The Influence of International Investment Treaties on Environmental and Social Regulation through Regulatory Chill

Qinyu Liu and Faulkner Clair R.
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Qinyu Liu: Simon Fraser University, Canada
Faulkner Clair R.: Simon Fraser University, Canada

Current Research in Law & Practice, 2025, vol. 3, issue 1, 1-14

Abstract: This paper investigates the influence of international investment treaties on domestic environmental and social regulation through the lens of "regulatory chill." Drawing upon a synthesis of theoretical frameworks, empirical studies, and high-profile arbitration cases, the study examines how investor-state dispute settlement (ISDS) mechanisms embedded in international investment agreements deter or dilute regulatory initiatives by states. The research identifies both anticipatory and reactive forms of chill, where governments either preemptively abandon or subsequently alter public interest laws to avoid litigation or reduce exposure to legal liability. Through an integrated analysis of global ISDS claim trends, environmental legislative patterns, and pivotal investor-state disputes—including Vattenfall v. Germany, Lone Pine v. Canada, and Philip Morris v. Uruguay—the paper illustrates how regulatory chill is neither anecdotal nor isolated, but a structurally embedded consequence of the international investment regime. The study concludes that the regulatory autonomy of states, particularly in the Global South, is increasingly compromised by legal mechanisms originally designed to promote investment. It calls for systemic reform, including the rebalancing of treaty provisions to safeguard the public policy space necessary for sustainable development and social equity.Keywords: competitive strategy, differentiation strategy, market focus strategy, cost leadership, performance

Date: 2025
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Persistent link: https://EconPapers.repec.org/RePEc:ctz:curilp:v:3:y:2025:i:1:p:1-14

DOI: 10.53104/curr.res.law.pract.2025.07001

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