From Investment Protection to Sustainability (via a Multilateral Investment Court): The EU and a New Universal Model for International Investment Agreements?

The global investment system is currently based on liberalisation grounded in market access and investment protection, aiming to create a cross-border competitive environment. A reform of the system is under discussion, particularly at the United Nations Commission on International Trade Law (‘UNCITRAL’) largely upon a proposal by the European Union (‘EU’), comprehensively focusing on procedural issues and the possible establishment of a Multilateral Investment Court. This paper argues that such an approach is fundamentally flawed, as it overlooks the main issue that the global investment system currently faces, that is, the necessity of greening investment. The paper claims that a comprehensive reform of the investment system should first address substance, particularly the clash between, on the one hand, green commitments under the UN Framework Convention on Climate Change (‘UNFCCC’) and the Paris Agreement and, on the other, investment protection under bilateral and multilateral investment agreements. Priority rights and duties should therefore be envisaged for carbon-neutral investment, adjusting the fair and equitable treatment (‘FET’) standard on climate grounds. On this basis, the procedural reform of the investor-State dispute settlement (‘ISDS’) system should be tailored to address substantial developments focused on sustainability, or at least include them adequately.