3.1 Main Features of International Investment Law

Some consequences for SD stem from the structure and content of the investment regime. As for the structure, the regime is mostly organised as a bundle of two-sided legal relations, taking the shape of Bilateral Investment Treaties (BIT s). Their number now approaches 3,000 treaties, most of them still in force, and their content can be varied, despite similarities abound, with respect to both substantive and procedural provisions. The latter include reliance on a dispute settlement system with its fulcrum on investor-state arbitration managed by ICSID. An exception can be seen by Brazil’s recent Cooperation and Investment Facilitation Agreements, which, albeit bilateral in nature, resort to classic state-state arbitration. In all such cases, one end of the bilateral relationship may be a multi-state subject, one example being the (not yet in force) 2020 Comprehensive Investment Agreement between China and the European Union (EU).

Further exceptions to the norm (ie BIT s) can be isolated by looking at two parameters. First, content: some actors opt for concluding bilateral treaties encompassing a larger array of issues and including an investment chapter. These Free Trade Agreements (FTA s) are generally more ‘structured’ and thus the compliance mechanisms and bodies they set up may contribute to promoting SD more effectively than a simple BIT. Similarly, rules relevant to investment, and to SD, can be found in agreements primarily focusing on other themes. For instance, in matters of performance requirements, which are dealt with in a variety of ways in IIA s,²⁸ a key instrument is the Trade-Related Investment Measures Agreement, belonging to the World Trade Organisation galaxy. The second parameter is the number of parties: plurilateral agreements on investment are gaining momentum, like those in force among the members of the Common Market for Eastern and Southern Africa and of the Association of Southeast Asian Nations.

Bilateral accords are still preponderant, though, which may have an effect on SD. One possible consequence regards the protection of common goods,²⁹ such as climate. FDI is likely to have a non-negligible role in bringing about climate change, but this problem is best tackled through concerted multilateral action, which cannot be adequately hosted in, and fully secured by, a multitude of BIT s.³⁰ Indeed, a legal framework conceived as a cohesive system, rather than a loose set of distinct items, favours the design of rules and institutions aimed at coping with common problems. Thus, WGIII is now musing upon the establishment of an advisory centre for developing countries along the lines of the one existing in the field of trade law since 2001 (though not affiliated to the World Trade Organisation). However, the most far-reaching effect of the bilateral nature of the investment regime concerns the level of promotion of SD as opposed to investors’ interests. Developing states usually have less bargaining leverage vis-à-vis capital-exporting powers and the former’s desiderata do not always enter the final agreement; what is worse, these countries might not even be willing to enshrine SD-provisions in their BIT s, since they might prefer to run a ‘race to the bottom’.

The problem can be summarised as follows: since states are convinced they can attract a larger share of FDI if they promise more favourable investment conditions than those offered by competing countries, environmental and human rights standards will remain low. While the actual role of a fragmented system on the persistence of low standards can be debated,³¹ as these can have a number of justifications, it seems safe to conclude that such a model does not provide a strong incentive to raise the standards. Remarkably, such an incentive would not necessarily stem from a uniform system (a multilateral investment agreement), should states merely be free to adopt high standards. As long as the so-called right to regulate remains a right as opposed to a duty, a centralised system could engender the same results as a fragmented one. Admittedly, freedom is key in a context where high standards have been rejected first and foremost by developing countries as a strategy of industrialised states to hinder the former’s development, a strategy inspired by a questionable ‘one-size-fits-all’ approach, whereas SD should be pursued differently in different places. Again, this is worth emphasising in light of the focus of this chapter on participation, since the exogenous imposition of standards would narrow the scope of political self-determination of ‘rule-taking’ countries. A simple non-regression obligation would be more acceptable, provided that the degree of protection afforded by two distinct norms can be compared, which is not always the case. However, it could still be problematic from the standpoint of democracy: is a country not free to change its legislation so as to strike the best-suited balance between sustainability and development?

At any rate, currently, SD-related provisions are to be found in different sources.³² IIA s do not generally provide for binding environmental and human rights standards, as they ‘merely’ set out investors’ guarantees and, conversely, fence in the host states’ room for manoeuver. Both types of rules, however, are capable of encroaching on SD.

On the one hand, standards of treatment of investors limit governmental leeway, to the effect that a non-justifiable breach of one such standard entails the state’s duty to pay compensation to the investors. Practically all these norms have a bearing of some sort on SD,³³ be they general in character (such as the most-favoured-nation-treatment, the national-treatment, the fair-and-equitable-treatment and the full-security-and-protection standards) or more specific (like those ruling out restrictions on capital movements). Competition among investment-seeking states may take two paths: by including certain rules in an IIA or by phrasing them in a way more constraining for the state. Yet it must be said that, even if they have an identical wording, two provisions may still result in being construed differently by arbitrators. This is another significant outcome of the fragmentation of the investment regime, devoid of any centralised judicial authority (even though WGIII is primarily working on this issue).

On the other hand, provisions preserving states’ regulatory power and shielding non-discriminatory actions taken in the public interest against investors’ entitlements also affect SD, this time, in a potentially positive way. Again, these safeguards may be formulated reductively by a government trying to secure a competitive advantage. In any case, irrespective of the language, and as already noted, it is up to states to exploit the leeway they are accorded and put it to good use.³⁴ Governments can do so not just through their own general laws, but also by enacting investment legislation³⁵ and concluding contracts³⁶ with investors. These are the other sources alluded to above that may explicitly, though not necessarily effectively, raise the issue of compliance with human rights, environmental standards and other SD-related norms (such as performance requirements, for instance the transfer of green technologies).

Having ascertained that most rules lying on the different planes of the multilayered investment regime are capable of having more or less immediate beneficial as well as adverse effects on SD, we should ask which are the possible strategies to pursue a reasonable equilibrium between sustainability and socio-economic progress.³⁷

3.2 Sustainable Development Strategies in International Investment Law

Overall, the ways to promote SD through investment law can be traced back to three groups, which can roughly be said to be centered on the host state, the investor (or home state) and the investment.³⁸

The first approach is quite obvious and consists of broadening governmental regulatory space, either by acting on the rules that carve out exceptions ultimately based on the pursuit of public interest or the protection of the most vulnerable subjects such as workers or indigenous peoples, or by directly reducing the scope of the rights and privileges afforded to investors. These results, in turn, may be attained by different means. Some promises usually made to investors may be omitted from an IIA (or domestic investment law, or investor-state contract). Conversely, a clause may be included that allows the host state to take measures which have a legitimate SD-related aim. In multilateral IIA s, such commitments by the parties may be diversified and in tune with each state’s individual stage of development.³⁹ Another option is the narrowing down of the scope of vaguely phrased provisions, which turns out to be an effective strategy in a field, such as that of investment law, where most protection standards are formulated as open-ended rules, perhaps as principles. Of course, exceptions to treatment standards, too, may be clarified so as to grant states non-easily-compressible room for maneuver. A third possibility is to pass through the interpretation rather than the reform of investment rules,⁴⁰ and more generally through judicial activity, for instance by avoiding that the reasonableness of the host state’s conduct be assessed by resorting to a strict proportionality test.⁴¹

The second group of strategies stresses the duties of investors and the role of the home states in enforcing such duties or discharging their own responsibilities. The task of ensuring that investors comply with human rights and environmental standards rests primarily with the host state, which may be urged by an IIA to ratify treaties protecting such standards, although this has usually a simple hortatory value. These standards may also be included as investors’ duties in IIA s or investor-state contracts, so that a breach arises not (only) from the violation of the host state’s domestic laws but from the violation of the IIA or contract itself.⁴² This would be conducive to arbitral claims where the investor is the defendant rather than the plaintiff. In the absence of similar clauses, one could maintain that investors’ duties are set out directly by customary international law, perhaps a sort of international development law applicable to investors.⁴³ Nevertheless, enforcing them through investment arbitration would be hard for a series of reasons related to jurisdictional issues (eg demonstration of investors’ consent to arbitration), the international subjectivity of natural and legal persons (in a context where corporations are usually seen as incapable of bearing real duties) and the relationship of investment rules with domestic law and international law at large (which is a major problem in light of the traditional uncertainty about the law applicable in investment arbitral proceedings).⁴⁴ It is unsurprising that claims against investors, or better, counterclaims, have rarely been successful.

As for the role of capital-exporting countries (home states), this could take the form of an improbable international law obligation not to act to the detriment of sustainability,⁴⁵ at least by way of due diligence, that is, by watching over the conduct of corporations abroad and possibly envisaging penalties for wrongdoers. A similar retributive but more plausible approach relies on the attachment of conditionalities to FTA s, whereby SD-related standards are upheld by the threat of lifting the benefits bargained with the counterpart. Viable options could also be the merger of SD considerations into the home state’s decision-making process (what in the EU is known as the policy integration principle),⁴⁶ as well as the monitoring of policy outcomes, which may themselves be fed into the decision-making process. This is the so-called sustainability impact assessment, which is again regularly performed by the EU before concluding FTA s, and is crucial despite the uncertain calculation of such an impact. It is pointless to ask in abstracto if FTA s are beneficial or detrimental to SD, as this analysis must be conducted on a case-by-case basis and capture possible future scenarios in order to provide data for planning. Policymakers should know, inter alia, which sectors will be advantaged and those which will be impaired by the agreement; whether SD-oriented regulation in the capital-importing country will be more financially burdensome and politically costly following the liberalisation of investment and trade; and how many additional resources, made available through economic development, will be possible to invest in SD-related measures and technologies.

This brings us to the third approach to sustainability in investment law. Since investment may further as well as hinder SD, rules – at the international level but also at the domestic level of both the host state and the home state – should be designed to promote FDI that is beneficial to SD and discourage FDI that undermines it. In addition to the already mentioned sustainability impact assessment undertaken before concluding FTA s or during their implementation, home states could adopt a wide array of measures aimed at facilitating ‘good’ investment over ‘bad’ investment.⁴⁷ The host state, for its part, might refine the Salini test and refuse the entry of, or simply exclude from protection, certain investments: thus, the government might decide to target only those that are more problematic in light of SD (eg sector-specific restrictions or other limitations based on development priorities).⁴⁸ Conversely, SD-compatible FDI might be attracted into the host country by favourable legislation, which might entail the creation of SD-based special economic zones.⁴⁹ In addition, provisions for investment facilitation could be included in IIA s to attract ‘recognized sustainable investors’.⁵⁰ However, the actions aimed at directing FDI towards the realisation of SD, also in light of the SDG s, are many more.⁵¹

3.3 Looking for Sustainability in International Investment Law

At this point, one might ask whether there is a definition of SD in international investment law. Apparently, although a number of IIA s refer to the concept, only a few attempt to explain it. For instance, the parties to the EU-Korea FTA unoriginally ‘recognise that economic development, social development and environmental protection are interdependent and mutually reinforcing components of sustainable development’.⁵² Even though the scope of the provision hosting the definition is limited to the trade relationship of the parties,⁵³ it cannot be excluded that such an article may have a larger interpretative value that also covers the investment parts of the treaty. Moreover, it is not that important that social and environmental conditions in a given country improve thanks to the ‘strings’ attached to trade rules rather than investment rules, as long as the effects are real. This must be remembered in light of the current spread of sophisticated, all-embracing FTA s.

At any rate, there are only a handful of similar provisions and these cannot be deemed to be representative of an entire branch of law, especially due to the fragmentation of the investment law regime, which hinders the emergence of a clear juridical idea of SD. This is also true when one tries to grasp the meaning of the notion by looking into either the context where SD is mentioned or the treaty part devoted to SD. The EU-CARIFORUM FTA is a good example of both cases. On the one hand, in its Preamble it states that the parties ‘need to promote economic and social progress for their people in a manner consistent with sustainable development by respecting basic labour rights in line with the commitments they have undertaken within the International Labour Organisation and by protecting the environment in line with the 2002 Johannesburg Declaration’:⁵⁴ the word ‘by’ indicates that labour rights and environmental protection are not by-products but an integral part of SD.⁵⁵ On the other hand, in an article named after SD, the parties express their understanding that this notion entails the ‘commitment that: (a) the application of this Agreement shall fully take into account the human, cultural, economic, social, health and environmental best interests of their respective population and of future generations; (b) decision-taking methods shall embrace the fundamental principles of ownership, participation and dialogue’, so that the parties ‘agree to work cooperatively towards the realisation of a sustainable development centred on the human person, who is the main beneficiary of development’.⁵⁶ This locution draws near to being an open-ended definition of SD; however, such a choice is not particularly common, especially in IIA s that are not FTA s. Even the recent (2019) Model BIT of the Netherlands, for instance, in a section entirely devoted to SD, provides no definition. It simply restates the importance of maintaining high standards in labour and environmental matters and of complying with international obligations (in force for the parties) related to the protection of the environment, labour rights and human rights; it mentions the idea of corporate social responsibility as referred to the same fields; it invokes women’s empowerment, but as a means to SD rather than an embodiment of it.⁵⁷

The path followed by the abovementioned model agreement – ie the expression of some non-economic concerns and the specific ways to address them, in place of a general definition of SD – is very common in BIT s, which are the backbone of the investment regime. Moreover, each BIT takes its own approach to the matter, by citing some issues and not others (the most common being human rights, labour, health, the environment and, to a lesser extent, corruption and transparency) and by devising some strategies and not others (non-relaxation of standards, renvoi to international obligations, well-defined power to regulate and so on). This is where treaty surveys come in useful. Indeed, scholars such as Chi,⁵⁸ Cordonier Segger,⁵⁹ Sauvant and Mann,⁶⁰ Fauchald,⁶¹ Gordo, Pohl and Bouchard,⁶² and institutions like the United Nations Conference on Trade and Development,⁶³ have tried to ‘take photographs’ of SD in IIA s, based on a variety of criteria. Their work is valuable for two reasons. First, it provides us with a rich statistical overview of the presence of SD-related clauses in IIA s. Secondly and more important to our purposes, it allows us to open a window onto the multifarious components of SD according to states and, especially, academics and specialised bodies. In a fragmented context such as the one of investment law, SD is best spoken of as a ‘narrative’ or ‘discourse’, rather than as a coherent, circumscribed notion.

However, some caveats are due with regards to similar surveys. ‘Big data’ analyses do not always render properly the complexity of rules (two sentences formulated with almost identical language may conceal major differences as to their meaning), or the relevance of such rules, which might be somewhat superfluous because of their content (as when an IIA provision demands compliance with the host state’s domestic law) or their container (as is the case for those new model BIT s compiled by states that have ceased concluding such bilateral agreements).

More generally, one must remember that SD clauses may differ as to their bindingness, completeness,⁶⁴ enforceability and, ultimately, effectiveness.⁶⁵ Indeed, what counts is facts, not the law. For example, it is not a great relief to know that BIT s have no significant adverse impact on domestic SD standards if, as it has been argued, these treaties worsen the actual conduct of investors on the field and therefore widen the gap between rules and practices.⁶⁶

4.1 The Protagonists on the Investment Stage

Discourse on participation in investment matters cannot underestimate the fact that international investment law is one of the very few branches of international law where individuals play a prominent role. Of course, this is limited to the investor. In principle, the protection afforded by investment law, even the part that has attained customary status, can only be invoked by investors if a state has expressed its consent to arbitration through a BIT negotiated with the home state. Apparently, despite the huge number of existing treaties, only a small fraction of bilateral relations between countries (the host state and the home state) is covered.⁶⁷ Moreover, arbitral costs are extremely high and this cuts out other companies.

However, neither aspect is an insurmountable impediment, and both can be circumvented by means that increase the number of participants on the investors’ side. On the one hand, the problem of high costs can be overcome through third-party funding, that is, the involvement of a subject extraneous to the dispute who financially supports the arbitration in order to obtain a share of the compensation eventually awarded (if any). As this practice may encourage specious litigation,⁶⁸ the WGIII is now considering how to regulate it. On the other hand, the issue of the lack of an IIA between the host state and the state of nationality of the investor can be bypassed by merely incorporating a new company – in fact, a subsidiary of the main investor – in a country that concluded an IIA with the host state (treaty shopping). In addition, multinational corporations can be complex juridical persons comprising a number of shareholders: investment tribunals have built up a case law that quite generously accords indirect shareholders the right to bring claims,⁶⁹ thus broadening the potential plaintiffs’ basin indefinitely. This fact, also in light of the pivotal role played by shareholders in a company’s decision-making, should be given consideration in the ongoing debate on sustainable corporate governance.

4.2 Investment (Law) and Democracy

If the investing company, its subsidiaries or otherwise controlled entities, its shareholders, as well as its funders, take part in investment litigation as ’representatives’ of capital-exporting countries, who are the participants within FDI-importing countries? In general terms, international investment law does not recognise participatory rights (as opposed to a mere faculty) to people affected by investment projects or those acting on their behalf. This is a serious issue, since this branch of international law can, by design, reduce democratic spaces in the host state.

Indeed, many IIA s contain so-called stabilisation clauses,⁷⁰ that ’freeze’ the laws of a host state throughout the duration of a contract with the investor (freezing clauses) or require the investor to comply with new laws but upon governmental compensation for the costs thus incurred (economic equilibrium clauses). As is evident, this can make changes in the domestic legislative framework very costly for the host state. Moreover, irrespective of this kind of clauses, a similar outcome may still stem from the abovementioned fair-and-equitable-treatment standard, which is included in all IIA s and may now have attained customary status. It requires the state to duly consider the investors’ legitimate expectations,⁷¹ which may be grounded on general regulations as well as on specific commitments undertaken by the government with the investors.⁷² But, absent IIA s and thus in an even broader perspective, violation of contractual obligations owed to investors could result in a full compensation duty based on the pacta sunt servanda principle.⁷³

It follows that the host state’s legislature will not be free to amend the country’s domestic laws – which include tax regulations –⁷⁴ without running the risk of being requested to pay significant sums as compensation for the investors’ economic losses, which also cover those related to missed opportunities. Democracy might, therefore, suffer a condition known as ’regulatory chill’, with law-making bodies being discouraged from enacting new rules promoting the public good and SD but prejudicing the investors’ interests. In addition, the chilling effects may be protracted by the existence of a sunset clause, which prolongs the application of an IIA to investments made while the treaty was in force for some, even many, years after the host state’s denunciation of the IIA. Although the anecdotal recounting of the existence of the regulatory chill has met with a few large-scale empirical studies downplaying the risk,⁷⁵ it seems wise to share the view taken by the OECD, which, while disproving the idea of the race to the bottom, admits that “[t]he possibility of a “regulatory chill” … is harder to refute for the lack of a counterfactual scenario”.⁷⁶

In any case, international investment law can compress a country’s political self-determination in other ways. For instance, a government could somewhat lose control of its own legislation during arbitration proceedings, should adjudicators decide to show little or no deference to the state’s interpretation and application of its laws. Construing domestic rules as law or as facts and adopting a greater or smaller degree of judicial self-restraint in attributing a meaning to the defendant’s laws when establishing eg whether the investor complied with such laws,⁷⁷ are actions that locate decision-making power mainly within or outside the state and its elected bodies.

Overall, the relationship between investment and democracy is complex and possibly negative.⁷⁸ Some empirical analyses find that, albeit democratic regimes protect property rights more firmly than autocratic countries (which of course is good in the eyes of investors), the former are also usually more likely to pay attention to the voice of the domestic industry and satisfy its requests to ensure economic equality of arms or even undercut competition against the ’invaders’.⁷⁹ Since foreign investors are more concerned with economic freedom than political freedom,⁸⁰ it follows that FDI does not necessarily flow towards more democratic states. As always, however, this kind of data-driven observations prove to be contentious, and other scholars have provided documentary evidence of a greater attractivity of democracies in terms of incoming FDI.⁸¹ At any rate, the most interesting question inverts the perspective and asks not whether more democracy fosters FDI but, rather, whether FDI fosters democracy.⁸²

Of course, given the fact that banning the inflow of foreign capital is undesirable for a country and perhaps even unfeasible, the rules on foreign investment should be devised so as to promote democracy rather than autocracy and corruption. This can be done in many ways. For instance, FDI in the primary sector (the extraction of natural resources), unlike investment in non-primary sectors (eg manufacturing), might exert a negative influence on democratic parameters in host countries and could thus be accorded a different treatment.⁸³ Similarly, different rules could be applied to investment projects arising out of contracts concluded with authoritarian regimes whose later fall made way for liberal governments. Currently, arbitrators do not usually take a more lenient approach when deciding cases on a breach of contract in transitional settings, so that investors’ “claims may prevent incoming democratic regimes from pursuing their development priorities” and thus from becoming more politically stable.⁸⁴

Another path for states is that of re-appropriating their power to confer meaning to IIA s, by expanding the possibility of issuing joint interpretations of such agreements, thus limiting the role of a supposedly unaccountable international judiciary. This hypothesis, however, is supportive of democracy only insofar as the interpretative power thus reconquered is not managed in an unaccountable manner by the government. Therefore, democratically elected bodies should be involved,⁸⁵ especially if they played a role in concluding the IIA, so that the meaning of it as understood by the executive is not seen by the parliament as an undue change in treaty arrangements. But, in more general terms, greater legitimacy requires larger participation, which includes non-state actors.

4.3 Sustainable Development Through Public Participation

As noted above, international investment law does not establish real participatory rights yet. This does not mean, however, that such rights are never provided for by other instruments such as investor-state contracts and domestic investment laws. Moreover, other branches of international law, such as environmental law⁸⁶ and human rights law,⁸⁷ may be used to prop up participation in investment matters. The same is true for the internal procedures of the World Bank and other financial institutions at the regional level whose statutory aim is that of funding projects all over the world, although these codes of conduct also attracted criticisms.⁸⁸ Moreover, if we think that adding soft law has any sense, the list of investment-related tools where participation features prominently is even longer.⁸⁹

Investment lawyers, at any rate, are now devoting increasing attention to the issue of participation.⁹⁰ They are considering how the public can be given the opportunity to have a say on investment issues, even if this, more often than not, takes the form of a faculty rather than an actual right. There are many possible avenues.

First, the public can be (and has been) asked to express their views on a number of instruments, binding or not. Some states consulted with their citizens before revising their model BIT s: for instance, Norway (2008 and again 2015), India (2015), Morocco (2017), the Netherlands (2018) and, for its Cooperation and Investment Facilitation Agreements, Brazil (2021). Ecuador went a lot further when, in 2013, it set up its Citizens’ Commission for a Comprehensive Audit of Investment Protection Treaties and of the International Arbitration System on Investments, comprising government officials, academics, lawyers and civil society groups, to assess whether the benefits of concluding IIA s were greater than the attached risks. The EU, for its part, in 2014 launched a wide-ranging consultation on investment protection and investor-to-state dispute settlement in the Transatlantic Trade and Investment Partnership Agreement, and in the same year the Union’s civil society was again called upon to send comments in light of the 2015 revision of the Transparency Policy of the European Investment Bank. Similar initiatives have been recently taken at the international level in 2019 for the Hague Rules on Business and Human Rights Arbitration and in 2020 for the OECD paper on Business Responsibilities and Investment Treaties.

The interest elicited by these initiatives differed from case to case, but it was usually manifested by individual scholars, learned societies, networks of professionals and other well-organised groups more than by ordinary citizens. The same occurs with public participation in institutional (permanent or temporary) fora, like WGIII or the domestic advisory groups the EU has established under the SD chapters of its trade agreements, the latter comprising representatives of business, trade unions and NGO s.⁹¹

As is evident from the examples above, people can be involved in many decisions such as the drafting of a hard or soft law text, the choice of a stance in matters of investment policy and the implementation of IIA s.⁹² However, the same can be replicated on a lesser scale, with the engagement of only a part of the population. Thus, for instance, those affected by an investment project could be allowed to voice their opinion in environmental impact assessments procedures⁹³ or even be granted the right to make that project conditional upon their free, prior and informed consent.⁹⁴ Both paths have been taken in practice, and the latter, in particular, is owed to indigenous peoples under human rights law.⁹⁵ The incorporation of the interests of affected communities into the investment contract between the state and the investor has also been carried out, albeit quite rarely, whereas the involvement of those communities as formal parties of the contract is, as of now, merely a doctrinal proposal.⁹⁶ Of course, civil society must have a role in the monitoring of the implementation of the investment contract, once concluded.

In addition to the participation in the creation of rules (of IIA s, contracts or other) and their actual operation ’on the ground’, the option exists of public involvement in investment adjudication. This is perhaps the most common entry point for civil society into investment law. Indeed, as of today NGO s have been admitted innumerable times to arbitral proceedings as amici curiae,⁹⁷ who are allowed to put forth their remarks on the case even if they are not parties to the dispute. Again, the possibility for the representatives of affected population to directly submit claims against the state or the investor is still a doctrinal idea.⁹⁸ However, amici curiae are not usually permitted to access relevant documents.⁹⁹ Indeed, transparency is one of the most serious problems in investment law and policy. Many state-investor contracts are confidential, as is much investment-related information during proceedings. Arbitral awards may also be classified; a survey shows that, of the cases dealt with by ICSID panels between 1972 and 2012, about 40 per cent were kept secret.¹⁰⁰

As can be seen, the means for a larger participation of the public are numerous. But do such means attain the goal of promoting SD? It goes without saying that the efficacy of the above-mentioned options can vary significantly. Much depends, and this is an aspect of utmost importance, on the kind of participating actors, who may not always be accountable to society at large.¹⁰¹ Cooptation of representatives of trade unions or of the industry in monitoring bodies and advisory committees might forward sectoral interests rather than the collective good. Perhaps, this risk decreases slightly by organising consultations open to the general public, but this, in turn, would include people with no clear stakes in the matter at hand and who, moreover, would not necessarily foster SD or at least the ’sustainability’ part of it.¹⁰² To be honest, partisanship and promotion of non-sustainable causes cannot be ruled out even when participation is reserved to affected communities. In this case, however, their decisions enjoy greater legitimacy, grounded on those people being directly impacted by the consequences of an investment project.

One should also consider that, irrespective of the goal pursued, actual effects may not be those expected. For instance, the involvement of amici curiae in arbitral proceedings may render investment arbitration, which is based on privacy and party autonomy, less attractive.¹⁰³ This is not necessarily a problem, provided, on the one hand, that the alternative dispute settlement mechanism equally provides a means of publicity and participation and, on the other hand, that the reduced appeal of dispute settlement does not adversely impact on the attractivity of the country for FDI. Indeed, and more in general, a larger participation can lead to obstacles to investment plans, making the state a ‘hostile business environment’.¹⁰⁴ The risk is that of having sustainability-oriented participation at the expense of development.

Open problems are also those related to the precise legal means and consequences of participation. As for the former, for each participatory channel more or less effective strategies can be followed. For example, amici curiae may hinge their comments on compliance with human rights and environmental law. However, this language may not be fruitful in terms of concrete results, as it is spoken with arbitrators who are better acquainted with the logic (and purposes) of investment law.¹⁰⁵ As for the latter, it must be noted that different consequences may be attached to the breach of participatory rights. Thus, for instance, investment lawyers must decide whether an investor who did not secure the free, prior and informed consent of affected communities should be punished by considering the contract as void, or merely by curtailing the damages awarded by the arbitral tribunal.¹⁰⁶ These are just some of the wide-ranging choices to be made to combine SD and participation.