Analysis of Environment-Related Investment Arbitration Cases under NAFTA and Their Implications for the Korea-U.S. FTA

NAFTA 환경관련 투자중재사건 분석과 한미 FTA에의 시사점

Because the Korea-U.S. Free Trade Agreement (Korea-U.S. FTA) and the North American Free Trade Agreement (NAFTA) have an overlapping contracting party, the United States, their provisions have much in common. The investment chapters of these agreements, especially, show many similarities, and thanks to these similarities, it is likely that the Korea-U.S. FTA arbitration tribunal for investor-state disputes regarding the environment will put great weight on the NAFTA tribunals' interpretations of those similar provisions. Since the NAFTA tribunals have already handled many environment-related arbitration cases, their interpretations will help heighten the predictability of environment-related Korea-U.S. FTA arbitration cases. This paper analyzes the environment-related NAFTA cases in which the tribunal has issued an award, which are the Metalclad case, S.D. Myers case, Waste Management case, Methanex case, Glamis Gold case, and Chemtura case. According to this analysis, the most controversial NAFTA provisions have been Article 1102 (national treatment), Article 1105 (minimum treatment standard, fair and equitable treatment), and Article 1110 (expropriation). The NAFTA tribunals applied the requirement of these articles in a strict manner, reducing the possibility of finding a violation. After the aforementioned analysis, this paper proceeds to compare the national treatment, minimum treatment standard (fair and equitable treatment), and expropriation provisions of the Korea-U.S. FTA and NAFTA and to predict the impact that the environment-related awards under NAFTA can have on environment-related Korea-U.S. FTA cases. It is expected that the NAFTA interpretations of the national treatment and minimum treatment provisions are likely be used as they are, but not the interpretations of expropriation, because of the differences in the expropriation provisions of the two agreements.