Expropriation clauses and environmental regulation: diffusion of law in the era of investment treaties

This article discusses diffusion of law in relation to investment treaty annexes on indirect expropriation. These annexes clarify the circumstances under which environmental regulation may constitute an expropriation requiring States to compensate investors. The article briefly reviews theoretical perspectives in diffusion of law debates and links them to investment treaty making. It then explores three diffusion moments in the development and spread of expropriation annexes: the transition of indirect expropriation concepts and rules from the jurisprudence of the United States (US) Supreme Court to the indirect expropriation annex included in the US model investment treaties of 2004 and 2012; the inclusion of a comparable annex in the 2009 Comprehensive Investment Agreement of the Association of South-East Asian Nations; and the inclusion of an indirect expropriation annex in the Comprehensive Economic and Trade Agreement between Canada and the European Union. The findings interrogate traditional concepts of diffusion of law and highlight the complexities of law formation in a globalized world. They also compound the case for comparative environmental lawyers to study the interface between national and international law and between environmental law and other branches of law that can affect options for environmental regulation.