SOAS Research Online

Abstract

Investment flows pose one of the newest and greatest challenge in the pursuit of sustainable development. Developmental activities resulting from rapid industrialisation and unchecked exploitation of natural resources have come at the cost of environment, human health and labour standards. Traditionally, under investment law, there has been a binary relationship between the investors and the States. However, as a result of the rise in investor-state disputes and the lessons learned from investor-state arbitration, states have begun to revisit and reframe their Model Bilateral Investment Agreements (Model BITs) to strike a balance between the host state's regulatory authority and investment promotion Essentially such BITs include specific language not only on investment promotion but also inter alia, on regulatory rights of the host state to protect the environment, human health and labour law. Significantly, the Bhopal Gas tragedy of India and the controversial Colombo Port city project of Sri Lanka have intensified the need of having a balanced approach in environmental protection and investment promotion. Hence, the purpose of this paper is to critically analyse the Model BITs of India and Sri Lanka to investigate the extent to which they are able to strike appropriate balance between these two paradigms. The paper further seeks to make suggestions to create coherence between these two interests to protect the environment from further degradation.