Examples of chapter 11 NAFTA disputes, a trade-investment-environment experience

What has been the impact of regional trade agreements on the way the environment is protected in each region? What has been the role of the dispute settlement mechanisms in such processes? Have those agreements found a way to reconcile trade and environmental protection?

Those are some of the questions that will be dealt with. In particular in relation to one regional process the NAFTA. This trilateral treaty, between Canada, Mexico and the USA, contains a Jorge set of provisions and 3 complex d1sput settlement mechanisms to ensure its application: a general scheme for controversies, (Chapter 20) a specific device for antidumping and countervailing duty disputes (Chapter 19), and an innovative procedure for the settlement of disputes between an investor anda Member State (Chapter 11) on which we will concentrate.

NAFTA's Chapter 11 was designed to provide a predictable legal framework to create 0 favorable environment for the increase in investment opportunities inside   Member States, specially by means of clear rules and an effective method of dispute settlement between an investor and a NAFTA member State, the mechanism enables to resort to binding international arbitration if the host government of a Member state violates the investment provisions of NAFTA. The analysis will pay special attention to the incidence of this mechanism on environmental protection; for that purpose will be analyzed 12 cases relating to "regulatory takings” which are one sort of indirect expropriation by the enacting of a regulation that limits or modifies the investment. Those cases have become a central issue 1n the discussion of the NAFTA Given the danger they represent to the regulatory capacity of the States and the damage they have inflicted to the protection of the environment by forcing the reverse of the some environmental laws.

As will be demonstrated, one of the causes for the problems of Chapter 11 has been the lack of definition of an “investment", lack that may have been done with the purpose of encompassing as many different kind of investments as possible, and to protect them against all the possible measures token by the governments. Nevertheless, this fault has proven to be an expensive one, not only monetarily but also from an environmental point of view.