, 23 November 2023
International Investment Law and Climate Change: reframing the ISDS reform agenda
Publication, 27 September 2023
Possible reform of Investor-State Dispute Settlement (ISDS): the assessment of damages and compensation
Publication, 01 December 2021
EU-China Comprehensive Agreement on Investment: an appraisal of its sustainable development section
Publication, 26 May 2021
Public Participation and Investment Treaties: towards a New Settlement?
Publication, 15 January 2021
Raising the cost of climate action? Investor-state dispute settlement and compensation for stranded fossil fuel assets
Publication, 01 October 2020
(Dis)integration in Global Resource Governance: Extractivism, Human Rights, and Investment Treaties
Publication, 01 August 2020
Labour rights in special economic zones: between unilateralism and transnational law diffusion, Lorenzo Cotula, Liliane Mouan (2021), Journal of International Economic Law article
Blog: Research-to-policy transitions in international economic law, Lorenzo Cotula, Afronomics Law (March 2021)
Rethinking investment law from the ground up: extractivism, human rights, and investment treaties, Lorenzo Cotula (2021), IISD
(Dis)integration in global resource governance: extractivism, human rights, and investment treaties, Lorenzo Cotula (2020), Journal of International Economic Law
Long read: Investment disputes from below: whose rights matter?, Lorenzo Cotula (2020)
Dataset: Examine the data on foreign owned coal plants (.xls file) used in the Raising the cost of climate action? Investor-state dispute settlement and compensation for stranded fossil fuel assets report
Land deals and investment treaties: visualising the interface, Lorenzo Cotula, Thierry Berger (2015), IIED Report
Land rights and investment treaties: exploring the interface, Lorenzo Cotula (2015), IIED Report
Bringing community perspectives to investor-state arbitration: the Pac Rim case (2015), Thierry Berger, Saúl Baños, Marcos A. Orellana, IIED Report | en Español
Expropriation Clauses and Environmental Regulation: Diffusion of Law in the Era of Investment Treaties, Lorenzo Cotula (2015), Wiley (journal article)
IIED submission to the EU public consultation on the Transatlantic Trade and Investment Partnership, Lorenzo Cotula and Thierry Berger (2014), IIED
Do investment treaties unduly constrain regulatory space?, Lorenzo Cotula (2014), Questions of International Law, QIL 9, 19-31
The New Enclosures? Polanyi, international investment law and the global land rush (2013), Journal article