By Fang Gu[1]
Introduction
International investment law is increasingly confronting a problem it was never designed to solve: climate change. As States accelerate decarbonization policies to comply with international climate commitments, investor–State disputes arising from fossil fuel phase-outs, subsidy reforms, and environmental regulation have become increasingly common. Yet the structure of investor–State dispute settlement (ISDS) remains largely retrospective. Tribunals determine liability years after contested measures are adopted, often focusing on compensation rather than prevention. By the time a final award is rendered, environmental harm may already be irreversible, regulatory initiatives abandoned, and political momentum for climate action diminished.
Current debates on climate change and ISDS have generated a growing body of jurisprudence concerning the interaction between investment protection and environmental regulation. Cases such as Philip Morris v Uruguay, Eco Oro v Colombia demonstrate the increasing pressure placed on tribunals to balance investment protection against public regulatory objectives, including environmental and public welfare concerns. Although the coal phase-out arbitrations against the Netherlands have since been discontinued, they nevertheless brought into sharp focus the tensions between investment treaty protections and State climate transition policies. Together, these disputes illustrate how climate governance has moved from the periphery of investment arbitration to one of its central contemporary challenges.
Yet an important dimension of these disputes remains underexplored. Most discussions continue to focus on the substantive compatibility of climate measures with investment treaty protections and the balance between investor rights and public regulatory objectives. Far less attention has been paid to the procedural architecture of ISDS itself. This blog argues that provisional measures deserve greater attention in this regard. As climate-related disputes increasingly involve urgent and potentially irreversible environmental risks, provisional measures may offer a mechanism for addressing such concerns before final awards are rendered.
The Temporal Mismatch Between Climate Governance and ISDS
The composition of the ISDS docket is increasingly changing as climate transition policies generate growing numbers of investment disputes. Measures involving fossil fuel phase-outs, renewable energy reforms, carbon pricing mechanisms, mining restrictions, and environmental licensing decisions are placing investment tribunals in direct contact with domestic climate governance. The now discontinued phase-out arbitrations against the Netherlands illustrate this dynamic particularly clearly. Investors have challenged Dutch legislation aimed at eliminating coal-fired electricity generation as part of the State’s broader decarbonization strategy. Similar tensions have also emerged in disputes concerning protected ecosystems and renewable energy subsidy reforms. In many of these cases, tribunals are no longer merely evaluating isolated commercial disagreements. Instead, they are increasingly drawn into disputes concerning energy transition, environmental risk allocation, and the pace of decarbonization itself.
This development places ISDS in an increasingly difficult institutional position. Most investment treaties were drafted during a period in which environmental governance occupied a far less central role in international economic relations. Their substantive standards—including fair and equitable treatment, indirect expropriation, and legitimate expectations—were not originally designed to mediate conflicts arising from large-scale climate transition policies. Yet tribunals are now regularly asked to assess exactly such measures.
Existing attempts to reconcile climate governance and investment protection have focused primarily on the merits phase of arbitration. Tribunals and scholars have explored whether climate treaties may influence treaty interpretation through systemic integration under Article 31(3)(c) of the Vienna Convention on the Law of Treaties, whether proportionality analysis can balance investment protection against environmental regulation, and whether exceptions clauses or police powers doctrines can preserve regulatory space for States. These doctrinal developments reflect a broader effort to prevent investment law from becoming isolated from contemporary environmental obligations.
However, these approaches share a common limitation: they remain largely retrospective. Investment arbitration often lasts for years, while climate governance depends heavily on timely preventive action. Even where tribunals ultimately uphold climate measures, prolonged proceedings, litigation costs, and uncertainty may still generate what is commonly described as “regulatory chill”—a phenomenon in which governments hesitate to adopt or maintain public-interest regulation due to the risk of costly investment claims. Delays in implementing environmental regulation may themselves undermine climate objectives, particularly where environmental harm risks becoming irreversible before proceedings conclude.
The deeper difficulty, therefore, is not merely substantive but temporal. Climate governance operates through prevention, urgency, and long-term sustainability planning, whereas ISDS remains structurally oriented toward retrospective adjudication and post hoc compensation. The result is a procedural mismatch: the legal tools most commonly used in investment arbitration are poorly suited to disputes involving urgent and potentially irreversible environmental risks.
Why Provisional Measures Matter
Provisional measures may partially bridge this gap. Under most arbitral rules, tribunals possess authority to order provisional measures in order to preserve rights, prevent serious harm, and maintain the integrity of proceedings. Traditionally, these measures have been used in relatively narrow contexts, such as preserving evidence or preventing aggravation of disputes. Yet their underlying rationale extends beyond procedural housekeeping. Provisional measures are among the few instruments within ISDS capable of operating prospectively rather than retrospectively.
This preventive orientation closely aligns with the realities of climate governance. Climate-related disputes frequently involve urgent regulatory decisions whose consequences cannot easily be reversed. Measures concerning fossil fuel phase-outs, emissions restrictions, environmental licensing, or renewable energy transitions often trigger investor claims while the environmental consequences of delayed regulation may continue to accumulate during proceedings.
In practice, provisional measures in climate-related disputes would most likely be sought by host States seeking to preserve the effectiveness of contested environmental regulation pending final adjudication. Such requests could rely on traditional arbitral requirements including urgency, necessity, and the risk of irreparable harm. The central concern, however, is not necessarily that tribunals will require States to suspend climate measures during the arbitration. Rather, climate-related disputes may create uncertainty regarding future liability and compensation, potentially discouraging governments from maintaining or expanding ambitious environmental policies while proceedings remain pending. This dynamic is closely connected to concerns about regulatory chill, which may arise even where environmental measures remain formally in force throughout the arbitration. Against this background, provisional measures cannot eliminate the possibility of future liability or compensation if a tribunal ultimately finds in favor of the investor. Nevertheless, they may provide a procedural mechanism through which tribunals can acknowledge the urgency of environmental concerns and preserve the effectiveness of contested regulatory measures while the merits of the dispute remain unresolved.
At the same time, provisional measures remain inherently bilateral instruments. Tribunals would also need to consider the investor’s competing interests, including sunk investments, lost commercial opportunities, contractual liabilities, and potential market losses resulting from continued compliance with contested climate measures. In sectors such as energy infrastructure, these economic consequences may be substantial and, in some circumstances, difficult to fully repair.
The central difficulty, therefore, is not whether investor interests should be disregarded, but how tribunals should balance different forms of irreparability. Investor losses are generally capable of monetary valuation and potential compensation through a final award. Certain forms of environmental harm, however, including emissions growth, ecosystem degradation, or biodiversity loss, may become irreversible before proceedings conclude. Provisional measures may therefore offer tribunals a procedural mechanism for temporarily preserving regulatory conditions while the merits of the dispute remain unresolved.
Importantly, this approach does not imply that climate measures should automatically prevail over investment protections, nor does it transform ISDS into a general system of environmental adjudication. Rather, it suggests that existing procedural tools within investment arbitration may be adapted to better address disputes involving urgent and potentially irreversible environmental risks.
The Doctrinal Flexibility of Provisional Measures
One reason provisional measures deserve greater attention in climate-related disputes is that arbitral tribunals already possess significant procedural discretion in this area. Under Article 47 of the ICSID Convention and Rule 47 of the ICSID Arbitration Rules, tribunals may recommend provisional measures necessary to preserve the parties’ rights. Similar authority exists under other arbitral frameworks, including the Article 26 of UNCITRAL Rules.
Importantly, tribunals have often interpreted these powers flexibly. Provisional measures are not limited strictly to preserving commercial assets or procedural evidence. Tribunals have already shown some willingness to engage environmental concerns through procedural mechanisms in disputes involving extractive industries. In Burlington v Ecuador, the tribunal addressed environmental remediation obligations arising from oil operations in the Ecuadorian Amazon and ultimately upheld Ecuador’s environmental counterclaim against the investor. Although the dispute did not directly concern climate change, the proceedings demonstrated that environmental harm may become an important consideration within the procedural management of investment disputes. Similarly, in Perenco v Ecuador, the tribunal considered environmental remediation issues throughout the arbitration, including through procedural arrangements relating to environmental inspections, expert evidence, and the preservation of environmental conditions pending resolution of the dispute. The case illustrated that tribunals may treat environmental risks as relevant not only at the merits stage, but also within the broader procedural framework of arbitration itself. These cases do not establish a general environmental mandate for investment tribunals. However, they demonstrate that environmental considerations are not entirely external to the procedural logic of ISDS. Rather, tribunals have already shown a degree of flexibility in accommodating environmental concerns where ongoing harm, remediation obligations, or irreversible consequences are implicated during proceedings.
Moreover, the legal threshold for provisional measures may be particularly relevant in climate disputes. Tribunals commonly assess urgency, necessity, and the risk of irreparable harm when deciding whether provisional relief is appropriate. Climate-related disputes frequently involve precisely these characteristics. Environmental degradation, biodiversity loss, and emissions-related harms are often difficult, or impossible, to reverse once they occur. The irreversible nature of climate harm therefore aligns closely with the rationale traditionally underlying provisional relief.
This does not mean tribunals should routinely grant provisional measures whenever environmental concerns arise. Investment arbitration remains grounded in consent, treaty interpretation, and procedural restraint. Tribunals may remain cautious about appearing to interfere excessively with sovereign policymaking or prejudging the merits of disputes. Nevertheless, the existing procedural framework already contains doctrinal tools capable of accommodating preventive environmental considerations without requiring radical institutional transformation.
In this sense, provisional measures may represent an evolutionary rather than revolutionary development within ISDS. Rather than fundamentally rewriting substantive investment protections, tribunals could adapt existing procedural powers to better reflect the realities of climate governance and irreversible environmental risk.
The Emerging Preventive Logic of International Adjudication
Recent developments in international law reinforce this broader preventive orientation. In its 2025 Advisory Opinion on climate change, the International Court of Justice emphasized obligations of prevention and due diligence in responding to environmental harm. Similar preventive reasoning has also emerged in the jurisprudence of the International Tribunal for the Law of the Sea and regional human rights courts dealing with climate-related obligations.
Although these developments do not directly modify investment treaty obligations, they contribute to a changing normative environment in which international adjudication increasingly recognizes the importance of preventive action in addressing environmental risks. Climate harm differs from many traditional commercial disputes precisely because its consequences may become irreversible before legal proceedings conclude. ISDS, however, remains structurally anchored in bilateral dispute resolution and post hoc compensation. Tribunals continue to operate within a framework originally designed to resolve property-based disputes between investors and host States, not to manage the broader governance challenges posed by climate transition.
Provisional measures cannot fully resolve these structural tensions. They cannot eliminate fragmentation between legal regimes, reconcile all conflicts between investment protection and climate obligations, or prevent future climate-related arbitrations. Nevertheless, they may provide tribunals with a limited but meaningful procedural mechanism capable of slowing irreversible harm while disputes remain pending.
Conclusion
Climate disputes are not ordinary investment disputes. Awards rendered years later cannot restore lost ecosystems, reverse emissions trajectories, or fully repair delayed climate action. Yet much of ISDS remains built around retrospective compensation rather than preventive governance.
As climate-related investment disputes continue to grow, the central challenge for ISDS may no longer concern only how tribunals interpret substantive treaty protections. It may also concern whether the system possesses procedural tools capable of responding to environmental urgency before irreversible consequences materialize. Provisional measures may not solve the climate dilemma in ISDS. However, they may offer tribunals a mechanism to preserve regulatory space, reduce regulatory chill, and temporarily accommodate climate governance concerns without fundamentally abandoning the existing structure of investment arbitration.
[1] PhD candidate in international law at Guanghua Law School, Zhejiang University. Visiting researcher at Law School, University of Michigan Ann Arbor.