The authors of this chapter of the book, Anne Van Aaken and Tobias A. Lehmann have elaborated on the equation of International Investment Law (IIL) with Sustainable Development from a viewpoint of economics. The chapter starts by giving a conceptual understanding of IIL and sustainable development to build a base for new readers.

Then the authors capture the link between International Investment Agreements (IIAs), Foreign Direct Investment (FDI), Sustainable Development and economic growth by incorporating the growth and welfare indices Gross Domestic Product (GDP) and Human Development Index (HDI). Further, a high end is taken by introducing the Political Economy Model into IIAs and finally elaborated on how Tribunals interpret IIAs. The chapter concludes by highlighting the slow process of integration of the sustainable development clauses in IIAs and how the conflicts should be set aside to find a suitable balance.

The existing global investment mechanism that is widely used strives on IIAs. It plays an important role not only in globalising the products but also brings with it economic development at both domestic and international platforms. IIAs include Bilateral Investment Treaty (BITs), Free Trade Agreements (FTAs), Preferential Trade and Investment Agreements (PTIAs), etc. In this chapter, the authors have divided the topic into small components and have written every component from the classical and empirical viewpoints.

Such division and simplification of the topics have definitely helped in understanding the subject matter more intrinsically. But what was missing in this chapter was the author's own analysis. By this I mean, the analysis presented was very brief and not at all elaborative leaving a mark on the readers of no or very little original train of thought by the authors.

There are many instances in the chapter where the authors seem to contradict their statements, for example, in one paragraph the authors write that the "FDI is insufficient for economic development." And in the next paragraph, the authors are seen complimenting FDI as it leads to economic growth. The contradiction continues where in one place the authors mention how IIAs help investors to grow but yet in another paragraph, they mention how IIAs bring a crowding-out effect in the economy.

While explaining "The Possible impact of IIAs on Host State Institutions." they write that international law enables the national investors to put pressure on their government to improve domestic investment governance. But it fails to undertake the negative aspect of this pressure on the developing domestic countries' investment regime. Corruption and false propaganda by the politician could make a false bubble of investment profits that if it bursts shall affect the entire international markets.

Hence, the Political Economy Model approach could make it seem that it is working for the welfare, reforming the institutions and is a strong driver of the FDI-related policies but in reality, it could bring recession in several countries at once and at large. It only mentioned one model that could be a potential tool for sustainable development but missed out on other models like the Environment Economy Model.

The chapter has also failed to do in-depth research as there were very few examples given of the treaties. A good example of the classical treaty where no clauses related to sustainable development and an example of a contemporary treaty where such clauses are added should have been incorporated to make the readers analyse the difference between both and why such clauses are now very well needed. For example, The Morocco/Nigeria BIT 2016 is a treaty that provides for investor obligations in the context of sustainable development.[1] Article 14 requires investors to comply with environmental impact assessment processes and to conduct social impact assessments.[2]

Another example is the Netherlands Model BIT 2018 provides in Article 7(1), that investors and their investments have to comply with the domestic laws and regulations of the host State including those in the fields of human rights and environmental protection.[3] Sighting such examples could also make the paper more engaging for the readers.

The Chapter only mentions how incorporating a reference to sustainable development in the Preamble of the treaties or an order by the Tribunals can save the day. But what one is forgetting is that "the evolution of sustainable development has undergone several stages, mainly through various international organization resolutions, declarations, conventions and judicial decisions."[4]

Thus, to save the day, only Premable or Tribunals would not be enough. To foster sustainable development in investment protection treaties, the States could also incorporate sustainable development clauses in the Annexes; provide direct references to the UN Convention on Corruption in the preambles or provisions of bilateral investment treaties[5]; clarify that the investors will uphold corporate social responsibility and business and human rights responsibilities.[6]

Lastly, the authors mention that GDP and HDI are the tools for measuring economic growth and welfare respectively. However, both indices lack in measuring economic growth via sustainable development as both do not consider environmental factors. Hence, the best indicator of the environment via sustainable development shall be GREEN GDP. It is basically a monetary valuation of natural resources, allowing the cost of natural resource depletion and environmental degradation to be subtracted from GDP.[7] This concept should have been discussed in detail without hovering around GDP and HDI.

To conclude, the chapter emphasised the classical view that the IIAs were not framed for achieving sustainable development but to enhance investment and profound economic development. But now in this contemporary period, the nuance and objective of the IIAs have taken a slight turn towards sustainable goals by incorporating clauses that are an environmental and societal incentive.

Although this transformation is a slow process it is very much there. The chapter has perfectly captured this premise but has failed in providing more extensive views like providing how sustainable development can be achieved via the IIAs; elaborating on the roles of Domestic Tribunals, International Tribunals, respective Governments and Contracting parties; how the clauses should be framed; different approaches that can be undertaken. This chapter provides a basic outline or an introduction to the readers about the different terms. After reading this chapter, a reader has to rigorously delve into the wearying subject matters of this topic for opulent knowledge.

End-Notes:

1. Urusua Kriebaum, ‘International Investment Law and Sustainable Development’(2022).
2. Ibid.
3. Ibid.
4. Barral, V., ‘Sustainable Development in International Law: Nature and Operation of an Evolutive Legal Norm’ (2012) 23 European Journal of International Law 377.
5. Agreement between the Government of Canada and the Government of Burkina Faso on the Promotion and Protection of Investments (2015).
6. Bilateral Investment Treaty (BIT) between the Government of Canada and the Government of Mongolia on Investment Provisions (2016).
7. Stefan Schweinfest, Alessandra Alfieri, Jessica Ying Chan, Bram Edens, ‘The Rise, Fall, Rethinking of Green GDP’ (System of Environmental Economic Accounting) https://seea.un.org/news/rise-fall-and-rethinking-green-gdp accessed 20 April 2023.

Written By: Anne Van Aaken and Tobias A. Lehmann.