Judging the Misapplication of a State’s Own Environmental Regulations

Internalisation of International Investment Agreements in Public Policymaking: Developing a Conceptual Framework of Regulatory Chill

“…They suggested that even though Philip Morris’ claims were dismissed on jurisdictional grounds, providing no guidance on the substantive validity of tobacco plain packaging measures for other states, recent successes on tobacco plain packaging measures in Australia and Uruguay, combined with, in their opinion, increasingly pro‐state outcomes in arbitration more generally, would mean that any further delay of such measures by other states would have little to do with fears of ISDS. Létourneau‐Tremblay and Behn also considered the implications of the Bilcon v Canada case for potential regulatory chill (Létourneau‐Tremblay and Behn, ). They highlighted an important aspect of the nature of many ISDS cases involving public policy, that ‘the violation of the treaty in this case does not relate to the substantive content, validity or legitimacy of a State's environmental regulations; rather, the violation stems from what the Tribunal considered to be due process and rule of law deficiencies in a State's implementation of its own environmental assessment (EA) regulations’ (Létourneau‐Tremblay and Behn, , pp.823–824).…”

“…Létourneau‐Tremblay and Behn also considered the implications of the Bilcon v Canada case for potential regulatory chill (Létourneau‐Tremblay and Behn, ). They highlighted an important aspect of the nature of many ISDS cases involving public policy, that ‘the violation of the treaty in this case does not relate to the substantive content, validity or legitimacy of a State's environmental regulations; rather, the violation stems from what the Tribunal considered to be due process and rule of law deficiencies in a State's implementation of its own environmental assessment (EA) regulations’ (Létourneau‐Tremblay and Behn, , pp.823–824). They noted that the case does raise questions about the role of state sovereignty to review the legality of its own laws, calling attention to the dissent from Respondent‐appointed arbitrator, Donald McRae, that it was a significant intrusion into domestic jurisdiction that would create a chill on the operation of environmental review panels.…”

“…A critical point was raised in Létourneau‐Tremblay and Behn's review of the implications of the Bilcon v Canada case Létourneau‐Tremblay and Behn, ), specifically, that often what is challenged in arbitration does not relate to the substantive content, validity or legitimacy of the measure itself but rather a deficiency in due process or rule of law. This distinction did not emerge consistently across the review and future investigations of policy internalisation should seek to understand if and how IIAs are being internalised during the substantive formulation of policy as well as in the policy formulation and implementation procedures.…”

“…The second pathway runs directly from the body of arbitral decisions which, when internalised by policy makers, have the capacity to stimulate or diminish precedential chill. A consistent set of arbitral decisions considerate of the state's right to regulate may deter regulatory chill responses, although this would not be guaranteed in the continuing absence of binding precedent; while awards such as that in Bilcon v Canada have raised concerns from legal experts that these decisions may give other states pause in their own regulatory proceedings (Létourneau‐Tremblay and Behn, ).…”