Resource Nationalism in Emerging Markets: Protecting the Environment and Local Communities or Imposing Protectionist Measures that Impact Foreign Investment?

Recent global trends show that new waves of resource nationalism are often associated with governments’ attempts to live up to modern ESG standards and to protect the rights of indigenous local communities. While states of course have the sovereign right to regulate within their territory in the interest of their population, this power is not absolute. Disproportionate or pretextual resource nationalism measures will likely negatively impact the investment climate and give rise to violations of international law protections granted to foreign investors through a specialized body of legal rules and norms found in international investment treaties. Such treaties generally allow investors to vindicate their rights through international arbitration claims directly against the state. The clash between states’ sovereign powers and international law investment protections remains acute. Foreign investors should beware of national and regional political trends that could potentially affect their foreign investments and should consider their options for international law recourse.