August 20, 2025

Bridging the Gap between IIAs and the Accommodation to a Green Transition with UNCITRAL’s Draft Provision 19

Key Points

Draft Provision 19 enhances regulatory autonomy, affirming the right to regulate for environmental priorities and human rights.
Carve-outs can improve consistency in International Investment Agreements, supporting sustainable development initiatives.
A tri-layered approach balances domestic policy with international commitments, notably integrating the Paris Agreement.
Potential procedural safeguards highlight the importance of maintaining investor confidence while promoting a green transition.

Abstract

Abstract The crisis of plurilateralism in investor-state dispute settlement (ISDS) and the need for a green transition presents significant challenges that UNCITRAL’s reform efforts addresses through its Working Group III. UNCITRAL’s Draft Provision on the right to regulate, Draft Article 19, marks a significant step toward enhancing States’ regulatory autonomy. Carve-outs and procedural safeguards could enhance uniformity in International Investment Agreements (IIAs). Draft 19 adopts a tri-layered approach: affirming regulatory rights, mandating high deference to both domestic policy decisions and international commitments (notably including the Paris Agreement). The draft provision addresses global environmental and governance priorities effectively. Well-defined carve-outs, paired with procedural safeguards could prioritize sustainable development while maintaining investor confidence and serve as a foundation for IIAs that are compatible with environmental and human rights objectives.

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