The law and a low-carbon society

Will arbitration proceedings pose a risk to transitioning to a low-carbon society?

Dr Julia Dehm has written a blog post that examines how international investment arbitration proceedings may pose a risk to transitioning to a low-carbon society.

“There is the potential for international investment treaties to hinder a rapid transition away from fossil fuels, particularly by allowing foreign investors to sue national governments through investor-state dispute arbitration,” explains Dr Dehm.

In her post, Dr Dehm cites the recent example involving Zeph Investments, which owns Waratah Coal, initiating arbitration against the Australian government under the Singapore-Australia Free Trade Agreement and the ASEAN-Australia-New Zealand Free Trade Agreement.

“Zeph Investments is seeking over $100 billion in damages, alleging breaches of fair and equitable treatment clauses and expropriation due to the Queensland Land Court's decision to recommend against granting environmental approvals for the Waratah coal mine,” says Dr Dehm.

“This arbitration is set to challenge a landmark decision by the Queensland Land Court in 2022 in ‘Waratah Coal Pty Ltd v Youth Verdict Ltd’, which refused environmental authority and mining lease applications for Waratah Coal’s mine project due to its impact on climate change would undermine human rights.”

“The concern is that such arbitration proceedings can have a ‘chilling effect’ on urgent transitions away from fossil fuels.”

Dr Dehm will be closely following the current proceedings involving Zeph Investments and the Australian government, and aims to provide a detailed analysis of the case.

“I am also working with the Australian Fair Trade and Investment Network (AFTINET) and other civil society groups to help raise awareness of how international arbitration can undermine urgent and just energy transition,” she says.

Read Dr Dehm's full post.