Environmental Protection and the Bilateral Investment Treaties of Malaysia and Netherlands: A Comparison

Abstract

In absence of any global treaty, the bilateral investment treaties are playing an important role of regulating foreign investments in the host countries. According to the United Nations Conference on Trade and Development, there are 2361 bilateral investment treaties are in force and like other members of the World Trade Organization, Malaysia and Netherlands also signed bilateral investment treaties to facilitate trade. The primary purpose of economic globalization is the economic development of the developing and least-developed countries as well as to facilitate benefits of the home states. Malaysia foreign investment laws and bilateral investment treaties mainly protects foreign investors, however, neither of them has any specific provision of protecting environment. The Environmental Quality Act 1974 standard in Malaysia is not high like many developed countries such as Netherlands and significantly lack any provision to sustainable development. This article addresses two questions: (a) do the bilateral investment treaties of Malaysia and Netherlands has any specific provision to protect the environment? (b) should the environmental protection be considered during the entry of foreign investment in Malaysia and Netherlands? Using doctrinal research method, we critically analysed twenty-one bilateral investment treaties signed by both Malaysia and Netherlands with same countries to explore whether there is any reference of protecting environment. We find that the existing Malaysia and Netherlands bilateral investment treaties have provisions to promote and protect foreign investments but have no reference (except Netherlands-United Arab Emirates BIT) of protecting environment. Therefore, both governments should consider this important factor while signing any future bilateral investment treaties.