Bridging multinational corporations' investment‐climate gap: Prospects for the direct claims approach

Abstract

AbstractMultinational corporations (MNCs) have enjoyed considerable investment rights and gained massive benefits under international investment law; at the same time, they have also significantly contributed to the climate crisis. Yet, they do not bear corresponding climate change obligations. A huge gap between MNC investment rights and climate change obligations—the MNC investment‐climate gap—persists because of MNCs' global operations, the limited reach of domestic legal mechanisms in regulating MNCs' obligations, and the ineffectiveness of international regimes at addressing MNCs' obligations. This gap is mainly due to the asymmetrical structure of the investor‐State dispute settlement regime. To correct this asymmetry, this article explores the possibility of direct claims by States against MNCs under recent investment treaties. In particular, it analyses this possibility from three angles: investor obligations, arbitral tribunals' jurisdiction and States' initiation of claims. To facilitate such claims, one must reconsider the jurisprudence of international investment law.