The adequacy of Ethiopia’s bilateral investment treaties in protecting the environment: race to the bottom

Abstract

States have the sovereign right to regulate investment activities within their territories to cope up with various policy objectives. One of such areas where regulation is necessitated is the protection of the host State’s society and the environment. This article aims at elucidating how to strike a balance between the protection of the foreign investment and the protection of the environment under Ethiopia’s Bilateral Investment Treaties (BITs). Though a comparative doctrinal investigation, this piece finds that the BITs of Ethiopia accord various protections to investments of foreign investors but they do not impose adequate obligations on the investors concerning environmental protection. It comes across the need to adopt a holistic approach of reforming the BITs from the preambles to the substantive contents. In order to safeguard Ethiopia’s right to regulate, the preambles, the fair and equitable treatment (FET) and indirect expropriation provisions of the BITs should be reconsidered. For this to happen, a resort to amendment, termination and renegotiation of the agreements would be a way-out. Thus, new generation of BITs is needed to introduce a bottom-up approach and ensure sustainable development.

Keywords: Bilateral investment treaties (BIT), environment, Ethiopia, fair and equitable treatment, foreign direct investment (FDI), regulatory space