The authors challenge the narrative that investment arbitration plays a positive role in the transition to renewable energy. While proponents argue that investment treaties provide certainty for critical mineral investments essential for green technologies, the Panama case reveals a darker reality.
Cobre Panamá, one of the world's largest copper mines, became the centre of deadly protests in 2023 when Panamanians rose up against what they perceived as environmental destruction and foreign exploitation. Despite copper's importance for renewable technologies like solar panels and wind turbines, local communities reported severe ecological damage, water resource competition, and human rights abuses.
Following sustained protests, Panama's Supreme Court declared the mining concession unconstitutional, emphasising the fundamental right to a healthy environment. The government subsequently closed the mine and imposed a moratorium on new mining operations.
In response, the Canadian company First Quantum Minerals and other affected parties initiated five international arbitration cases against Panama under the Canada-Panama Free Trade Agreement. These cases highlight the controversial nature of Investor-State Dispute Settlement (ISDS) mechanisms, which allow corporations to bypass domestic courts and sue governments directly.
The authors point out that ISDS proceedings lack transparency, exclude affected communities, and primarily benefit large multinational corporations. The threat of massive compensation awards can create "regulatory chill," preventing governments from implementing environmental and social protections.
Most critically, claims that investment treaties facilitate the just energy transition are increasingly being debunked. Research shows no evidence that such agreements increase renewable energy investment flows, and the inflexibility of ISDS contradicts the adaptability needed for evolving climate policies.
The blog concludes that a truly just transition cannot accommodate a dispute resolution system that undermines justice itself by protecting corporate interests at the expense of human rights and environmental protection.
Read the full analysis at the BHRJ Blog.
