On The Identification Of Indirect Expropriation Caused By Environmental Measures

As every country is increasingly paying attention to the environmental issues,conflicts between investors and host countries due to environmental measures are arising.An investment in a foreign country must involve two types of legal rules: the host country’s domestic laws,regulations,policies and multilateral or bilateral investment agreements.Therefore,the problem of conflicts mainly manifests whether the domestic laws or measures of the host country violate the international investment agreements,and whether the host country’s environmental measures have led to the indirect expropriation.The concept of indirect expropriation has been developing continuously in investment agreements.But a clear and accurate judging standard has not been obtained up to now.There are still many deficiencies in the combination with environmental measures.The phenomenon that the protection of international investment is far more than the protection of the environment has not changed radically in the practice of investment arbitration.Investors are still in obvious favorable position in arbitration,which results much difficulties in environmental measures of host countries.China is faced with the dual demand of expanding investment in foreign countries and improve its environment.It is of practical significance to find and solve the problems in these two aspects of China,and also the motive of this paper.This paper consists of five parts in addition to preface and conclusion:Chapter One is an introduction of the concepts of the indirect expropriation and the environmental measures.Firstly,this chapter describes the definition of indirect expropriation in different investment agreements,and key elements of judging indirect expropriation in arbitration.Then this chapter describes the development environmental measures in investment agreement and in tribunals’ awards.This chapter also preliminary summarizes the elements used to identify an environmental measure as an indirect expropriation.Chapter Two is analysis of the relationship between environmental measures and indirect expropriation.On the basis of introducing the situation of environmental protection in recent years,the contradiction between environmental measures and investment protection is interpreted,and the contradictions between host countries and investors.This chapter tries to provide basis for improvement suggestions.Chapter Three is case analysis.The elements through which environmental measures constitute indirect expropriation are found out in these specific cases.Chapter Four is the theory summary.Based on the above three chapters,it summarizes and analyzes the judgement basis of indirect expropriation,rises some suggestions used to identify the indirect expropriation more accurately,and finds out the possible improvement direction of the investment agreement.Chapter Five is a study based on the current situation in China.In the position of the host country and investors,this chapter analyzes the risk of indirect expropriation that may exist in China’s domestic environmental measures,and separately provide some preventive measures.