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Panel 5A: The Interrelationship between

Investment Arbitration, Indigenous Rights and Environmental Law

Séance 5A: La corrélation entre l’arbitrage sur les investissements, les droits des peuples autochtones, et le droit de l’environnement

November 19, 2014

Martin Valasek 
Norton Rose Fulbright

Konstantia Koutouki

Université de Montréal 


Annie Lespérance

Cabinet Yves Fortier


Miguel Eduardo Vargas Monroy

Université de Montréal 



Anna Jeffery 

2018 JD/MA Candidate





The first speaker, Konstantia Koutouki, gave an overview of investment arbitration and sustainable development. High quality and appropriate foreign investment is necessary for sustainable development, which integrates human rights, economic development, as well as environmental sustainability. External factors such as sovereign debt crises can cause a break in foreign currency projects, which impacts indigenous communities in particular. There has been a considerable increase in the number of investment treaties, the majority of which involve indigenous concerns since a lot of these investments take place on indigenous land. Investment arbitration will need to adapt to this reality and acknowledge the particular status of indigenous people in international and domestic laws. Issues arise when states are responsible for representing indigenous communities with whom there may be some tension domestically. Therefore, indigenous communities should be given special status so as to ensure that their interests are being represented effectively. The Nagoya Protocol to the Convention on Biological Diversity has begun to level the playing field in the area of access to genetic resources. It has done so by making prior and informed consent necessary, which gives indigenous communities the ability to stop companies from going onto their territory. This is a small step towards greater integration of these issues, although there continues to be a lot of room for improvement in terms of acknowledging indigenous and environmental concerns in investment arbitration. 


The second speaker, Annie Lespérance, discussed the role of arbitrators in striking a balance between the protection of investments and the environment. Recent investment arbitration awards have not fully integrated the concept of environmental protection, thus attracting criticism and putting the legitimacy of the investment arbitration system into question. These awards have come about because environmental issues only come up in an investment context - it is unlikely that both parties would readily agree to characterize the dispute as solely environmental. Arbitrators thus intrinsically create a hierarchy between norms of international investment law and other norms of international law, such as environmental ones. In order to help legitimize the international arbitration system, arbitrators should approach disputes in a holistic way and apply norms of international law in a balanced and integrated manner.


The third speaker, Miguel Eduardo Vargas Monroy, spoke about the Lago Agrio case in Ecuador. It is a very complex case that spans over two decades and involves investment arbitration, natural resource extraction, as well as indigenous and environmental rights. In essence, a local judgment in Ecuador which found Chevron liable for the environmental damage caused by its predecessor, Texaco, has been challenged both in the US court system and in investment arbitration as a denial of justice.  Chevron used the tactic of focusing the case on the corruption in Ecuador instead of the environmental impacts of Texaco’s activities in the country. Chevron has had success both in the US courts and before the investment tribunal.  This is not beneficial for indigenous communities, who tend to be the most vulnerable in society. The framework in place to help indigenous communities is not working and they deserve special protection in order to ensure that their interests are being represented effectively. Although there are concerns that investment arbitration is used as a popular method to help foreign investment in developing countries, which has both positive and negative effects at the local level, there is optimism of opportunities for change in the future.


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