Investor-State Dispute Settlement and the Future of the Precautionary Principle

The proliferation of bilateral investment treaties and investment chapters in trade megatreaties and the associated increase in the preference of investors for investor-state dispute settlement has given rise to concerns that the regulatory sovereignty of both developed and developing states might be compromised. In response to these concerns many trade agreements (including the recently concluded Comprehensive Economic Trade Agreement between the European Union (EU) and Canada) have incorporated provisions designed to protect the regulatory sovereignty of nation states, especially in relation to labour standards, public health, phytosanitary and environmental protection. This paper examines the nature and scope of environmental protection measures in investment chapters and attempts to analyse the extent to which these measures will, in practice, prevent challenges by investors seeking to chill or prevent environmental regulations which might threaten their investments. The analysis concentrates particularly on measures based on the precautionary principle and uses the current EU restrictions on neonicotinoid pesticides as a case study. The paper concludes that the measures included in investment chapters designed to prevent such challenges by investors will not necessarily achieve the desired level of protection for environmental regulatory sovereignty.