Effective, accountable and inclusive institutions? An analysis of the Chevron v. Ecuador (II) investment arbitration and the Lago Agrio environmental justice movement

Abstract

The international investment agreement regime, one of the more obscure global institutions, has a significant impact upon how states, local governments and communities develop. Many investment agreements include investor-state dispute settlement (ISDS) mechanisms, which seek to protect investors from unjust expropriation by host states. Yet, the implications of such a mechanism for fulfilling the vision of the United Nation’s Sustainable Development Goals (SDGs) have never been studied. This thesis examines the ISDS mechanism by conducting a case study of the Chevron v. Ecuador (II) [CvE2] investment arbitration. The thesis analyses case documents such as hearing transcripts, decisions and submissions to identify the discourses at work within the arbitration; determine the implications of such discourses for processual developments; and explore how such processes influence the space afforded to those nongovernmental organisations and environmental justice groups affected by the arbitration. The research utilises an analytical framework informed by critical development theory and environmental justice theory, to demonstrate that the CvE2 arbitration is dominated by an exclusive discourse that prioritises a strict adherence to international investment law, to the exclusion of other principles such as those of international human rights law and environmental law. The dominance of such a discourse reduces the legitimacy of the institution and its rulings for many key stakeholders. The findings also reveal that marginalised stakeholders, such as environmental organisations representing indigenous communities, were refused access to the arbitrations though they were materially affected by the claims, and additionally, were denied consideration - whereby the material impact of the ruling upon the stakeholder group was deemed irrelevant to the proceedings. The findings provide evidence that ISDS, in its current form, is incompatible with the United Nation’s goal for ‘effective, accountable and inclusive institutions’ (United Nations Development Programme, 2016, p. 1). This thesis contributes to the scholarship on environmental justice and environmental policy through its analysis of the implications of arbitration mechanisms embedded in international investment regimes for environmental justice claims and, more broadly, the goal of sustainable development. The thesis highlights the need for further research into investor-state investment arbitrations and provides evidence that significant reform is necessary in order for the institution to be reconciled with the SDGs.