Abstract
The exploitation of natural resources such as oil, coal, and gas that are contained in the soil of the territory of States is generally considered to be subject only to the domestic regulation of the State in question. Due to the permanent sovereignty over natural resources, states are free to determine whether and how they wish to exploit these resources. The role of international law is limited, but only to the extent that concerns of foreign investors are not negatively affected. This contribution assesses the relationship between certain sub-sections of international economic law, investment law and trade law, and answers the question whether the case of shale gas extraction by means of fracking is merely another example of the tension between the rules that govern international economic relations and domestic policy considerations, or whether it represents a potential turning point in the way the international community perceives these constraints on domestic policy making. This is done by considering the Lone Pine Inc. investment arbitration against Canada. This arbitration takes place against a background of increasing public discontent with investor-state dispute settlement and a reconsideration of this concept by several states.
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Notes
- 1.
For further information on gas production, imports, exports, demands and prices see International Energy Agency (2017).
- 2.
See Lone Pine Resources Inc. v. The Government of Canada, ICSID Case No. UNCT/15/2 (further discussed in Sect. 4).
- 3.
For an overview of the different hydraulic fracturing stages see for example FracFocus.
- 4.
For a more detailed description of the technology and its environmental considerations refer to Middleton et al. (2017).
- 5.
For an overview and discussion refer to Fleming (2013).
- 6.
For a comparative analysis of amongst others the ownership system of mineral rights and its impacts on public perception and participation in the United States and the United Kingdom please refer to Whitton et al. (2017).
- 7.
See also Goldthau and Sovacool (2016).
- 8.
Act 2011-835 of 13 July 2011 (Loi n° 2011-835 du 13 juillet 2011 visant à interdire l’exploration et l’exploitation des mines d’hydrocarbures liquides ou gazeux par fracturation hydraulique et à abroger les permis exclusifs de recherches comportant des projets ayant recours à cette technique).
- 9.
U.S. Energy Information Administration (2016a), p. 21.
- 10.
U.S. Energy Information Administration (2013).
- 11.
U.S. Energy Information Administration (2016a), p. 21.
- 12.
Ibid.
- 13.
US Energy Information Administration (2013).
- 14.
For more information on the beginning of shale gas production and the environmental concerns in Canada, refer to Rivard et al. (2014).
- 15.
U.S. Energy Information Administration (2016b).
- 16.
Government of Canada (2018b).
- 17.
- 18.
Polish Geological Institute (2012).
- 19.
For more information see Orlen (2010), pp. 44–55.
- 20.
Meißner and Naumenko (2011), p. 9.
- 21.
See also Goldthau and Sovacool (2016).
- 22.
Financial Times (2018).
- 23.
Sinding (2013).
- 24.
NY ECL § 23-0303(2).
- 25.
DRBC (2018).
- 26.
See for further information on the involvement of water and river basin commissions in the shale gas regulation process: ibid.
- 27.
DRBC (2009).
- 28.
See for a comparative analysis for the legal regimes in the United States and Canada: Carter and Eaton (2016).
- 29.
Government of Canada (2018b).
- 30.
For an overview refer to Government of Canada (2018a).
- 31.
Canadian Association of Petroleum Producers, as well as Beaudoin and Serry (2010).
- 32.
Canadian Association of Petroleum Producers (2012).
- 33.
This is because “energy” and “environment” are included as a shared competence under Articles 4 (2)(e) and (i) TFEU Accordingly “the Union and the Member States may legislate and adopt legally binding acts in that area. The Member States shall exercise their competence to the extent that the Union has not exercised its competence. The Member States shall again exercise their competence to the extent that the Union has decided to cease exercising its competence” (Article 2(2) TFEU).
- 34.
Commission Recommendation from 22 January 2014 on minimum principles for the exploration and production of hydrocarbons (such as shale gas) using high-volume hydraulic fracturing, OJ [2014] L39/72 (“Recommendation”).
- 35.
Generally speaking, the entire European Union environmental acquis is applicable to shale gas activities, see also: Tomescu.
- 36.
DG for Internal Policies European Parliament (2011), pp. 53–60.
- 37.
Directive 2006/21/EC on the management of waste from extractive industries and amending Directive 2004/35/EC, [2006] OJ L 102/15.
- 38.
Directive 2008/50/EC of 21 May 2008 on ambient air quality and cleaner air for Europe, [2008] OJ L 152/1.
- 39.
Directive 96/82/EC of 9 December 1996 on the control of major-accident hazards involving dangerous substances, [2007] OJ L 10/13, as amended.
- 40.
Directive 2011/92/EU of 13 December 2011 on the assessment of the effects of certain public and private projects on the environment, [2012] OJ L 26/1.
- 41.
Regulation No. 1907/2006 of 18 December 2006 concerning the Registration, Evaluation, Authorisation and Restriction of Chemicals (REACH), establishing a European Chemicals Agency, amending certain Directives, [2006] OJ L 396/1.
- 42.
Directive 92/43/EEC of 21 May 1992 on the conservation of natural habitats and of wild fauna and flora, [1992] OJ L 206/7, as amended and Directive 2009/147/EC of 30 November 2009 on the conservation of wild birds, [2010] OJ L 20/7.
- 43.
Directive 2000/60/EC of 23 October 2000 establishing a framework for Community action in the field of water policy, [2000] OJ L 327/1.
- 44.
Directive 2006/118/EC on the protection of groundwater against pollution and deterioration, [2006] OJ L372/49.
- 45.
- 46.
See DECC (2013), p. 14.
- 47.
Schrijver (2008); we refer to this contribution for an elaborate overview of the history of the principle of permanent sovereignty over natural resources.
- 48.
United Nations, General Assembly Resolution 1314 [XIII], “Recommendations concerning international respect for the right of peoples and nations to self-determination”, 12 December 1958.
- 49.
United Nations, General Assembly Resolution 1803 [XVII], “Recommendations concerning international respect for the right of peoples and nations to self-determination”, 14 December 1962.
- 50.
Schrijver (2008).
- 51.
Barral (2016), p. 3.
- 52.
Desta (2016), p. 128.
- 53.
Schrijver (2008).
- 54.
Resolution adopted by the General Assembly on 25 September 2015, United Nations, A/RES/70/1.
- 55.
Ibid., p. 19.
- 56.
Rules generally protect investors against (in)direct expropriation, discrimination, and require host states to accord “fair and equitable treatment” under a “minimum standard of treatment” provision. The open character of some of these norms is often criticized as providing arbitral tribunals with too much room for interpretation and the reform of investment protection chapters typically includes efforts to more clearly define the content of such open norms.
- 57.
Lone Pine Resources Inc v Canada, Notice of Intent to Submit a Claim to Arbitration Under Chapter 11 of the North American Free Trade Agreement (8 November 2012) www.italaw.com/sites/default/files/case-documents/italaw1156.pdf.
- 58.
Lone Pine Resources Inc v Canada, Notice of Intent to Submit a Claim to Arbitration Under Chapter 11 of the North American Free Trade Agreement (8 November 2012), para. 3, www.italaw.com/sites/default/files/case-documents/italaw1156.pdf.
- 59.
Lone Pine Resources Inc v Canada, Claimant’s Reply to the Submissions of the United States of America and Mexico Pursuant to Article 1128 of the NAFTA (22 September 2017), para. 8.
- 60.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), paras. 187–188 (footnotes omitted).
- 61.
Lone Pine Resources Inc v Canada, Claimant’s Reply (Redacted) (22 July 2017), para. 256 (footnotes omitted).
- 62.
Lone Pine Resources Inc v Canada, Claimant’s Reply (Redacted) (22 July 2017), para. 279 (footnotes omitted).
- 63.
Grabowski (2014).
- 64.
- 65.
Pac Rim Cayman LLC v. Republic of El Salvador, Award, Para. 9.15.
- 66.
Pac Rim Cayman LLC v. Republic of El Salvador, Award, Para. 8.44.
- 67.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), para. 227 (footnotes omitted).
- 68.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), para. 236.
- 69.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), para. 259.
- 70.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), para. 270.
- 71.
Lone Pine Resources Inc v Canada, Claimant’s Reply (Redacted) (22 July 2017), para. 443.
- 72.
Lone Pine Resources Inc v Canada, Claimant’s Memorial (10 April 2015), paras. 280–322.
- 73.
Lone Pine Resources Inc v Canada, Claimant’s Reply (Redacted) (22 July 2017), para. 567 and preceding paras.
- 74.
ICSID, Case Details: Lone Pine Resources Inc. v. Canada (ICSID Case No. UNCT/15/2), available at https://icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=UNCT/15/2 (last accessed at 30 April 2018).
- 75.
Viñuales (2015), p. 12.
- 76.
Desta (2016), p. 118.
- 77.
Republic of Tanzania (2017), Natural Wealth and Resources (Permanent Sovereignty) Act, 2017. Available at http://www.tcme.or.tz/resources/view/the-natural-wealth-and-resources-permanent-sovereignty-act-2017; Republic of Tanzania (2017), Natural Wealth and Resources Contracts (Review and Re-negotiation of Unconscionable Terms) Act, 2017. Available at http://www.tcme.or.tz/resources/view/the-natural-wealth-and-resources-contracts-review-and-re-negotiation-of-unc; Republic of Tanzania (2017), Written Laws (Miscellaneous Amendments) Act, 2017. Available at http://www.tcme.or.tz/resources/view/the-written-laws-miscellaneous-amendments-act-2017 (all last accessed at 30 April 2018).
- 78.
See UNCTAD Investment Policy Hub, Bilateral Investment Treaties, available at http://investmentpolicyhub.unctad.org/IIA/CountryBits/222 (last accessed at 30 April 2018).
- 79.
Masamba (2017).
- 80.
Ibid.
- 81.
Lexology, Allen & Overy—New laws create potential for arbitration claims against Tanzania, 5 September 2017. Lexology, Winston & Strawn LLP—Tanzania’s Legal Reform of the Natural Resources Sector Threatens Extractive Industries, 1 August 2017. Lexology, Jones Day—Tanzania Overhauls Mining Laws, Fines Investor US$190 Billion: Is Your Investment Protected?, 5 August 2017.
- 82.
USTR, Press Statement in Arlington, Virginia, 19 October 2017. Reported here https://insidetrade.com/trade/his-own-words-lighthizer-lets-loose-business-hill-opposition-isds-sunset-clause (last accessed 30 April 2018). See also, US House of Representatives, Committee on Ways and Means—Hearing on U.S. Trade Policy Agenda, The Honorable Robert E. Lighthizer, 21 March 2018, p. 20; available at https://waysandmeans.house.gov/wp-content/uploads/2018/05/20180321FC-Transcript.pdf, pp. 20–21.
- 83.
- 84.
Hoffmeister (2017).
- 85.
Reinisch (2017), p. 295.
- 86.
ECJ, Opinion 2/15 of the Court, 16 May 2017, para. 282.
- 87.
Geraets and Reins (2016), p. 18.
- 88.
Desta (2016), p. 143.
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Reins, L., Geraets, D., Schomerus, T. (2018). Fracking, Sovereignty over Natural Resources and International Investment Law. In: Bungenberg, M., Krajewski, M., Tams, C.J., Terhechte, J.P., Ziegler, A.R. (eds) European Yearbook of International Economic Law 2018. European Yearbook of International Economic Law, vol 9. Springer, Cham. https://doi.org/10.1007/8165_2018_7
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