The Invocation of the Precautionary Principle within the Investor–State Dispute Settlement Mechanism: Not Seizing the Occasion

Abstract

The principal purpose of this article is to demonstrate how the precautionary principle can be included in the investor–state dispute settlement (ISDS) deliberative process by providing a legal solution that would permit the invocation and implementation of this concept within the ISDS operational framework. The precautionary principle has been widely applied in the environmental management field, yet its role within the ISDS framework has remained relatively underutilised. To analyse this issue, this paper first explores the operational justification of the precautionary principle and how decision-makers should endorse it in order to fully recognise and address environmental concerns on a legal level. Next, the article proceeds to examine recent ISDS cases in which the precautionary principle was invoked and compares various risk assessment techniques to illustrate how it may be incorporated into the deliberative process and harmonised with other standards. The paper suggests that the forward-looking nature of the precautionary principle has paramount importance in disputes involving oil and gas, particularly in cases where oil and gas activities are believed to contribute to greenhouse gas emissions that could worsen global warming. This paper advances the argument that a wider application of the principle could better equip ISDS tribunals to address the limitations of scientific knowledge, especially under circumstances where significant or irreversible environmental damage may occur.

Keywords

• the precautionary principle
• investor–state dispute settlement
• investment arbitration
• oil and gas disputes
• climate crisis
• proportionality test