CHAPTER 4 INTERNATIONAL ENVIRONMENTAL LAW AND INTERNATIONAL BUSINESS VENTURES

• Jurisdiction: United States

International Environmental Law for Natural Resources Practitioners
(Mar 1997)
CHAPTER 4
INTERNATIONAL ENVIRONMENTAL LAW AND INTERNATIONAL BUSINESS VENTURES
Ved P. Nanda ^*
University of Denver College of Law
Denver, Colorado

I. INTRODUCTION

Environmental concerns are a priority item for business ventures in most industrialized countries where effective environmental regimes regulate activities which cause or might cause adverse environmental consequences. But as yet there is a lack of clarity as to how international environmental law affects the activities of international business ventures, especially transnational corporations (TNCs).

To illustrate, the fundamental principle of environmental law, sic utere tuo ut alienum non laedas, that is, "one should use one's own property in such a manner as not to injure that of another," imputes state responsibility for harm caused to other states. The principle was applied in the often-cited arbitration decision in the Trail Smelter case,¹ and was reiterated in the 1972 Stockholm Declaration adopted at the UN Stockholm Conference on the Human Environment.² After acknowledging the right of states "to exploit their resources pursuant to their environmental policies," Principle 21 of the Declaration limits state sovereignty by linking states' right of exploitation of natural resources with "the responsibility to ensure that activities within their jurisdiction or control do not cause damage to the environment of other States or of areas beyond their national jurisdiction."

The difficulty lies, however, in translating the principle into specific and precise obligations, for international agreements on the environment are usually couched in general terms, a practice common in but not limited to those agreements initially negotiated as framework agreements for later elaboration in protocols.

This paper attempts to address the relationship between international environmental law and international business ventures. It first highlights the development of international environmental law, in Part II. Part III studies selected major international conventions related to the environment that have a bearing on those involved in international business and trade, followed in Part IV by an analysis of applicable emerging principles of international environmental law. The concluding section, Part V, provides an appraisal and offers recommendations.

II. THE DEVELOPMENT OF INTERNATIONAL ENVIRONMENTAL LAW

The development of international environmental law, a

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relatively new addition to the corpus of international law, can be directly attributed to several factors, including 1) an enhanced awareness that the global environment is fragile, global environmental problems are immense, and human activities are damaging the environment at an accelerated pace; and 2) a growing realization that without concerted national, regional and international action the planet will continue to suffer further environmental degradation. Advances in science and technology have, of course, made it possible to understand and appreciate the nature and scope of the challenge and have hence contributed significantly in raising human awareness on environmental issues. And the more recent efforts at integrating economic and environmental issues, and at linking international trade law and international environmental law, such as in the North American Free Trade Agreement,³ offer promising prospects for further development of international environmental law norms which are enforceable.

The first major international effort comprehensively to address worldwide concern with the environment and to translate it into concrete action plans took place in connection with the 1972 United Nations Stockholm Conference on the Human Environment.⁴ The Conference adopted the Stockholm Declaration, comprising guiding principles and representing the first global consensus on the magnitude of the environmental problems that confront the world community.⁵ It also produced an Action Plan for environmental management and established a framework for the creation of an organization to implement the Action Plan.⁶ Subsequently, the UN General Assembly established the United Nations Environment Program,⁷ consisting of a Governing Council, the Environment Fund, and the secretariat to serve as a focal point for environmental action and coordination within the UN system, and to act as a catalyst for environmental action.

Following the Stockholm Conference, a large number of countries enacted domestic environmental laws and regimes. Several states entered into bilateral and multilateral agreements for the protection, preservation and management of the environment. In addition, they established bilateral, regional and international institutions and regimes to assess the global environmental situation, promulgate standards and monitor their compliance, with industrialized states providing technical and financial assistance to developing countries in their efforts to address environmental problems.

During the years between the Stockholm Conference in 1972 and the Rio Earth Summit in 1992, states entered into a large number of international environmental conventions that contain binding legal obligations.⁸ In June 1992, the United Nations Conference on Environment and Development (UNCED) was held in Rio de Janeiro to mark the twentieth anniversary of the Stockholm Conference. The Rio Conference gave impetus to the negotiation, signing and ratification of even more new conventions. UNCED adopted the Rio

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Declaration on Environment and Development,⁹ Agenda 21, a blueprint for managing the environment in the 21st Century,¹⁰ the UN Framework Convention on Climate Change,¹¹ the Convention on Biological Diversity,¹² and a statement of principles on forests.¹³

III. SELECTED INTERNATIONAL ENVIRONMENTAL CONVENTIONS

A. General

At the outset, it should be noted that the process of treaty negotiation and ratification is slow and cumbersome and often reflects mostly the terms of the least common denominator. Also, the universality of adherence to the agreement is by no means certain. Equally important, treaty implementation always remains a significant concern. First, wide ratification of an international agreement is obviously essential. Second, an effective institutional structure needs to be established to oversee and monitor the implementation, to apply standardized norms, and to agree upon and provide for remedies. Thus, appropriate procedures need to be established to assure reasonable access to the decisionmaking process for those seeking redress under the agreement. Finally, an effective incentive and coercive system and a compulsory dispute settlement mechanism are essential elements to encourage observance and to ensure a reasonable degree of reliance.¹⁴

Nevertheless, international agreements constitute the primary source of international law, and they create binding obligations for states parties. This is especially the case in the development of international environmental law, for numerous international conventions related to the environment are responsible for establishing governing norms and procedures and for the creation of appropriate institutional structures. Although this is not the place for a detailed study of these various conventions, a few selected international conventions with a bearing on transnational business and trade will be discussed here. These are the United Nations Framework Convention on Climate Change, the Convention on Biological Diversity, the Basel Convention on Hazardous Wastes,¹⁵ the Convention on International Trade in Endangered Species (CITES),¹⁶ the Montreal Protocol on Substances that Deplete the Ozone Layer,¹⁷ and the Madrid Protocol on the Antarctic.¹⁸

B. The Climate Change Convention

The United Nations Framework Convention on Climate Change,¹⁹ adopted in 1992 at the Rio Earth Summit, states as its objective to:

achieve...stabilization of greenhouse gas concentrations in the atmosphere at a level that would prevent dangerous anthropogenic interference with the climate system. Such a level should be achieved within a timeframe

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sufficient to allow ecosystems to adapt naturally to climate change, to ensure that food production is not threatened and to enable economic development to proceed in a sustainable manner.²⁰

The Convention did not mandate firm targets or timetables. Several issues, including mechanisms for funding, as well as the commitments of developed countries, countries with economies in transition, and developing countries, were left unresolved. However, this being a framework convention, it was envisaged that protocols to the Convention in order to address specific measures for reducing emissions would be subsequently adopted. The Commission for Sustainable Development²¹ and the Conference of the Parties were set up to undertake appropriate implementation measures.

The Convention obligates states parties to reduce CO₂ emissions to 1990 levels by the year 2000. Since its signing, the Intergovernmental Panel on Climate Change (IPCC), established to provide a scientific consensus on climate change, has released its 1995 Second Assessment Report, concluding inter alia, that atmospheric concentrations of such greenhouse gases as CO₂, methane and N₂O have grown significantly, that is, by about 30%, 145% and 15% respectively.²² The Report also suggests a discernible human influence on the global climate.²³

As of the second Conference of the Parties, held at Geneva in July 1996, it remained doubtful that most developed countries would be able to fulfill their Convention obligations to reduce greenhouse gases to 1990 levels by 2005.²⁴ Nevertheless, in light of what appears to be a scientific consensus on the problem of climate change, various countries, including the U.S., have called for binding, realistic targets on phasing out...