Lone Pine Resources v Canada Award: Steps towards a Recognition of Sustainable Development Principles in Energy Investment Arbitrations

Abstract

Lone Pine Resources Inc. v. The Government of Canada 1 is the first investment arbitration case in the oil and gas sector in which the host state has taken measures to enforce its domestic sustainable development laws and regulations. In this case, the Canadian government prohibited fracking in the St. Lawrence River basin in Quebec, despite having previously issued a permit, by placing the precautionary principle, which is a principle of sustainable development, as the criterion. The tribunal did not find the host government's action to be a violation of the investor's rights, although it was unable to answer the question of whether the implementation of the precautionary principle constitutes a public purpose according to the NAFTA expropriation standard. However, it is notable that in the submissions of the parties and amicus curiae, reference has been made to the precautionary principle on the basis of applicable domestic and international law. Another feature of this case is that the arbitral tribunal decided to grant the request for participation of amicus curiae by an environmental NGO, and in distinct sections of the final award, it mentioned the views of the environmental group. The implementation of sustainable development is crucial in the field of petroleum arbitrations, given the extent of environmental degradation caused by these projects. Even though this case pertains to North America, it may mark the beginning of a global transformation that affects the petroleum producing countries throughout the world. Additionally, it may open a door for arbitration tribunals to establish compatibility between the standards of investor protection and sustainable development principles such as precaution and public participation.