Governments that take action to accelerate the transition away from oil, gas, and coal are facing an escalating risk of legal challenge from foreign investors over the perceived impacts of such measures on their investment returns or other costs imposed. Through investor-State dispute settlements (ISDS), foreign investors can bring arbitration claims against governments to obtain compensation for losses they claim to incur as a result of government regulations or decisions. Fossil fuel companies are among the biggest users of ISDS.
Overcoming International Investment Agreements as a Barrier to Climate Action: A Toolkit to Safeguard Fossil Fuel Measures from Investment Treaty Claims is a toolkit designed to outline various measures for removing, reducing, or responding to ISDS risks within the context of the transition away from fossil fuels. It aims to equip readers with an understanding of potential pathways to blunting the threat of investment arbitration, providing measures States and advocates can pursue to remove the risk of ISDS, reduce States’ exposure to investment arbitration claims, and respond to claims if and when they arise.
The prospect of ISDS claims often involve substantial costs and awards reaching the millions or billions of dollars. Policymakers and experts around the world are increasingly recognizing ISDS as a significant legal barrier to the necessary phaseout of fossil fuels. But it is not an insurmountable one.
Read the Overcoming International Investment Agreements as a Barrier to Climate Action to learn more.
(Published January 2024)