Fabián Pozo, the Legal Secretary of the President of the Republic of Ecuador, opened the session with a welcome speech on the achievements of the new administration in its first 100 days in office. Mr Pozo noted that (i) Ecuador´s return to ICSID shows that the country is open to international arbitration and foreign investment and (ii) the recently enacted regulation to the arbitration law guarantees the autonomy of arbitration centers and favors arbitration with State entities.1

At the event, panellists stressed that disputes relating to environment and climate change, human rights, and outer space activities are not incapable of being resolved by arbitration. There have already been investment arbitration cases dealing with these issues and it is very likely that these types of cases will soon increase, especially in light of the many advantages of arbitration, such as flexibility and confidentiality and suitability for large scale complex disputes.

Arbitration, environment and climate change

Members of the panel: César Coronel Ortega (moderator) (Associate, Coronel & Pérez, Ecuador), Juan Camilo Pinto (Judicial Advisor, NAFTA, Canada), María José Alarcón (Associate, Cotney, Florida), Isabel San Martín (Associate, LALIVE, United Kingdom) and Martín Jiménez (Foreign Lawyer, Veru, Torres & Partners, United Kingdom).

Ms Alarcón opened the panel mentioning that almost 60% of investment arbitrations worldwide relate to construction or energy projects, therefore, environmental issues are key when such disputes. She explained that, historically, it has been claimed that arbitral tribunals failed to address the tension between optimal investment protection and environmental considerations but that environmental protection instruments, such as bilateral and multilateral treaties, are now rapidly coming centre stage as tools to urgently fight climate change and protect the environment. For instance, bilateral investment treaties (BIT) between Singapore-Indonesia, Morocco-Nigeria, and Canada-Romania contain provisions reaffirming that the States have a right to regulate environmental matters within their respective territories to achieve legitimate national objectives.2 Ms Alarcón opined that these clauses allow States to enact regulations to fight the negative impact that some industries have on the environment, without being held liable for the resulting environmental damages. Ms Alarcón concluded by saying that it will be interesting to see how arbitral tribunals will interpret these clauses in disputes relating to foreign investment and climate change.

Ms San Martín mentioned that, since 2018, Europe has initiated a process to modernize the Energy Charter Treaty (ECT),3 as this treaty has given rise to a growing number of investment arbitration cases initiated against European States, on the basis of the changes to their renewable energy regulations. She emphasized that it was important that States take advantage of this modernization process to implement provisions that favour environmental protection.

On climate change disputes, Ms San Martín referred to the 2019 ICC Report ‘Resolving Climate Change Related Disputes through Arbitration and ADR’, which provides a broad definition of climate change related disputes.4 She pointed out the significant number of arbitrations initiated against States due to their obligations derived from the Paris Agreement,5 which is a binding international treaty that does not contain enforcement mechanisms against the States and is thus a toothless treaty. Ms San Martín identified two types of disputes emerging from the Paris Agreement:

  • Arbitrations commenced by investors against States that have enacted regulations to mitigate climate change affecting their investments. For instance, in Westmoreland Coal Company v. Canada,6 a dispute arose out of the early closure of the investor´s coal mining operations. She also mentioned two ongoing arbitrations against the Netherlands and that it will be interesting to see what role the Paris Agreement plays in these disputes.7
  • Arbitrations commenced by investors against States that have failed to issue regulations to address climate change affecting their investments. For instance, the Peter A. Allard v. Barbados case,8 in which the investor sued Barbados under the Canada-Barbados BIT claiming that the State failed to comply with its environmental obligations, which in turn affected an eco-tourism project.

Mr Pinto said that arbitration is an effective mechanism to solve environmental disputes and that arbitrators should take an expansive approach when it comes to deciding investment cases. For instance, he explained that in September 2021, an ICSID Arbitral Tribunal ruled in Eco Oro Minerals Corp. v. Republic of Colombia that States may issue regulations to restrict extractive activities, as long as they are not arbitrary or discriminatory, in order to preserve ecosystems.9

Finally, Mr Pinto commented on recent initiatives such as the Campaign for Greener Arbitrations, founded by Lucy Greenwood with the objective of reducing the carbon footprint of the arbitration community by, for instance, replacing in-person hearings with online hearings, hard-copy with electronic bundles and avoiding unnecessary international flights. In early 2021, the Campaign for Greener Arbitrations launched its protocols aimed at raising awareness about practitioners, law firms, arbitral institutions, and legal service providers and promote ‘greener’ arbitrations.10

Arbitration of disputes of human rights and space law

Members of the panel: Carla Cepeda (moderator) (Associate, Carmigniani & Pérez, Ecuador), David Toscano (Founder, TADIR, Ecuador) and Nicolás Alarcón (Associate, Rodrigo, Elías & Medrano, Peru), Cristina Viteri (Partner, HEKA, Ecuador) and Marcelo García (Director, Intervistas, Canada).

During the first part of the session addressing human rights, Mr Toscano discussed human rights violations in investment arbitration cases, such as Biloune and Marine Drive Complex Ltd. v. Ghana,11 where an investor asked the tribunal to find Ghana liable for the expropriation of the claimant’s assets on the basis of an agreement between the claimant and the Ghana Investments Centre, denying the investor justice and committing human rights violations as the investor – a natural person – was subject to detention and deportation for reasons unrelated to the investment. The tribunal reasoned that it lacked jurisdiction to rule on the claims of human rights violations because the scope of arbitration agreement was too narrow. While the tribunal did not address the issue, this case addressed the possibility for parties to submit human rights disputes for resolution by arbitration in the context of investment protection.

Mr Alarcón mentioned two cases, Tecmed S.A. v. United States of America12 and Urbaser v. Argentina,13 in which arbitral tribunals found they had jurisdiction to take a decision on human rights violations. He further noted that tribunals have also held that compensation to the victims can be made in ways different than monetary damages. For instance, by filing amicus curiae briefs in major investment arbitration cases, such as MetLife Inc. v. Argentina,14 the Argentinian civil society played an important role in calling arbitral tribunals to question how human rights issues should not be ignored in the context of international investment law. Mr Alarcón noted that, in some cases, investors ask the arbitral tribunals to apply human rights principles when interpretating international treaties. In other cases, such as Urbaser v. Argentina, States have requested arbitral tribunals to declare that the investor violated certain obligations, including obligation related to human rights. He added that while States have a responsibility to honor the commitments they undertook under a contract or a BIT to protect investment, they also have a duty to guarantee that investors are complying with the principles of basic human rights according to the human rights treaties they are a party to.

During the second part of the session addressing space law and arbitration, the speakers discussed how the enactment of international instruments, such as the 1967 Outer Space Treaty15 or the NASA’s Artemis Accords,16 resulted in a demand for an effective dispute resolution mechanism to enforce liability of the many States and corporations conducting operations in outer space. Some human activities like exploration and exploitation of space minerals result in space debris or pollution, which becomes a concern for the international community to be determined by international law. The issue of how to deal with claims located outside a State's territory also has been addressed by tribunals in investment arbitration cases. For example, in Devas v. India,17 the tribunal held it had jurisdiction over expropriation claims with regard to telecommunication frequencies determining that not all investments require a physical presence in a State’s territory to be subject to protection.

In view of the increasing outer space activities, the panelists referred regulations such as the Optional Rules for Arbitration of Disputes Relating to Outer Space Activities (2011) issued by the Permanent Court of Arbitration,18 which offers a flexible framework for parties to appoint arbitrators who are knowledgeable on space law. Given the high complexity of space-related disputes, the speakers considered that it was necessary to rely on specific regulations or international treaties addressing the particularities of outer space disputes.


1
Ecuador´s Arbitration and Mediation Law was s enacted in 1997 and amended in 2015. However, the Executive Decree Nº 165 containing the regulations to the law were not issued until 18 Aug. 2021, See Andrés Larrea, 'The Wait is Over: Ecuador Enacts Regulations to its Arbitration and Mediation Law' (Kluwer Arbitration Blog, 1 Sept. 2021). See also A. Galindo, ‘Ecuador: The New Investment Protection Law: An Overview of Key Changes’, ICC Dispute Resolution Bulletin, issue 2018-4.

2
Indonesia-Singapore BIT (2018), entry into force on 9 March 2021; Morocco-Nigeria BIT (2016), Canada-Romania BIT (2009), available at https://investmentpolicy.unctad.org/.

3
See 'Commission presents EU proposal for modernising Energy Charter Treaty' (https://trade.ec.europa.eu/, 27 May 2020).

4
The ICC Commission and ADR Report is available at https://iccwbo.org/dispute-resolution-services/commission-on-arbitration-and-adr/. Paragraph 2.3 of the Report provides: ‘Such disputes may arise out of or in relation to: (i) contracts relating to the implementation of energy or other systems transition, mitigation or adaptation in line with the Paris Agreement commitments (for the avoidance of doubt, the Paris Agreement is between state parties and the commitments thereunder apply to state parties and not to non-state parties unless they have been incorporated into domestic regulation); (ii) contracts without any specific climate-related purpose or subject-matter but where a dispute involves or gives rise to a climate or related environmental issue; and (iii) submission or other specific agreements entered into to resolve existing climate change or related environmental disputes, potentially involving impacted groups or populations’.

5
https://unfccc.int/sites/default/files/english_paris_agreement.pdf

6
Westmoreland Coal Company v. Government of Canada, ICSID Case No. UNCT/20/3.

7
RWE AG and RWE Eemshaven Holding II BV v. Kingdom of the Netherlands, ICSID Case No. ARB/21/4, Pending. Uniper SE, Uniper Benelux Holding B.V. and Uniper Benelux N.V. v. Kingdom of the Netherlands, ICSID Case No. ARB/21/22, Pending. See also S. Putter, 'The Netherlands Coal Phase-Out and the Resulting (RWE and Uniper) ICSID Arbitrations' (Kluwer Arbitration Blog, 24 Aug. 2021).

8
Peter A. Allard v. The Government of Barbados, PCA Case No. 2012-06.

9
Eco Oro Minerals Corp. v. Republic of Colombia, ICSID Case No. ARB/16/41 (Decision on Jurisdiction, Liability and Directions on Quantum, 9 Sep. 2021).

10
https://www.greenerarbitrations.com/green-protocols/complete-set

11
Antoine Biloune and Marine Drive Complex Ltd. v. Ghana Investments Centre and the Government of Ghana (Award on Jurisdiction and Liability, 27 Oct 1989), Ad hoc Arbitration based on the 1976 UNCITRAL Arbitration Rules.

12
Técnicas Medioambientales Tecmed, S.A. v. The United Mexican States, ICSID Case No. ARB (AF)/00/2 (Award, 29 May 2003).

13
Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26 (Award, 8 Dec. 2016).

14
MetLife, Inc., MetLife Servicios S.A. and MetLife Seguros de Retiro S.A. v. Argentine Republic, ICSID Case No. ARB/17/17 (Amicus Curiae Submission, 30 Mar 2021, available at https://jusmundi.com/en/).

15
https://www.unoosa.org/oosa/en/ourwork/spacelaw/treaties/outerspacetreaty.html

16
https://www.nasa.gov/specials/artemis-accords/index.html

17
CC/Devas (Mauritius) Ltd., Devas Employees Mauritius Private Limited, and Telcom Devas Mauritius Limited v. Republic of India, PCA Case No. 2013-09 (Award on Jurisdiction and Merits, 25 Jul. 2016).

18
https://docs.pca-cpa.org/2016/01/Permanent-Court-of-Arbitration-Optional-Rules-for-Arbitration-of-Disputes-Relating-to-Outer-Space-Activities.pdf