Evaluation of Scientific Evidence in Investor-State Arbitration: A Suggested Framework

Freshfields lawyers Joaquin Terceño, Campbell Herbert, and Pedro Ramirez published an article in TDM's Special Issue International Investment Arbitration – Environmental Protection and Climate Change in which they suggest a potential framework for the evaluation of scientific evidence in Investor-State Arbitration. The proposed framework is based on objective, due process criteria, the application of which could enhance the transparency, predictability, and legitimacy of investment arbitration decisions.

Green legislation and other regulations promulgated to combat climate change are causing a surge in investment disputes, and the growth in such disputes will only accelerate in the coming years. Arbitration of these disputes, and environment-related disputes more broadly, commonly entails assessment by tribunals of complex and disputed scientific evidence. Parties may rely on scientific evidence to challenge or support the existence of an environmental threat, the safety of a product, or the availability of alternative measures that the State could have adopted. Tribunals may be confronted with attacks on that scientific evidence, or on the process used to generate it. The constantly evolving nature of scientific knowledge and methods means that determining the boundary between fact and process can be difficult for tribunals.

Despite the centrality of scientific evidence to the decision-making process, tribunals have yet to establish a clear and uniform framework for the assessment of such evidence. Debates have raged over the best approach to evaluating scientific evidence, and a review of public international law jurisprudence reveals a spectrum of approaches.

One end of the spectrum, dubbed the "nihilist" approach, posits that arbitrators should avoid engaging with scientific matters entirely. Such an approach grants states a wide margin of appreciation on matters of scientific uncertainty. Proponents of this approach have justified it on the basis that questions of scientific judgment are non-legal and, therefore, fall outside the scope of an international tribunal's role, and that arbitrators, lacking scientific expertise, are ill-equipped to properly assess complex scientific evidence.

The other end of the spectrum suggests that arbitrators should be prepared to engage, albeit cautiously, with scientific evidence.

The issue is not unique to investor-state arbitration. WTO and ICJ cases reveal similar issues. While the WTO's Dispute Settlement Body (DSB) often scrutinizes the adequacy of the scientific process rather than judging the science itself, the ICJ's reluctance to engage with scientific evidence underlines the problems of disengagement and highlights the need for a balanced approach in handling such evidence.

In the paper, we argue that, despite their structural differences, tribunals in investor-state arbitration should observe the approaches taken by other legal bodies, in particular, the WTO DSB, and from that we propose a framework that tribunals could use when faced with scientific evidence.

The proposed framework consists of posing three questions:

1. Does the scientific evidence meet a prima facie threshold of reasonableness?
2. Was the process used to generate the evidence robust? and
3. Does the challenged measure bear a rational connection to the science said to underpin it?

Separating the 'correctness' of the evidence from the integrity of the process used to generate it helps prevent tribunals' views on the evidence from subconsciously influencing their judgment on the process's integrity. Imposing a threshold of reasonableness will aid tribunals in determining the level of scrutiny to apply. Newly proposed scientific facts may warrant a deeper look at the process, whereas widely recognized scientific evidence – for example, findings recorded in reports of the Intergovernmental Panel on Climate Change, which have undergone extensive peer review – requires less scrutiny.

The third limb examines the relationship between the scientific evidence and the government action in question, to assess whether the action was indeed based on the scientific evidence and whether the rationale is objective and coherent. This aims to ensure transparency and deliberation in policymaking, avoiding the misuse of scientific evidence for unjustifiable regulatory actions.

This approach maintains the integrity of international investment law, which primarily concerns the process by which states take regulatory action, rather than the scientific accuracy of these actions. It also limits the encroachment of tribunals on matters reserved for domestic authorities, thus preserving the legitimacy and neutrality of investor-state dispute resolution system.

J.P. Terceño; C.M.M. Herbert; P. Ramirez (2023, forthcoming) “The Rise of Environmental Disputes: A Due Process-Based Approach to Evaluating Scientific Evidence” (TDM, ISSN 1875-4120) June 2023, www.transnational-dispute-management.com