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Investment Treaty Reform when Regulatory Chill Causes Global Warming

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  • Henrik Horn

Abstract

State-to-state investment protection treaties, and the Energy Charter Treaty in particular, are alleged to dissuade host countries from regulating foreign-owned investment with adverse climate impact. This paper examines implications of treaty reforms that have been proposed as remedies for such regulatory chill. It finds that an increased carve-out, and reduced compensation in case of regulation, can address the stranded investment problem, but might not be accepted by both parties to the agreement. Disallowing investor-state dispute settlement (ISDS) solves the chill less effectively, but is more acceptable to both parties. Shortening of a sunset period applicable to unilateral withdrawal will tend to worsen the problem

Suggested Citation

  • Henrik Horn, 2023. "Investment Treaty Reform when Regulatory Chill Causes Global Warming," RSCAS Working Papers 2023/12, European University Institute.
    • Handle: RePEc:rsc:rsceui:2023/12
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    as
    1. Guttorm Schjelderup & Frank Stähler, 2021. "Investor‐state dispute settlement and multinational firm behavior," Review of International Economics, Wiley Blackwell, vol. 29(4), pages 1013-1024, September.
    2. Kohler, Wilhelm & Stähler, Frank, 2019. "The economics of investor protection: ISDS versus national treatment," Journal of International Economics, Elsevier, vol. 121(C).
    3. Eckhard Janeba, 2019. "Regulatory chill and the effect of investor state dispute settlements," Review of International Economics, Wiley Blackwell, vol. 27(4), pages 1172-1198, September.
    4. Aisbett Emma & Karp Larry & McAusland Carol, 2010. "Compensation for Indirect Expropriation in International Investment Agreements: Implications of National Treatment and Rights to Invest," Journal of Globalization and Development, De Gruyter, vol. 1(2), pages 1-35, December.
    5. Horn, Henrik & Tangerås, Thomas, 2021. "Economics of international investment agreements," Journal of International Economics, Elsevier, vol. 131(C).
    6. Dolzer, Rudolf & Schreuer, Christoph, 2012. "Principles of International Investment Law," OUP Catalogue, Oxford University Press, edition 2, number 9780199651801, Decembrie.
    7. Joachim Pohl & Kekeletso Mashigo & Alexis Nohen, 2012. "Dispute Settlement Provisions in International Investment Agreements: A Large Sample Survey," OECD Working Papers on International Investment 2012/2, OECD Publishing.
    8. Ralph Ossa & Robert W. Staiger & Alan O. Sykes, 2020. "Disputes in International Investment and Trade," NBER Working Papers 27012, National Bureau of Economic Research, Inc.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Financial support from Torsten Söderberg Foundation is gratefully acknowledged;

    JEL classification:

    • F21 - International Economics - - International Factor Movements and International Business - - - International Investment; Long-Term Capital Movements
    • F23 - International Economics - - International Factor Movements and International Business - - - Multinational Firms; International Business
    • F53 - International Economics - - International Relations, National Security, and International Political Economy - - - International Agreements and Observance; International Organizations
    • K33 - Law and Economics - - Other Substantive Areas of Law - - - International Law

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