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Abstract
Thousands of international investment and trade agreements contain provisions protecting investments made by parties from the signatory states. One such provision is Investor-State Dispute Settlement (ISDS), a mechanism allowing foreign investors to sue host states in arbitration for treaty violations. Fossil fuel investors are increasingly utilizing ISDS successfully to hold states liable for climate action; arbitral tribunals are awarding large compensations to these investors when states deny them permits for upstream activities or enact phase-out policies attempting to ban fossil fuel consumption. These awards impose heavy burdens on states while simultaneously deterring climate action by creating fears of liability. This Comment proposes that states could invoke the security exception, a common clause in these international agreements that allows a state to violate its treaty obligations to protect its essential security interests, to defend action targeting fossil fuel assets for the purpose of mitigating climate change. Historically, tribunals have accepted a broad slate of interests, from economic to environmental, as within the purview of the security exception, and they have afforded wide discretion to invoking states in defining their security interests for themselves. Climate change poses a significant security threat to the socioeconomic and political stability of countries. Invoking the security exception to defend climate action would be a novel and potentially effective defense that could help states win such disputes, advancing global efforts to achieve the Paris Agreement climate goals.
Recommended Citation
Kapasi, Nabil
()
"Climate Change as a Security Interest: A Novel Defense in Fossil Fuel Investment Arbitration,"
Chicago Journal of International Law:
Vol. 26:
No.
2, Article 5.
Available at:
https://chicagounbound.uchicago.edu/cjil/vol26/iss2/5