By Lauren Fleming, Staff Member

Protests held around the world on February 4, 2016 against the ratification of the Trans-Pacific Partnership (TPP) were another sign of growing discontent against market liberalization and multilateral free trade agreements.[1] Labor groups and environmentalist were among the most vocal opposition groups, denouncing the erosion of labor standards and environmental protections.[2]

One element of the TPP and similar trade agreements that has received widespread criticism is investor-state dispute settlement (ISDS). ISDS provisions in international trade agreements allow corporations to sue governments through an apolitical arbitration system.[3] Independent tribunals are formed to adjudicate disputes between investors, who claim their property rights have been infringed upon in violation of international treaties; and governments, who claim their actions were just.[4]

Although only a small number of disputes were arbitrated in the mid-1990s, there has been a large increase in the number of investor-state arbitrations.[5] Several of these decisions have provoked strong criticism from environmental groups. For example, In 2000, a United States corporation successfully sued the Mexican government, alleging improper denial of a permit to operate a hazardous waste site, and collected over $18 million in damages.[6] In 2011, a Swedish energy company sued Germany for its decision to phase out nuclear energy after the Fukushima disaster.[7] Germany settled the case before arbitration and withdrew its plans.[8]

These cases are often cited to in order to illustrate the dangers ISDS has on countries’ ability to regulate the environment. Recently, one investor-state dispute has emerged that has prompted the idea that private investors can utilize ISDS in order to promote environmental policies.

In 2010, Peter Allard, a Canadian businessman, initiated an ISDS action against Barbados.[9] Allard operated an environmental sanctuary and eco-tourism site in Barbados.[10] In 2005, the South Coast Sewage Treatment Plant, owned and operated by the Barbados Water Authority, accidently discharged raw sewage into the wetlands, parts of which comprised Allard’s sanctuary.[11] Allard alleged that Barbados’s negligent operation of the plant, coupled with other failures, damaged his investment and constituted a breach of Barbados’s treaty obligations with Canada.[12]

In June 2016, the arbitration panel published its conclusions.[13] First, the panel found that Allard failed to prove that the health of the sanctuary materially declined during the relevant period, thus forcing him to cease operating the sanctuary.[14] Second, the arbitrators concluded that even if Allard had established sufficient injury to the sanctuary, he failed to prove that injury “was caused by the actions or inactions of Barbados.”[15] In addition, the tribunal found Allard failed to establish that Barbados violated any of the provisions of the BIT between Canada and Barbados.[16]

Although Allard was ultimately unsuccessful, this case marks a significant shift in the use of ISDS. This is one of the first disputes where the investor has utilized ISDS as a means to protect the environment. It prompts an interesting conversation regarding future suits and whether ISDS can be used as a mechanism for the promotion of environmental goals.


[1] TPP Signing Sparks Dozens of Protests Across US Over Biggest Trade Pact, Reuters, February 5, 2016,; Trans Pacific Partnership Trade Deal Signed in Auckland, BBC News, February 4, 2016,

[2] See generally Cathleen Cimino-Isaacs, Labor Standards in the TPP, in Trans-Pacific Partnership: An Assessment 261, 261–78 (Cathleen Cimino-Isaacs & Jeffrey J. Schott eds., 2016) (providing an overview of the TPP’s labor standards and trade rules); Jeffrey J. Schott, TPP and the Enviornment, in Trans-Pacific Partnership: An Assessment 251, 251–60 (Cathleen Cimino-Isaacs & Jeffrey J. Schott eds., 2016) (analyzing the TPP’s environment chapter and member-countries’ environmental obligations).

[3] Stephen E. Blythe, The Advantages of Investor-State Arbitration as a Dispute Resolution Mechanism in Bilateral Investment Treaties, 47 Int’l Law. 273, 276 (2013). See also Charles N. Brower & Shashank P. Kumar, Investomercial Arbitration: Whence Cometh It? What Is It? Whither Goeth It?, 30 ICSID Rev. – For. Inv. L.J., 44 (2015).

[4] See generally Zachary Douglas, The International Law of Investment Claims 1–6 (2009) (providing broad overview of investment treaties and arbitration).

[5] Kyla Tienhaara, Regulatory Chill and the Threat of Arbitration: A View From Political Science, in Evolution in Investment Treaty Law and Arbitration 606, 676 (Chester Brown & Kate Miles eds., 2011).

[6] See Madison Condon, The Integration of Environmental Law into International Investment Treaties and Trade Agreements: Negotiation Process and the Legalization of Commitments, 33 Va. Envtl. L.J. 102, 108 (2015); Samrat Ganguly, The Investor-State Dispute Mechanism and a Sovereign’s Power to Protect Public Health, 38 Colum. J. Transnat’l L. 113, 145 (1999).

[7] Meredith Wilensky, Reconciling International Investment Law and Climate Change Policy: Potential Liability for Climate Measures Under the Trans-Pacific Partnership, 45 Envtl. L. Rep. 10683, 10584 (2015)

[8] Id.

[9] Allard v. Barbados, PCA Case Repository 2012-06, Award, ¶¶ 1, 4(2016).

[10] Id. at ¶ 33.

[11] Id. at ¶¶ 33, 43.

[12] Id. at ¶ 3.

[13] Id.

[14] Id. at ¶ 139.

[15] Id. at ¶ 166.

[16] Id. at ¶¶ 228, 252, 226.