Rethinking Investment Treaties

The report argues that the traditional model of investment treaties, focused on protecting foreign investors through investor-state dispute settlement (ISDS), is often ineffective and can obstruct climate action. It proposes a new framework where treaties serve as complementary tools to national laws, focusing on encouraging sustainable investment, ensuring corporate accountability for social and environmental impacts, and fostering international cooperation on issues like fossil fuel phase-outs and technology transfer.

• The traditional investment protection model is considered doubtful in its continuing relevance because empirical evidence on whether such protections actually increase foreign investment is mixed and inconclusive.
• Investment treaties have been identified as a major barrier to the energy transition and the protection of human rights and the environment.
• Treaties have a limited role in encouraging sustainable investment, as states can unilaterally remove restrictions on sustainable foreign investment without a treaty.
• The report suggests that future treaties should prioritize domestic law as the primary level of regulation for investment projects, with treaties playing a complementary role to reinforce national frameworks.
• To improve accountability, treaties could ensure that national legal systems in both home and host states are available for civil and tort liability actions against investors for misconduct.
• The report recommends moving away from investor-state dispute settlement (ISDS) and instead using those resources to improve national judiciaries and legal frameworks.
• Treaties could address collective action problems by establishing multilateral commitments to phase out fossil fuel investments and end public subsidies for them.
• International cooperation through treaties is proposed to lower the high cost of capital for sustainable investments in developing countries, potentially through multilateral platforms and foreign exchange guarantees.
• The report suggests that treaties should facilitate technology and knowledge transfers to developing countries and avoid prohibiting performance requirements that might hinder sustainable technology diffusion.
• Future treaties could improve governance by enshrining obligations for government contract transparency and establishing common beneficial ownership registries to combat corruption.

APA

Ostřanský, J., & Bonnitcha, J. (2024). Rethinking Investment Treaties. International Institute for Sustainable Development. https://www.iisd.org/system/files/2024-05/rethinking-investment-treaties-roadmap.pdf

Chicago

Ostřanský, Josef, and Jonathan Bonnitcha. Rethinking Investment Treaties. International Institute for Sustainable Development, 2024. https://www.iisd.org/system/files/2024-05/rethinking-investment-treaties-roadmap.pdf.

Wikipedia

{{cite report |last1=Ostřanský |first1=Josef |last2=Bonnitcha |first2=Jonathan |title=Rethinking Investment Treaties |publisher=International Institute for Sustainable Development |date=May 2024 |url=https://www.iisd.org/system/files/2024-05/rethinking-investment-treaties-roadmap.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{ostansk2024rethinking, author = {Ostřanský, Josef and Bonnitcha, Jonathan}, title = {{Rethinking Investment Treaties}}, institution = {International Institute for Sustainable Development}, year = {2024}, month = may, url = {https://www.iisd.org/system/files/2024-05/rethinking-investment-treaties-roadmap.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }