States are under an obligation not to conduct or permit activities within their territory that result in harm to the environment of other states. Thus, the United States in 1935 successfully pursued a claim against Canada in the Trail Smelter arbitration for pollution from a Canadian smelter which damaged vegetation in the State of Washington.
Similarly, Australia and New Zealand pursued claims (which were left unresolved) in 1973 against France before the International Court of Justice for radioactive pollution detected in Australian and New Zealand territories caused by France’s testing of nuclear weapons in the South Pacific.
In 2010, in the so-called Pulp Mills case between Argentina and Uruguay, the International Court of Justice held that ‘[a] State is … obliged to use all means at its disposal in order to avoid activities which take place in its territory, or any area under its jurisdiction, causing significant damage to the environment of another State’.
Closer to home, all ten members of the Association of Southeast Asian Nations (ASEAN), including Indonesia in January 2015, have signed up to the 2003 ASEAN Transboundary Haze Pollution Agreement. The parties to the agreement expressly acknowledge in Article 3 that they are responsible under international law ‘to ensure that activities within their jurisdiction or control do not cause damage to the environment and harm to human health of other states’.
Neighbouring states, however, are unlikely to pursue an international law claim in relation to the haze problem. And even if they did, Indonesia cannot be compelled by another state to have an international law dispute adjudicated by an independent tribunal. The arbitrators and judges in the cases mentioned above all had jurisdiction based on the consent of the disputing states. That is unlikely to happen in this instance.
Nonetheless, even if a state cannot press a claim against a neighbouring state for haze pollution, there are means by which individuals can do so, as explained below.
Investment treaty protection against pollution
Indonesia has agreed scores of investment treaties with fellow ASEAN states and other countries. Investment treaties generally allow qualifying foreign investors to bring claims in their own right against a state which breaches its treaty obligations. Thus, a claim could be brought against the government of Indonesia by:
- a foreign individual, company or NGO from a country which is party to an investment treaty with Indonesia; and which
- has investments, assets, employees or operations in Indonesia which have been harmed by the forest fires and/or the haze.
Such a claim would be decided by an independent tribunal sitting in a neutral location and applying international law.
By way of illustration, the Canadian owner of an eco-tourist facility in Barbados is currently suing the Government of Barbados for an alleged breach of the Canada-Barbados bilateral investment treaty. Peter Allard argues in his claim that Barbados breached its treaty obligations by allowing the environment to be spoilt which caused a loss of tourist revenues at his eco-resort.
The remedies available to an investor for a successful claim under an investment treaty potentially include:
- declaratory relief requiring the offending state to take all necessary steps to prevent the pollution; and
- monetary damages for any resulting harm.
Moral damages could also be awarded. Moral damages are available ‘in extreme cases of egregious behavior’, including where a state’s actions cause a grave or substantial deterioration of a person’s physical or mental health. There may be an argument that haze which requires almost all outside activity to cease, and schools and businesses closed given the risk of serious illness, as is the situation presently in much of Indonesia, Singapore and Malaysia, satisfies this criteria.
Investment treaty claims can in the right circumstances help motivate a state to modify its behavior to comply with international norms, and provide compensation to those adversely affected until it does comply. For the haze, such a claim may just help lift the mask on an acute and worsening problem.
Dechert LLP is a global specialist law firm with over 900 lawyers operating out of 27 offices in 14 countries.
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