Analyzing The Role Of International Investment Arbitration In Environmental Justice: A Legal Perspective

Shatakshi Singh, LL.M (Constitutional & Administrative Law), ICFAI Law School, The ICFAI University, Dehradun

Dr. Ashish Kumar Singhal, Associate Professor, ICFAI Law School, The ICFAI University, Dehradun

ABSTRACT

International investment arbitration tribunals, established under institutions like ICSID and ad hoc arrangements, provide a platform for foreign investors protected by Investment Treaties (IIAs) to pursue claims against host states. However, the Investor-State Dispute Settlement (ISDS) mechanism faces criticism for its legitimacy due to concerns about pro-investor bias, limited appeal options, lack of transparency, and, most significantly, its disregard for obligations under international environmental law. These arbitral proceedings often clash with established principles of international environmental law, such as state sovereignty, the precautionary principle, transparency, public participation, and the pursuit of sustainable development. This paper argues that the emphasis on awarding compensation in investment arbitration undermines environmental justice by potentially protecting unsustainable development projects, penalizing host countries for enacting environmental regulations, exacerbating inequities between generations and within societies, hindering the regulatory space of developing nations, and neglecting the environmental responsibility of investors themselves.

Keywords: International Investment Arbitration, Investor-State Dispute Settlement (ISDS), Environmental Justice, International Environmental Law, Sustainable Development.