Conflicts between International Climate Law and Investment Arbitration: A Proposed Exception to the Full Reparation Standard without Moving the Goalposts

Abstract

State responsibility is a foundational aspect of public international law that ensures, inter alia, that States pay compensation pursuant to the full reparation standard where they breach international standards of protection owed to foreign investors. Concerns about the application of the full reparation standard include the diminishing of regulatory power of States and the advent of ‘crippling’ or excessive compensation awards. In this article I argue that compensation awards may be reduced to the extent that a State policy is explicitly aimed at complying with international climate law. I argue that Article 55 of the ILC Articles allows for an exception to the full reparation standard, thereby limiting the amount of compensation payable. The Article 55 exception would allow tribunals to consider international climate law in awarding compensation, and avoiding claims of ‘moving the goalposts’ by retrospectively raising climate law defences for State breaches of investment protection standards.