History

The development of international law around natural resources expanded greatly after 1945. Before the Second World War, the focus regulation of natural resources was focused on fisheries and international rivers. Following the war, the scope expanded to mineral, gas, oil, and other natural resources, including environmental stewardship.

Early Regulatory Schemes (1867-1945)

Regulation of natural resources began in the 19th Century. The bulk of the regulation consisted of bilateral treaties to manage the exploitation of fisheries, migratory birds, and riparian rights. Some of the treaties and regulations implemented during this period include:

• The Convention Between Great Britain and France Relative to Fisheries (regulating oyster harvesting) – 1867
• North Sea Fisheries Convention – 1182
• Water Boundaries Treaty between the United States and Canada (1902)
• Fur Seal Treaty between the United States, Britain, Russia, and Japan (1911)
• Whaling Convention (1931)

A few critical cases continue to drive international natural resources law during this period.  Two in particular are:

•  Pacific Seal Arbitration (1893)  The crux of this case was that nations did not have the right to unilaterally extend their jurisdiction over natural resources in international waters for conservation purposes, and states needed to negotiate treaties to preserve resources outside their jurisdictional limit.
• Trail Smelter Arbitration (1941) In this case, sulfur fumes from a Canadian smelter caused damage in Washington State. The result was an international limitation on a state’s management of its natural resources to the extent it caused cross-boundary damages – which later became the basis of Principle 21 of the Stockholm Declaration.

Additionally, during this period, there was a move towards the nationalization of resources, and support for self-control over natural resources was reinforced by the 1941 Atlantic Charter.

The enforcement methodology post-1919 was the Permanent Court of International Justice (PCIJ). A number of the cases heard before the PCIJ continue to serve as critical law, including:

• Chorzow Factory Case (1926) – Found that liquidation or expropriation occasioned by a peace treaty was an exception to the general rule of international law of no expropriation without indemnity. In the case of a lawful taking, the deprived party is entitled to the value of the taking – including lost profits. The injured party is entitled to restitution or total value if it was an unlawful taking.
• Mavrommatis Palestine Concessions (1924) –  Reinforced the international law principle that foreign investors may seek diplomatic protection and a country may exercise their remedies as a state on behalf of their subjects.

United Nations to the Stockholm Conference (1945-1972)

The post-war decolonization and rise of independent developing countries created new issues in managing natural resources. Nations challenged concession agreements, newly independent countries exercised their sovereignty over resources, and developed nations lost colonial access to these resources.

During this period, concerning conservation, the treaty and institutional framework rested with the United Nations and was essentially a piecemeal and uncoordinated process. No international organization – charted by the UN or others – was empowered to manage the process or given the mandate to coordinate.

During this period, the failure to reach a consensus agreement on foreign direct investment led to several countries limiting foreign direct investment or banning it outright. The General Agreement on Tariffs and Trade (GATT) in 1947 and the 1962 General Assembly Permanent Sovereignty Resolution were critical developments. Additionally, the 1967 adoption of the Draft Convention on the Protection of Foreign Property began to shape the investment landscape.

Permanent Sovereignty over Natural Resources (PSNR)

In 1954, the UN Commission on Human Rights recommended that the General Assembly establish a commission to review PSNR. This commission was established in 1958 and issued a resolution in 1962 (GA resolution 1803). Key elements of the GA resolution included:

• Reinforcement of the right of states to permanent sovereignty over their natural resources
• Nationalization shall have an adequate rationale and shall be paid appropriate compensation
• Foreign investment agreements entered into by States shall be observed in good faith

The General Assembly overwhelmingly adopted the resolution. The 1995 ICJ East Timor case failed to rule on the legal principle of PSNR, though the majority opinion supported that the resolution had legally binding consequences. The ICJ subsequently reinforced this view of the legally binding effect of PSNR in the 2005 ICJ Armed Activities on the Territory of the Congo case.

PSNR also supports peoples’ self-determination rights in the 1966 Human Rights Covenants. The goals include pursuing economic self-determination, securing the benefits of natural resources for non-self-governing peoples, and having states regain effective control over their natural resources.

Stockholm Conference to Rio Conference (1972-1992)

This period was bookended by two significant conferences – the Stockholm Conference on the Human Environment and the Rio Conference.

Stockholm Conference (1972)

In the Stockholm Conference, Principle 21 is considered the prime element of international environmental law. The principle states that “States have, by the Charter of the United Nations and the principles of international law, the sovereign right to exploit their resources under their environmental policies, and 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 the limits of national jurisdiction.” The exercise of the right is tempered by the findings of the Smelter cases in that states cannot cause transboundary environmental damage to areas outside their jurisdiction.

The conference also led to the creation of the United Nations Environment Program (UNEP).

Other Environmental Agreements

Other environmental agreements during this period following Stockholm include:

• 1972 Convention of Marine Pollution by Dumping of Waste and Other Matter
• 1972 World Heritage Convention
• 1973 CITES Convention on International Trade in Endangered Species of Flora and Fauna
• 1978 UNEP Draft Principles
• 1981 Montevideo Program for the Periodic Review of Environmental Law
• 1982 World Charter for Nature

The net result of these conferences and agreements was the development of a discrete practice of international environmental law, which limited the harm a state could do to the environment. Additionally, environmental law began to transcend wildlife protections to pollution and emissions control standards.

International Investment Law (1972-1992)

This era saw several regional agreements, such as NAFTA, the Energy Charter Treaty (ECT), and an extensive expansion of involvement by the World Bank in foreign direct investment protections. The 1974 Charter of Economic Rights and Duties of States and the New International Economic Order (NIEO) Resolution focused on the allowance of each state to exercise sovereignty and choose its economic system to be settled by the host state’s law. This effectively recognizes the right of the host state to nationalize and expropriate the foreign investor’s property provided that appropriate compensation is paid – and changes the 1962 PSNR resolution to place jurisdiction in the host state’s courts.

Rio to Johannesburg (1992-2002)

The 1992 Rio Declaration on Environment and Development brought the elements of the Stockholm Convention and the PSNR into alignment with the world order following the end of the Cold War. The Rio declaration shifts to a human-centered approach to the environment and integrates sustainable development into the environmental goals. The state has a right to development but shall integrate environmental considerations into the development approach. Coming out of this conference was Agenda 21 – which focused on sustainable development integrating environmental and sustainability concerns.

The period saw a continued failure to implement safeguards and standards for foreign direct investment. The Uruguay Round in 1995 extended the TRIMS agreement for FDI, but this falls far short of a comprehensive framework.

Johannesburg to 2017

The World Summit on Sustainable Development (WSSD) was held in 2002. the conference reinforced the Millennium Development Goals and the desire to reverse the loss of environmental resources by 2015. In 2012, there was a follow-up to the original Rio Conference (Rio+20)  to review progress and address emerging challenges. It was followed by the UN Sustainable Development Summit in 2015, which focused on sustainable development goals – reinforcing the focus on safe water, energy sources, and sustainable consumption and production patterns.

FDI protections have improved – however, South America saw several nationalizations around the energy industry during this period.