Settling Water Disputes through International Investment Arbitration: When and by What Standards?

Abstract

The development of water law as environmental law may trigger disputes over investment projects, which could find their way to international investment arbitration. Consequently, domestic water law and administration can be subjected to international scrutiny. This article analyses relevant investment treaty provisions and cases concerning water resources management to examine (i) when water disputes can be submitted to investment arbitration and (ii) what standards tribunals have applied to settle them. It demonstrates that water disputes over investment projects can widely be covered by investment treaties, but they do not automatically turn water resources into legally protected commodities. Investment arbitration is commonly used by foreign investors to challenge the legality of water-related measures adopted by host States under an applicable investment treaty, it can also be used to enforce domestic environmental law. In most controversial cases, arbitral tribunals applied reasoned decision-making and regulatory coherence as emerging global regulatory standards.