The ICJ’s Advisory Opinion: Empowering States and Communities in International Investment Law

Byron Sequeira

Credit: Robin Van Lonkhuijsen/AFP via Getty Images.

The International Court of Justice’s (ICJ) ongoing advisory proceedings on climate change have drawn global attention to the legal obligations of states in addressing the climate crisis. Sparked by a coalition of small island developing states (SIDS) and vulnerable nations, this advisory opinion is a pivotal attempt to clarify the obligations of states under international law to mitigate climate change and protect affected populations. The request for an advisory opinion was filed on April 12, 2023[1] and was attended by 96 states and 11 international organizations during public hearings. The proceedings reflect the urgent need for a coherent legal framework enabling states to pursue ambitious climate policies without being deterred by investor claims.[2]

A unique contribution to the ICJ proceedings came from the International Union for the Conservation of Nature (IUCN), the only participating international organization with both State and Non-State members. Through its written submissions, written comments, and oral submissions, the IUCN highlighted the interplay of science and law in addressing climate change. Its robust interpretation of international legal frameworks helped inform the ICJ’s deliberations and emphasized the need to align climate mitigation with human rights and environmental protection.

This article examines how the ICJ’s advisory opinion can establish a framework for sustainable investment governance. By incorporating contributions from organizations like the IUCN, the advisory opinion has the potential to reinforce the intersection of environmental law and human rights within investment law. By analyzing cases such as Renco Group v. Peru,[3] the article explores how the ICJ’s advisory opinion could address systemic inequities and influence international investment law with environmental and human rights values.

International Investment Law and the Climate Challenge

International investment agreements, which typically take the form of bilateral investment treaties (BITs) and free trade agreements (FTAs), have historically prioritized investor protection over state sovereignty and environmental accountability.  Investors have used provisions such as fair and equitable treatment and investor-state dispute settlement mechanisms to challenge legitimate regulatory measures addressing climate change. This practice has created a chilling effect on states, particularly in the Global South, hindering their ability to fulfill climate governance commitments.

The arbitration case, Renco Group v. Peru, highlights these challenges. Renco’s subsidiary, Doe Run Peru, operated the La Oroya metallurgical smelter, located in a town recognized as one of the most polluted sites on Earth. Generations of residents suffered catastrophic health impacts, including lead poisoning and respiratory ailments, caused by unchecked emissions from the smelter. When Peru introduced stricter environmental regulations to address this crisis, Renco responded by initiating arbitration under the US-Peru Trade Promotion Agreement, alleging violations of its fair and equitable treatment expectations and expropriation without compensation, which are protected by the Agreement. Thus, the investor sought significant compensation. 

In contrast, during the advisory opinion hearings, the Republic of Nauru emphasized that the climate crisis disproportionately affects vulnerable nations and communities, particularly small island developing states. Nauru underscored that states have obligations under general international law to address climate harm and that these obligations must be upheld and enforced without derogation.[4] The Renco Group case, which remains pending before a Permanent Court of Arbitration tribunal, exemplifies how foreign investors invoke provisions in international investments agreements to challenge state regulatory measures aimed at fulfilling environmental and public health obligations. While the tribunal has yet to render a decision, Renco’s claims characterize Peru’s environmental measures as breaches of investor expectations, thereby exposing the systemic tensions within the investor-state dispute settlement framework. This case underscores the need for an international legal framework that balances the imperative of climate action with investor protections.

The IUCN further reinforced this perspective by defining the “climate system” in line with Article 1(3) of the United Nations Framework Convention on Climate Change (UNFCC) as the “totality of the atmosphere, hydrosphere, biosphere, and geosphere and their interactions”.[5] This definition underscores the systemic nature of climate harm and the need for legal frameworks that prioritize mitigation measures over investor interests. 

La Oroya v. Peru: A Human Rights Imperative

Credit: Liliana Ávila/AIDA.

In a parallel legal development, the affected communities of La Oroya sought justice through the Inter-American Court of Human Rights (IACHR) in La Oroya v. Peru.[6] The IACHR condemned Peru for failing to protect its citizens from the toxic emissions generated by the La Oroya smelter, recognizing environmental harm as a breach of fundamental human rights, including the rights to life, health, and a clean and healthy environment. This landmark judgment underscored the nexus between environmental protection and the state’s human rights obligations under the American Convention on Human Rights.

During the ICJ advisory proceedings, the International Union for the Conservation of Nature (IUCN) provided insights that echoed this connection between environmental harm and human rights. Referring to international human rights treaties and cases such as KlimaSeniorinnen Schweiz v. Switzerland,[7] the IUCN argued that states have positive obligations to mitigate greenhouse gas (GHG) emissions to safeguard the rights of vulnerable populations.[8] This alignment with the IACHR’s position reinforces the principle that human rights must serve as a guiding framework for both climate action and investment governance. The tension between human rights courts and investment tribunals underscores the need for reform. While human rights courts hold states accountable for protecting public welfare, investment tribunals often prioritize investor protections, sometimes restricting state measures enacted in the public interest. The Renco Group case exemplifies this tension, demonstrating the need for investment treaties that explicitly recognize human rights and environmental obligations.

Some modern investment agreements reflect this shift. The Dutch Model BIT (2019) and Colombian Model BIT (2017) affirm states’ right to regulate in the public interest, while Comprehensive Economic and Trade Agreement (CETA) integrates environmental and human rights considerations into its investment framework. Some model BITs go further, allowing counterclaims against investors for environmental and human rights violations. Though no international investment agreements currently in force includes this provision, these developments indicate a growing recognition that investment law must evolve to balance investor rights with public interest concerns. Investor-state dispute settlement reform should focus on adjusting the existing legal framework to enable investment tribunals to consider human rights and environmental interests.

The IUCN’s analysis of customary international law, including the duty to prevent significant harm, procedural due diligence, and the obligation to cooperate, provides a robust foundation for such reform.[9] A harmonized framework would enable states to fulfill their climate obligations while ensuring the protection of vulnerable communities from irreparable harm caused by environmental degradation.

The ICJ’s pending advisory opinion will build on the growing consensus that states have an obligation under international law to combat climate change. This recognition should encourage states to revise investment agreements to strike a balance between investor protections and environmental and human rights obligations. While pro-investor advocates argue that investment courts should not adjudicate environmental disputes—maintaining that such matters belong in domestic courts—climate-related disputes increasingly intersect with investment law. Though non-binding, the ICJ’s opinion may influence treaty negotiations and state practice, reinforcing the need for investment frameworks that accommodate states’ regulatory autonomy while upholding international investment commitments.

The ICJ and ITLOS Advisory Opinions: Strengthening Legal Clarity in Climate and Investment Governance

The International Court of Justice (ICJ) was asked to provide an advisory opinion addressing two specific questions: (1) What are the obligations of States under international law to ensure the protection of the climate system for present and future generations? (2) What are the legal consequences under these obligations for States that, by their acts and omissions, have caused significant harm to the climate system?[10]

In a complementary development, the International Tribunal for the Law of the Sea (ITLOS) provided an advisory opinion in 2023 on state obligations under UNCLOS, addressing marine environmental harm caused by climate change. ITLOS emphasized states’ duty to prevent, reduce, and control greenhouse gas emissions, reinforcing the interconnectedness of environmental governance across jurisdictions. This opinion complements the ICJ’s efforts, advocating for harmonized legal principles that align with human rights and environmental goals.

The ICJ’s advisory opinion, informed by contributions from the IUCN and aligned with ITLOS’s findings, can clarify the strong emerging consensus on states’ climate obligations under international law. While investment tribunals have generally recognized that bona fide environmental regulations do not constitute expropriation or violate fair and equitable treatment standards, challenges remain in ensuring consistency in arbitral decisions. By reinforcing the legal basis for states to enact climate policies, the ICJ’s opinion can provide persuasive authority to guide future treaty negotiations and dispute resolution while respecting established investment law principles.

Transforming Investment Law for the Anthropocene

The Anthropocene—an epoch defined by humanity’s significant and often detrimental impact on the Earth’s ecosystems—necessitates a profound transformation of international investment law. The ICJ’s advisory opinion holds the potential to catalyze this transformation by embedding principles of sustainability, human rights, and accountability into the foundation of investment governance. Such a shift requires a reimagining of international investment agreements to ensure that foreign investments actively contribute to sustainable development rather than exacerbating environmental harm.

During the ICJ advisory proceedings, the Solomon Islands and Marshall Islands stressed that legal frameworks must protect the regulatory autonomy of states most affected by climate change[11] Such reforms could include access to justice for affected communities in investor-state dispute settlement disputes, including consideration of amicus curiae submissions by investment tribunals. Investment tribunals must align decisions with global sustainability goals, such as those outlined in the UN Sustainable Development Goals.

Conclusion

The ICJ’s advisory opinion on climate change presents a significant opportunity to shape the evolving relationship between international investment law, human rights, and environmental accountability. By engaging with disputes such as Renco Group v. Peru and La Oroya v. Peru, and drawing from complementary developments like the ITLOS Advisory Opinion, the ICJ can reinforce states’ regulatory autonomy to address climate change. Rather than eliminating investment safeguards, the ICJ opinion can encourage the development of legal frameworks that integrate environmental and human rights considerations into investment governance.

This shift is critical for ensuring that international law remains responsive to the challenges of the Anthropocene. Moving forward, states must take proactive steps in treaty negotiations to strike a balance between investor rights and their own obligations to protect the environment and public health. If widely embraced, the ICJ’s opinion could serve as a catalyst for reform, guiding the reform of investment agreements to promote sustainability, enhance legal certainty, and protect the rights of vulnerable communities. Ultimately, the decision to align investment law with environmental and human rights imperatives rests with states; however,  the ICJ’s opinion provides a foundation for that transformation.

---

[1] Request for Advisory Opinion on the Obligations of States in Respect of Climate Change, I.C.J., U.N. Doc. A/77/L.58 (Apr. 12, 2023).

[2] International Court of Justice, Public Hearings on the Request for an Advisory Opinion on the Obligations of States in Respect of Climate Change (Dec. 2–13, 2024).

[3] The Renco Group Inc. v. The Republic of Peru, ICSID Case No. UNCT/13/1, Partial Award on Jurisdiction, (July 15, 2016) [hereinafter Partial Award].

[4] International Court of Justice, Verbatim Record, Obligations of States in Respect of Climate Change, CR 2024/46 (Dec. 9, 2024).

[5] International Union for Conservation of Nature, Written Statement, Obligations of States in Respect of Climate Change, ICJ (Mar. 19, 2024).

[6] La Oroya Community v. Peru, Inter-Am. Ct. H.R., Judgment of Nov. 27, 2023.

[7] Verein KlimaSeniorinnen Schweiz & Ors v. Switzerland, App. No. 53600/20, Eur. Ct. H.R. (Apr. 9, 2024).

[8] International Union for Conservation of Nature, Written Comments, Obligations of States in Respect of Climate Change, ICJ (Aug. 15, 2024).

[9] International Union for Conservation of Nature (IUCN), Written Statement on Customary International Law and Climate Obligations, ¶¶ 342–456, in International Climate Law Proceedings (Mar. 19, 2024).

[10] Supra note 5.

[11] International Court of Justice, Verbatim Record, Obligations of States in Respect of Climate Change, CR 2024/42 (Dec. 5, 2024).