Climate Change and Investor-State Dispute Settlement – Environment

Companies often view climate change litigation in the same way as other legal matters.
risk. It is also a chance if taken in the right direction.
right forum for companies exposed to certainclimate-related
To protect their rights, the government has taken measures. The past decade has been
Increasing usage of such a forum has been observed: Investor-State Dispute
Settlement (“ISDS”) Individuals and
One State can have multiple entities.
ClaimsDirectFor another state
Illegal government interference with foreign investment
Long before the two States entered into a bilateral arrangement,
multilateral treatyand more than 3,000 of these exist
These claims can be made under treaties. Most ISDS cases are.
The Convention on Settlement of International
ICSID Convention – Investment Disputes

Many investment treaties were in place before climate change.
These treaties were at the forefront public consciousness, and may still be
In conflict with measures taken by States to satisfy their new requirements
International obligations related to climate change In recent years, there have been several international obligations related to climate change.
Over the years, investors have begun to challenge the States’ authority.
Climate-related actions before ISDS Tribunals Indeed,
ToOne trackerAt the moment, there are at least 13
Investors are bringing up climate change-related disputes
Against States

These include claims for compensation after the accident.
Introduction of climate-related measures decreasing the value
investments. Two separate cases were filed in 2021.
RWE and Uniper both filed claims against the Netherlands
Under the Energy Charter Treaty, the government is accused of stealing the
Planned phase-out of coal power stations by 2030 was a violation
The treaty. Investors also sued States for amending the treaty or rolling it.
Climate-related measures should be supported, especially in the event of changes to
European governments introduced incentive programs to encourage
Renewable energy investment InThe PV Investors
SpainFor example, investors filed suit against the company.
The Spanish government claims that a series reforms were implemented to improve the quality of life.
An earlier energy regime that included a 7% tax for power generators
Revenues and a reduction of subsidies for renewable energy
The Energy Charter Treaty was violated by producers. The tribunal ruled
In favor of the investors, we award them approximately $100 million
in damages.

There have been many ISDS claims resulting from.
Environmental permitting decisions. For example, Canadians will be allowed to vote on environmental permits in 2021.
TC Energy initiated a legacy case against the United States under
The North American Free Trade Agreement (“NAFTA”) is a means of achieving this goal.
$15 billion in damages resulting from the U.S. government’s decision
To revoke the company’s permit to use the Keystone XL
pipeline.

Foreign investors are not allowed to invest under the ISDS regime.
Limit the ability of States to engage in proportionate and
Regulation is necessary to protect the environment. Modern
Investment treaties protect a State’s rights to engage.
in legitimate environmental regulation. Chapter 14 of this chapter is an example.
The United StatesMexicoCanada Agreement (or USMCA)
It replaced NAFTA and provides that “[n]This Chapter contains nothing
It shall not be construed as preventing a Party adopting, maintaining, or resolving to dispute the matter.
This Chapter is applicable to any other measure.
It deems appropriate to ensure that investment activity is in
Its territory is managed in an environmentally sensitive manner.
“Health, safety, and other regulatory objectives.” Moreover,
Even older treaties may contain no carve outs.
Environmental protection has been interpreted to mean “recognize”
Legitimate environmental measures

However, unreasonable government measures are not allowed.
Validity may be triggered by discriminatory, arbitrary, or disproportionate conduct
Treaty claims. ISDS tribunals will continue to be (and remain) independent from treaty claims.
be) charged with balancing foreign interests
Investors and host States

ISDS is likely to become an increasingly important avenue.
to resolve climate change disputes. Companies
Industries most affected states’ climate change obligations
(e.g., fossil fuels, mining, etc.) Audit their corporate accounts.
You can structure it and make changes if necessary to ensure that they are protected.
An investment treaty. Such restructuring should be done before
Any climate-related dispute has or is arising with the State
Reasonably foreseeable. Some treaties are superior, however.
There are many types of investor protections. It is important to evaluate.
Which treaty would best protect the company in case of adverse events?
Climate-related government actions

This article is intended as a general overview.
guide to the subject matter Expert advice should be sought
Learn more about your particular circumstances.