Navigating the Intersection of International Investment, Climate Change, and Human Rights: A Comprehensive Overview (October 2025) – Center for International Environmental Law

The Center for International Environmental Law (CIEL) warns that the investor-state dispute settlement (ISDS) system is a major barrier to effective climate action. This little-known framework, found in many international investment agreements, allows foreign companies to sue countries for damages when those nations implement environmental protections.

In recent years, there’s been a growing push for nations to take bold steps to combat climate change. CIEL’s brief, The International Investment Legal Regime, Climate Change, and Human Rights: An Overview, delves into how ISDS contradicts this momentum. It highlights recent legal developments that strengthen the argument against ISDS, including significant rulings from international courts that affirm states’ climate duties.

These rulings show that ISDS creates unnecessary obstacles to phasing out fossil fuels, which is essential for meeting international environmental and human rights laws. Judges at the International Court of Justice and the Inter-American Court of Human Rights have stated that countries must regulate polluting industries to protect people and the planet. Despite this, ISDS continues to protect these industries from accountability.

ISDS allows corporations to avoid national courts and challenge public regulations in private tribunals. These tribunals often hand out massive compensation amounts, creating a “regulatory chill” that discourages governments from implementing vital climate policies. For instance, fossil fuel companies have filed over 300 ISDS cases, seeking more than $80 billion in damages for policies aimed at reducing reliance on fossil fuels.

Experts agree: protecting the environment shouldn’t come at such a high cost. CIEL’s findings outline key issues surrounding ISDS:

• How ISDS undermines national sovereignty and hinders a fair energy transition.
• Why climate and human rights should take precedence over corporate interests.
• What actions states can take to mitigate ISDS threats, such as withdrawing from certain treaties and aligning investment rules with human rights obligations.

As nations intensify their climate efforts, they must also address the laws that shield polluters. By dismantling the ISDS framework, countries can prevent costly claims in the future.

This publication offers a thorough overview of ISDS’s detrimental effects on human rights and the environment. It also proposes ways to challenge ISDS, backed by recent judicial opinions emphasizing states’ responsibilities to curb climate harm. For a deeper dive, check out the full brief at CIEL.

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