Environmental Protection Provisions in International Investment Agreements: Global Trends and Chinese Practices
Round 1
Reviewer 1 Report
- There is a large literature exploring the links between International Investment Treaties and FDI and showing a positive limpact of IIT on FDI, for example Bengoa et al (2020) and references therein. This literature should at least be mentioned.
- The term neoliberalism is confusing, ambiguous and not very rigurous. Therefore authors should be more careful when referring to neoliberalism and liberalism. For example, the gold standard was not a prominent feature of liberalism, as the authors seem to argue in page 9. I suggest replacing the "liberalism" and "neoliberalism" terms in page 9 by "market friendly environment" with more ore less intervention of the State from the host market.
- References should be detailed at the end of the paper, in alphabetical order.
References:
Bengoa, M., Sanchez-Robles, B., & Shachmurove, Y. (2020). Do trade and investment agreements promote foreign direct investment within Latin America? Evidence from a Structural Gravity Model. Mathematics, 8(11), 1882.
Author Response
Dear reviewer,
Thank you for your inspiring advice. We have revised our manuscript accordingly. Here is our explanation of the revision and point-by-point response to your comments.
1. There is a large literature exploring the links between International Investment Treaties and FDI and showing a positive impact of IIT on FDI, for example, Bengoa et al (2020) and references therein. This literature should at least be mentioned.
Reply: Thank you for pointing out this reference. We have added it to the article to describe the positive impact of IIAs offering high-level investment protection on FDI.
2. The term neoliberalism is confusing, ambiguous and not very rigorous. Therefore, authors should be more careful when referring to neoliberalism and liberalism. For example, the gold standard was not a prominent feature of liberalism, as the authors seem to argue in page 9. I suggest replacing the “liberalism” and “neoliberalism” terms in page 9 by "market friendly environment" with more or less intervention of the State from the host market.
Reply: This has been amended accordingly. Other literature has also been cited to clarify this. The added contents clarify the concept of “neo-liberalism” and “embedded liberalism”. We also pointed out that the most outstanding difference between neo-liberalism and embedded liberalism is the level of state intervention in the market-friendly business environment.
3. References should be detailed at the end of the paper, in alphabetical order.
Reply: Amendments are made according to the journal’s house style.
Hope that the revision is clearly explained and the comments of you are well replied to by this letter.
Sincerely,
Shen Wei and Su Kezhen
Reviewer 2 Report
The contribution addresses a topic widely approached by the literature. This impacts its potential originality, though the reference to the Chinese practice is of peculiar interest. The contribution is also well organised and its clear structure is its main point of strenght.
On the contrary, reference to literature and the case law is too limited, to the point of being insufficient.
It is suggested that the Author also considers relevant studies by Jorge E. Viñuales, Raúl Emilio Vinuesa, Alan Boyle, Attila Tanzi and Michele Potestà on the relationship between investment law and the protection of the environment, and Catherine Titi and Aniruddha Rajput on police powers/regulatory freedom, just to name a few.
It is also suggested to consider the 2022 special issues of the Journal of World Investment & Trade on Ocean Governance (issue 1/22) and investment law and climate change (issues 5-6/22).
As to the case law, the author considers just a limited part of the abundant ECT case law on renewable energies. Reference to those cases directly referring to the relevance of environmental agreement in investment arbitration (eg: Sevilla Beheer) would be advisable.
Author Response
Dear reviewer,
Thank you for your inspiring advice. We have revised our manuscript accordingly. Here is our explanation of the revision and point-by-point response to your comments.
1. Extensive editing of English language and style required.
Reply: The article was reviewed and revised by professional proofreaders. We have engaged the proofreader to review it again this time. The certificate of proofreading is uploaded with the revised manuscript.
2. The reference to literature and the case law is too limited, to the point of being insufficient.
Reply: More references to literature are added. For case law, we have added more investment arbitration cases concerning environmental protection measures in FDI activities. There are now 72 such cases (including renewable energy-related cases under the ECT) which are now analyzed in the article.
3. It is suggested that the Author also considers relevant studies by Jorge E. Viñuales, Raúl Emilio Vinuesa, Alan Boyle, Attila Tanzi and Michele Potestà on the relationship between investment law and the protection of the environment, and Catherine Titi and Aniruddha Rajput on police powers/regulatory freedom, just to name a few. It is also suggested to consider the 2022 special issues of the Journal of World Investment & Trade on Ocean Governance (issue 1/22) and investment law and climate change (issues 5-6/22).
Reply: Thank you for pointing out these literatures, which now are cited in the article. The works of Jorge E. Viñuales, Michele Potestà, Catherine Titi, and Aniruddha Rajputz are especially inspiring. Relevant content in journals is also considered and added to the article.
4. As to the case law, the author considers just a limited part of the abundant ECT case law on renewable energies. Reference to those cases directly referring to the relevance of environmental agreement in investment arbitration (eg: Sevilla Beheer) would be advisable.
Reply: Thank you for referring us to these sources, the analyses by tribunals in a series of ECT-related cases. These are added to the article.
Hope that the revision is clearly explained and the comments of you are well replied to by this letter.
Sincerely,
Shen Wei and Su Kezhen
Reviewer 3 Report
The subject of the article is very important, especially when we are speaking about the FDI. I recommend the authors keep working on this theme and consider biocultural diversity rights deeper. Also, such research needs to interdisciplinary approach.
Author Response
Dear reviewer,
Thank you for your inspiring advice. We have revised our manuscript accordingly. Here is our explanation of the revision and point-by-point response to your comments.
1. Moderate English changes required.
Reply: The article was reviewed and revised by professional proofreaders. We have engaged the proofreader to review it again this time. The certificate of proofreading is uploaded with the revised manuscript.
2. I recommend the authors keep working on this theme and consider biocultural diversity rights deeper. Also, such research needs to interdisciplinary approach.
Reply: Biocultural diversity is now added in the article, such as the influence of biocultural-related international instruments (like the Convention on International Trade in Endangered Species of Wild Fauna and Flora) on international investment. For an interdisciplinary approach, the added section 2.2 “The Effect of International Environmental Instruments over FDI” takes the perspective of international environmental law to observe the effect of another area of international law on FDI. Significant international environmental instruments such as the Paris Agreement were analyzed, and we pointed out that both the protection of the environment and the protection of FDI are host states’ international obligations substantialized by international treaties.
Hope that the revision is clearly explained and the comments of you are well replied to by this letter.
Sincerely,
Shen Wei and Su Kezhen
Reviewer 4 Report
In principle, this is a good article providing an interesting overview on the recent trends of environmental concerns in International Investment Agreements. The article combines an overview of the global trends and then discusses in its second part the evolution in China. It would be interesting to explain further why China is an interesting example to focus on. I think China is not only interesting because of its economic importance, but also because it is in the International Investment Agreements typically both host and investor.
Three elements might also be further discussed in the article:
- the relevance of the Paris Agreement and sepcifically its Art. 2.1(c) that requires making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. This provision could be seen as requiring that also investments under International Investment Agreements should contribute to the objectives of the Paris Agreements.
- interestingly, no current IIA seems to include provisions requiring that investments should respect both environmental standards from the host country, where the investment takes place, and the standards from the country host to the invostor. `This idea has been proposed several times.
- finally, it would be interesting to describe and explain clearer the trends how environment concerns became more important and how arbitrations gave more weight ober time to environmental concerns, and to see whether today, environmental concerns could even be put forward under an old treaty that does not explicitly mention environmental issues.
Author Response
Dear reviewer,
Thank you for your inspiring advice. We have revised our manuscript accordingly. Here is our explanation of the revision and point-by-point response to your comments.
1. It would be interesting to explain further why China is an interesting example to focus on. I think China is not only interesting because of its economic importance, but also because it is in the International Investment Agreements typically both host and investor.
Reply: We pointed out China’s significant role in the international investment scheme in the article to show its relevance and importance. In detail, we list the data on China’s net FDI inflows and outflows in the past 30 years. Also, we count the number of China’s national environmental laws and regulations in the same chart. China’s significant role is not only based on FDI activities but also on its adoption of environmental regulatory measures. China provides us with a good case to analyze the relationship between FDI protection and the host state’s police power in the field of environmental protection.
2. The relevance of the Paris Agreement and specifically its Art. 2.1(c) that requires making finance flows consistent with a pathway towards low greenhouse gas emissions and climate-resilient development. This provision could be seen as requiring that also investments under International Investment Agreements should contribute to the objectives of the Paris Agreements.
Reply: We added this into the article though little has been discussed or materialized. The Paris Agreement and its article 2.1(c) are the focus of the added section 2.2 “The Effect of International Environmental Instruments over FDI”. In this part, we point out that both environmental protection and foreign investment protection could be the host states’ international obligations substantialized by international treaties. We also discuss the influence of international environmental instruments on the IIAs, and the IIAs are supposed to be more environment-friendly.
3. Interestingly, no current IIA seems to include provisions requiring that investments should respect both environmental standards from the host country, where the investment takes place, and the standards from the country host to the investor. This idea has been proposed several times.
Reply: The environmental protection clause is the provision prescribing the host state’s right to regulate and is designed to excuse the host state’s liability. For the standards adopted by the host state to the investor, we discuss the environmental protection requirement in China’s domestic regulations, and China’s practice in its IIA-making.
4. It would be interesting to describe and explain clearer the trends how environment concerns became more important and how arbitrations gave more weight over time to environmental concerns, and to see whether today, environmental concerns could even be put forward under an old treaty that does not explicitly mention environmental issues.
Reply: To describe and explain the trends in how environmental concerns became more important, we described the paradigm shift of international economic order from “neoliberalism” to “embedded liberalism”. We also introduced a new perspective of international environmental law in section 2.2 “The Effect of International Environmental Instruments over FDI” to observe such a trend. ISDS gave little consideration to environmental concerns unless the objective clause in the BIT makes that point. We discussed this in the article. After using more keywords to search in the database, in section 2.3 “Environmental Protection in Investment Arbitration” we introduced more investment arbitration cases involving the disputes arising out of environment protection in FDI. A series of renewable energy-related cases were analyzed, and we examined how environmental concerns were discussed under a traditional investment treatment standard (fair and equitable treatment).
Hope that the revision is clearly explained and the comments of you are well replied to by this letter.
Sincerely,
Shen Wei and Su Kezhen
Round 2
Reviewer 1 Report
The paper has improved remarkably and is ready for publication, in my view
Reviewer 2 Report
I thank the Authors for having engaged in such a constructive manner with my comments.
No comments or suggestions to the updated version of the paper.
Reviewer 3 Report
The topic of the article is interesting and according to the research of the authors, I recommend them to keep going on this research.
I think there is a need not only to focus on biological issues also biocultural diversity issues. For future research on this theme, may be the authors try to study more about clean investment and biocultural diversity.
Reviewer 4 Report
I think the revisions have improved the text. Especially the new chapter 2.2 onthe effect of international environmental instruments over FDI adds an important perspective.
