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IISD | 31 December 2021
Investor–state disputes in the fossil fuel industry
By Lea Di Salvatore
Executive Summary
The fossil fuel industry is the most significant contributor to climate change. As the consequences of burning fossil fuels become increasingly evident, policy-makers across the globe are stepping up their efforts to curb emissions.These actions inevitably aim at curtailing fossil fuel activities. However, under current international investment law (IIL), foreign investments in fossil fuel projects are granted special protection and access to investor–state dispute settlement (ISDS). Through this system, investors can bring claims to international tribunals regarding regulatory measures adopted by a host state that they allege breach their investment privileges under IIL.
This report analyses the trends in investor–state disputes initiated by investors in the fossil fuel industry to understand the extent to which this industry relies on ISDS to protect its investments.The emerging picture is that the fossil fuel industry has been a pioneer of the ISDS system and has been using it extensively to protect its investments. This protection can hinder the development and implementation of measures to tackle climate change and can present a major obstacle for countries seeking to phase out fossil fuels.
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