Extractive industries and investor-state arbitration: Enforcing home standards abroad

Abstract

Extractive industries can bring much-needed jobs to remote locations in developing countries. At the same time, there are too many examples where extractive projects bring environmental degradation and human rights violations. Some research has pointed out that the difference between an extractive project that brings positive spillovers for communities and one that destroys communities and poisons the environment is a strong rule of law. However, developing countries often lack strong legal institutions and have high levels of corruption. Furthermore, remote locations are usually the last safe haven for vulnerable populations stricken by poverty. This essay argues that, given these circumstances, home states have a responsibility to do more to control their outward investors, particularly regarding extractive industries. The essay concentrates mostly on Canadian mining companies given the plurality of conflicts involving them and a developing country. The essay will also analyze current efforts at the home state level to rein-in the conduct of extractive industries abroad and advise where they may fall short.