Christina Voigt - SD As A Principle

Sustainable Development as a
Principle of International Law

Legal Aspects
of
Sustainable Development
General Editor
David Freestone
This series will publish work on all aspects of the international legal
dimensions of the concept of sustainable development. Its aim is to publish
important works of scholarship on a range of relevant issues including
conservation of natural resources, climate change, biodiversity loss and the role
of international agreements, international organizations and state practice.
VOLUME 2
The titles published in this series are listed at the end of this volume.
Sustainable Development as a
Principle of International Law
Resolving Conflicts between

Climate Measures and WTO Law
By
Christina Voigt
LEIDEN • BOSTON
2009
This book is printed on acid-free paper.
Library of Congress Cataloging-in-Publication Data
Voigt, Christina.
Sustainable development as a principle of international law : resolving conflicts
between climate measures and WTO law / Christina Voigt.
p. cm. — (Legal aspects of sustainable development ; 2)
Includes bibliographical references and index.
ISBN 978-90-04-16697-4 (hardback : alk. paper)
1. Sustainable development—Law and legislation. 2. Emissions trading—Law and
legislation. 3. Environmental law, International. I. Title.
K3585.V63 2008
344.04’6—dc22
2008045763
ISSN 1875-0923
ISBN 978 90 04 16697 4
Copyright 2009 by Koninklijke Brill NV, Leiden, The Netherlands.

Koninklijke Brill NV incorporates the imprints Brill, Hotei Publishing,
IDC Publishers, Martinus Nijhoff Publishers and VSP.
All rights reserved. No part of this publication may be reproduced, translated, stored in
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Fees are subject to change.
printed in the netherlands

To my little son Victor Leander.
Table of Contents
Series Editor’s Preface xv

Acknowledgements xvii
List of Abbreviations and Acronyms xix
General Introduction 1
Sustainable Development, International Trade and Climate Change 1
Why Sustainable Development? 3
The Ultimate Challenge 6
Part I
Sustainable Development in International Law
Introduction 9
Chapter 1
Origins and Development of the Concept of Sustainable
Development in International Law 11
1.1 A Concept with Ancient Roots? 11
1.2 Sustainable Development’s Rise in the International Order 13
1.3 International Treaty Law 19
1.4 Regional and National Laws 21
1.5 The New Millennium 24
1.6 Recent Legal and Political Developments 28
1.7 In Sum 31
Chapter 2
Integration as a Central Aspect of Sustainable Development 35
2.1 Introduction 35
2.2 Integration within the Limits of Ecological Thresholds 38
2.3 Climate Stability: An Ecological Threshold 42
2.4 Scientific Uncertainty 47
2.5 Environmentalism and Sustainable Development 48
2.6 Integration and Transgenerational Justice 50
2.7 In Sum 54
viii Sustainable Development as a Principle of International Law
Chapter 3
The International Climate Regime 57
3.1 Introduction 57
3.2 Normative Framework of the Climate Regime 59
3.2.1 Object and Purpose of the UNFCCC 59
3.2.2 Principles of the UNFCCC and the Kyoto Protocol 61
3.2.3 Obligations 67
3.3 The Flexibility Mechanisms of the Climate Regime 70
3.4 International Emissions Trading 74
3.4.1 Private Participation 74
3.4.2 The Global Carbon Market and Linking of Domestic
Trading Schemes 76
3.4.3 Supplementarity to Domestic Action 79
3.4.4 In Sum 80
3.5 The Clean Development Mechanism 80
3.5.1 Additionality 83
3.5.2 Prospects 83
3.6 Joint Implementation 85
3.7 Concluding Remarks 86
Chapter 4
Sustainable Development in the Context of International Climate
Change Law 89
4.1 Introduction 89
4.2 References to Sustainable Development in the UNFCCC 92
4.3 References to Sustainable Development in the Kyoto Protocol
and Subsequent Documents 94
4.4 Implicit References to Sustainable Development 96
4.4.1 Intragenerational Equity: Differentiation, Partnerships and
Funding 96
4.4.2 Intergenerational Equity 104
4.4.3 Economic Flexibility 106
4.5 Concluding Remarks and Summary 113
Chapter 5
Sustainable Development in WTO Context 115
5.1 Introduction to WTO Law 115
5.1.1 Coverage 116
5.1.2 Rules and Concepts 116
5.2 Trade and Environment 120
5.3 WTO Exception Clauses 122
Table of Contents ix
5.4 Sustainable Development and Trade Law 125

5.5 References to Sustainable Development in WTO Law 127
5.5.1 WTO Agreement 127
5.5.2 Institutional Developments 130
5.5.3 WTO 2001–2006 Doha Development Agenda 134
5.5.4 WTO Dispute Settlement 135
5.5.5 Invocation of Sustainable Development in WTO Law:
Procedural and Substantive Requirements 140
5.6 Summary 143
Chapter 6
Sustainable Development as a General Principle of Law 145
6.1 Introduction 145
6.2 Limitation of Scope 147
6.3 General Principles in International Law 148
6.3.1 An Ambiguous Source of Law 148
6.3.2 Custom and General Principles 149
6.3.3 The Function of General Principles and the Objection of
Indeterminacy 150
6.3.4 Provenance of Principles 153
6.3.5 Common Legal Conscience 157
6.3.6 In Sum 159
6.4 Sustainable Development as a General Principle 160
6.4.1 The Normative Force of Sustainable Development and the
Critique of Indeterminacy 162
6.4.2 Substantial Function: Integration as Process or Result? 169
6.4.3 International Jurisprudential Practice 171
6.4.4 In Sum 177
6.5 Legitimacy of Sustainable Development 177
6.5.1 Foro Domestico 178
6.5.2 International Legal Conscience 183
6.6 The Role of the Judiciary in Promoting Sustainable Development 183
6.7 Summary and Concluding Remarks 186
Part II
Conflicts Between Climate Measures and WTO Law
Introduction 189
x Sustainable Development as a Principle of International Law
Chapter 7
Fragmentation of International Law: the Origin of Normative
Conflicts 195
7.2 Conflict of Norms 198
7.2.1 Definitions 198
7.2.2 Permissive Norms in the Climate Regime 201
Chapter 8
Climate Measures and WTO Law: General Comments 203
8.2 Limitation of Scope 204
8.3 General Compatibility of the Objectives 205
Chapter 9
International Emissions Trading and WTO Rules 207
9.2 WTO Concerns of Sovereign Exchanges in Emission Units 208
9.3 WTO Concerns of Private Exchanges in Emission Units 211
9.3.1 Trading with Emission Units and GATT Rules 212
9.3.2 Are All Emission Units ‘Like Products’? 215
9.4 Emissions Trading Affecting Existing Markets 216
9.4.1 Import and Sale of Energy Products 216
9.4.2 Electricity as an Energy Product 218
9.4.3 Energy Imports and National Treatment Rule 219
9.4.4 Like or Directly Competitive or Substitutable Products 219
9.4.5 No less-favourable Treatment or Effective Equality of
Competitive Conditions 221
9.4.6 Conclusion 223
9.5 GATT Exception Clauses 223
9.5.1 GATT Article XX(g): Relating to the Conservation of
Exhaustible Natural Resources 224
9.5.2 GATT Article XX(b): Necessary to Protect Human,
Animal or Plant Life or Health 226
9.5.3 Chapeau of GATT Article XX 228
9.6 Conclusion 231
Chapter 10
The Clean Development Mechanism and WTO Rules 233
10.2 CDM Activities as Services under GATS 235
Table of Contents xi
10.3 Participation in CDM Activities and Discrimination 241

10.4 GATS Exception Clauses 247
10.4.1 Policy in Respect of the Measure 248
10.4.2 Necessity 248
10.4.3 Chapeau 252
10.5 National Development Priorities under the CDM 255
10.6 In Sum 257
Chapter 11
Concluding Remarks on Part II 259
Part III
Sustainable Development as a Principle of Integration of
Climate and Trade Law
Introduction 263
Chapter 12
Is there a Need for the Principle of Sustainable Development in
WTO Dispute Settlement? 265
12.2 Interpretation in International Adjudication 266
12.3 Interpretation of WTO Norms: Principles and their Limitations 269
12.3.1 Textual Interpretation 270
12.3.2 Evolutionary Interpretation 273
12.3.3 Teleological Interpretation 277
12.3.4 Interpretation with Reference to Norms outside the
Treaty: Art. 31.3(c) VCLT: General Comments 280
12.3.5 Article 31.3(c) VCLT in WTO Jurisprudence 287
12.4 Conclusions 289
Chapter 13
Principles of Conflict Resolution 293
13.1 Explicit Conflict Clauses 293
13.2 Implicit Conflict Clauses in the Kyoto Protocol and UNFCCC 295
13.3 Lex specialis derogat lege generali 299
13.4 Lex posterior derogat lege priori 301
13.5 Conclusions 303
xii Sustainable Development as a Principle of International Law
Chapter 14
Applicability of Non-WTO Law in WTO Dispute Settlement 305
14.1 WTO Dispute Settlement and Public International Law 305
14.2 Jurisdiction and the Applicable Law in WTO Dispute Settlement 307
14.3 Sources of non-WTO Law in WTO Dispute Settlement 310
14.3.1 Customary Law 311
14.3.2 General Principles of Law 312
14.4 In Sum 315
Chapter 15
Applicability of the Principle of Sustainable Development in WTO
Dispute Settlement 317
15.1 Applicability as Part of WTO Law 317
15.2 Applicability as a General Principle of Law 318
15.3. Mandatory or Permissive Application? 319
15.4 Dispute Settlement Authority and ‘Judicial Activism’ 321
15.5 In Sum 322
Chapter 16
Application of the Principle of Sustainable Development:
Practical Consequences 325
16.1 The Aim of Creating Coherence 325
16.2 Nature of a Legal Test for Sustainable Development 327
16.3 Possible Elements of a Legal Test for Sustainable Development 330
16.3.1 Identification of Affected Interests 330
16.3.2 Primary Sustainability: Type and Strength of Interests
Protected by the Measure 331
16.3.3 Secondary Sustainability: Assessment of the (Broader)
Sustainability of the Measure 332
16.3.4 Proportionality of Means and Ends 335
16.3.5 Procedurals 337
16.3.6 Legal Effect 339
Chapter 17
‘Case’ Studies: CDM and Emissions Trading 341
17.1 Clean Development Mechanism 341
17.1.2 Strength of the Protected Interest 342
17.1.3 Contribution to Sustainable Development in a Broader
Context 343
17.1.4 Proportionality 352
Table of Contents xiii
17.1.5 Procedural Requirements 355

17.1.6 In Sum 357
17.2 Emissions Trading 357
17.2.2 Strength of the Protected Interest 359
17.2.3 Sustainable Development in a Broader Context 360
17.2.4 In Sum 370
17.3 Summary 371
Chapter 18
Final Conclusions 373
18.1 Sustainable Development in Climate Change and International
Trade Law 373
18.2 Sustainable Development as a Legal Principle of Integration 374
18.3 Areas of Conflict between Climate Measures and WTO Law 375
18.4 Application of the Principle of Sustainable Development in the
Context of Climate and Trade Law Conflicts 377
Table of Cases 381

Bibliography 389
Index 423
Series Editor’s Preface
I am pleased to welcome this important work as the second volume in the new
Martinus Nijhoff monograph series on Legal Aspects of Sustainable Develop-
ment published under my general editorship. The aim of this series will be to
publish works at the cutting edge of legal scholarship that address both the
practical and the theoretical aspects of this important concept.
Christina Voigt’s work meets all these criteria, both as a work of scholar-
ship and as a thesis with important practical implications. Her study looks
closely at the evolution and basic tenets of the concept of sustainable develop-
ment, arguing that it has the potential capacity to bind together or integrate
the diversity and the plurality of interests within the international community.
It can thus, she argues, act as a powerful force for integration between po-
tentially conflicting legal regimes. The regimes she has examined to test this
hypotheses are those of the UN Framework Convention on Climate Change
and its Kyoto Protocol (particularly the Clean Development Mechanism and
emissions trading provisions) and the World Trade Organization. The practical
importance of this venture should be obvious. The 2007 Fourth Assessment
Report of the Intergovernmental Panel on Climate Change makes it clear that
climate change processes have already begun, that major mitigation efforts
will be necessary to avert dangerous climate change and that to avoid the
worst effects further emission reductions of greenhouse gases of 25-40% by
2020 will be essential. In developing a post-Kyoto regime to meet rigorous
targets such as these the international community seems likely to continue to
look to “cap and trade” systems at national, regional and international levels.
It is likely to be only a matter of time before these come into conflict with
the WTO regime. At this point she argues the principle of sustainable devel-
opment provides a force for integration; it can provide a legal basis for the
argument that the community interest in a stable global climate prevails over
the economic and welfare interest protected by the international trade regime.
However this can only happen if the climate mitigation measures themselves
pass the “sustainable development” litmus test.
At a time when many international scholars are bemoaning the fragmenta-
tion of the international legal architecture, Dr Voigt’s study provides us with
a refreshing perspective of the positive role that the principle of sustainable
development might play in integrating different regimes. This is an important
and timely work and I am pleased to commend it to a wide audience.
David Freestone
Washington DC
Acknowledgements
This book is a shortened and updated version of my doctoral thesis, which was
submitted to the University of Oslo, School of Law, in September 2006 and
defended for the degree doctor juris in April 2007.
Writing this book has been a long journey and a far one. Most of all, it
brought me in contact with many different people, who all in their special
ways contributed to the fruition of this project. They include (in alphabetical
order): Ivar Alvik, Klaus Bosselmann, Andrew Brennan, Jonas Ebbesson,
Marius Emberland, Jonas Enge, Christoffer Eriksen, Ole Kristian Fauchald,
Caroline Foster, Donald Goldberg, Gustav Haver, Ellen Hey, Ulf Linderfalk,
Daniel B. Magraw, Michael Mehling, Benedikte Moltumyr Høgberg, Nicolai
Nyland, Richard Ottinger, Kenneth A. Palmer, Catherine Redgwell, Nicolas
Robinson, Nicolas de Sadeleer, Inger-Johanne Sand, Chris Saunders, Torunn
Salomonsen, Francesco Sindico, Beate Sjåfjell, Prue Taylor, Geir Ulfstein,
Jake Werksman, Nikolai K. Winge, and Glenn Wiser.
I sincerely thank each and every one of them.
A very special thanks goes to my supervisor Professor Hans Christian
Bugge who through the years saw this project progressing and finally being
finished. I am most grateful for his constant support, encouragement, and his
constructive critique without which the shape of things would have been quite
different.
I also thank my colleagues at the Research Group for Natural Resources
Law and the Institute for Public and International Law (University of Oslo),
the Norwegian Research Council, the Nordic Environmental Law Network,
the New Zealand Center for Environmental Law (University of Auckland,
New Zealand), and the Center for International Environmental Law (Wash-
ington, D.C.) for generously supporting my research.
Finally, this project would have been impossible without the support of
my parents, Dieter and Maria Voigt, and my partner Gaute. He was the rock
in these years of turbulence. I thank him for his seemingly endless patience
and optimism.
March 2008
List of Abbreviations and Acronyms
AA Assigned Amounts
AAU Assigned Amount Units
ACIA Arctic Climate Impact Assessment
ASIL Procs. American Society of International Law Proceedings
AGP WTO Agreement on Government Procurement
AJIL American Journal of International Law
AB Appellate Body
AVR Archiv des Völkerrechts
Ariz. J. Int‘l & Arizona Journal of International and Comparative Law
Comp. L.
AYbIEL Australian Yearbook of International Law
B.C. Envt’l. Aff. Boston College Environmental Affairs Law Review
L.R
BIT Bilateral Investment Treaty
Buff. Envtl. L.J Buffalo Environmental Law Journal
BYbIL British Yearbook of International Law
CC Compliance Committee
CCAP Center for Clean Air Policy
CCS Carbon Capture and Storage
CDM Clean Development Mechanism
CER Certified Emission Reductions
Colo. J. Int’l Colorado Journal of International Environmental Law
Envtl. L. & and Policy
Policy
Colum. J. Columbia Journal of Transnational Law
Transnat’l L.
COP Conference of the Parties (to the UNFCCC)
xx Sustainable Development as a Principle of International Law
CPM COP/MOP joint meeting

CPR Commitment Period Reserve
CTD Committee on Trade and Development
CTE Committee on Trade and Environment
DDA Doha Development Agenda
Denv. J. Int’l L. Denver Journal of International Law & Policy
& Pol’y
DNA Designated National Authority
DOE Designated Operational Entity
DSB Dispute Settlement Body
DSU Dispute Settlement Understanding
Duke Envtl. L. & Duke Environmental Law and Policy Forum
Pol’y F
EB Executive Board
EJIL European Journal of International Law
ELR The Environmental Law Reporter
ENB Earth Negotiations Bulletin
ERT Expert Review Teams
ERU Emission Reduction Unit (JI)
ET Emissions Trading
ETS Emissions Trading Scheme
EU ETS EU Emissions Trading Scheme
FAO Food and Agricultural Organisation of the United
Nations
FES Friedrich-Ebert-Stiftung
FIELD Foundation for International Law and Development
GATS WTO Agreement on Trade in Services
GATT WTO Agreement on Tariffs and Trade
List of Abbreviations and Acronyms xxi
GDP Gross Domestic Product

Georgt. Int’l Georgetown International Environmental Law Review
Environm. L.
Rev
GHG Greenhouse Gases
GNP Gross National Product
GPIL General Principles of International Law
GPL General Principles of Law
GWP Global Warming Potential
GYIL German Yearbook of International Law
Harv. Envtl. L. Harvard Environmental Law Review
Rev
ICJ International Court of Justice
ICLQ International & Comparative Law Quarterly
IET International Emissions Trading
IISD International Institute for Sustainable Development
ILA International Law Association
ILC International Law Commission
ILM International Legal Materials
Ind. J. Global Indiana Journal of Global Legal Studies
Legal Stud
Int’l Law The International Lawyer
Int’l. J International Journal
IPCC Intergovernmental Panel on Climate Change
IUCN International Union for Conservation of Nature and
Natural Resources
J. Energy Nat. Journal of Energy and Natural Resources Law
Resources L
JD Joint Declaration
xxii Sustainable Development as a Principle of International Law
JI Joint Implementation
JPOI Johannesburg Plan of Implementation
KP Kyoto Protocol
Law&Pol’y Int’l Law & Policy in International Business
Bus.
LDC Least Developed Countries
LULUCF Land Use, Land Use Change and Forestry
MA Marrakesh Accords
Max Planck Max Planck Yearbook on United Nations Law
UNYB
MEA Multilateral Environmental Agreement
MOP Meeting of the Parties (to the Kyoto Protocol)
MtCO2eqv Million tonnes CO2 equivalent
NAP National Allocation Plan
NJIL Nordic Journal of International Law
N.Y.U. J. Int’l L. New York University Journal of International Law and
Politics
ODA Official Development Assistance
OECD Organization of Economic Cooperation and
Development
OPEC Organization of Petroleum Exporting Countries
Pace Envtl. L. Pace Environmental Law Review
Rev
PAM Policies and Measures
PDD Project Design Document
PPM Production and Processing Methods
QUELROs Quantified Emission Limitation and Reduction
Obligations
List of Abbreviations and Acronyms xxiii
RECIEL Review of European Community & International

Environmental Law
RMU Removal Units
SCM WTO Agreement on Subsidies and Countervailing
Measures
S. Cal. L. Rev Southern California Law Review
SIA Sustainable Impact Assessment
TBT WTO Agreement on Technical Barriers to Trade
TRIMS WTO Agreement on Trade-Related Investment
Measures
U. Ill. L. University of Illinois Law Review
UNCED United Nations Conference on Environment and
Development
UNFCCC United Nations Framework Convention on Climate
Change
U. PA. J. Int’l University of Pennsylvania Journal of International
Econ. L Economic Law
Va. J. Int’l L. Virginia Journal of International Law
VCLT Vienna Convention on the Law of Treaties
Wm. & Mary William and Mary Environmental Law and Policy
Envtl. L. & Pol’y Review
Rev.
WMO World Meteorological Organization
WCED World Commission on Environment and Development
WSSD World Summit on Sustainable Development
WTO World Trade Organization
Yale L.J Yale Law Journal
Yale J.Int’l L Yale Journal of International Law
Yale J. on Reg. Yale Journal on Regulation
YbIEL Yearbook of International Environmental Law
xxiv Sustainable Development as a Principle of International Law
ZaöRV Zeitschrift für ausländisches öffentliches Recht und

Völkerrecht
ZRP Zeitschrift für Rechtspolitik
ZöR Zeitschrift für öffentliches Recht
ZUR Zeitschrift für Umweltrecht
‘By producing greenhouse gases and other pollutants, these fuels
affect the sustainability of life itself. Our reliance on them puts the
very future of humanity at risk.’ 1
General Introduction
Sustainable Development, International Trade and Climate Change
The purpose of this book is to provide the theoretical framework for and
analyse the doctrinal foundation of sustainable development as a principle of
integration in international law.
The book attempts to apply the principle to the practical scenario of norma-
tive conflicts between climate mitigation measures and norms of the multi-
lateral trade regime under the WTO with the aim of ‘testing’ the theory by
investigating into its capacity to solve such conflicts.
The analysis consists of three parts. Part I examines the content and legal
status of sustainable development as a principle of integration. Part II assesses
the potential for conflicts between climate measures and the law of the WTO.
Part III focuses on the legal principle of sustainable development as a judicial
reasoning tool applicable to and effective in the resolution of normative con-
flicts.
The relationship between climate measures and trade law is chosen for two
particular reasons. First, the multilateral efforts to combat climate change pro-
vide an extraordinary opportunity to examine the trade-environment conflict,
its causes, consequences and modalities for solution and reconciliation. By
permitting the use of innovative market-based instruments to offset economic
impacts, the climate change regime, consisting of the 1992 United Nations
Framework Convention on Climate Change2 and its 1997 Protocol (Kyoto
Protocol),3 draws attention to the use of economic measures in environmental
1
Former UN Secretary-General Kofi Annan, UN Press Release, 10.07.2006.
2
31 ILM 849 (entered into force March 21, 1994) (hereinafter UNFCCC).
3
Kyoto Protocol to the United Nations Framework Convention on Climate Change, U.N.
Doc. FCC/CP/1997/L.7/Add.1 (entered into force 16 February 2005) (hereinafter Kyoto
2 Sustainable Development as a Principle of International Law
protection and their relation to trade agreements. Complex questions arise

with respect to WTO consistency and the conditions under which the design of
climate measures can be adjusted to accommodate a loss of international com-
petitiveness of affected industries. At the same time, the important question
of how to react to a trade-restrictive measure designed under an international
environmental treaty is prompted at the WTO dispute settlement system, where
such dispute is likely to end up.
These are not only questions of relationship between WTO and environ-
mental or other international rules and vice versa. At their core, they address
the structure of international law as a legal system. Is there such a system,
and if so is it merely arbitrary or does it mechanically follow technical rules?
Or it is even a purposive system? ‘International law’, it has been claimed, ‘is
not rules. It is a normative system.’4 The primary role of modern international
law is to secure values for the common good. But is there such a thing as in-
ternational law pursuing a collective goal of the international community and
by doing so addresses the interplay of different norms, even unifies different
areas of law, including WTO law? This book argues that sustainable develop-
ment is this goal and that international law is aligning to it.
Second, both international climate change law and WTO law respond to
collective interest of the world community, and both treat sustainable develop-
ment as axiomatic. References can be found in the treaty texts of both regimes.
The Parties to the UNFCCC, for example, have a right to, and should, promote
sustainable development.5 At the same time, the Parties to the WTO recognize
that their trade relations should be conducted so as to allow for the optimal
use of the world’s resources in accordance with the objective of sustainable
development.6 Sustainable development has explicitly been invoked by the
Appellate Body in the settlement of trade disputes. Recently, the Secretary-
General of the WTO, Pascal Lamy, succinctly stated: ‘[w]e must remember
that sustainable development is itself the end-goal of this institution [the
WTO]. It is enshrined in page 1, paragraph 1, of the Agreement that estab-
lishes the WTO.’7
These references are giving rise to the question whether different contexts
lead to parallel definitions of sustainable development that increase rather
Protocol).
4
R. Higgins, Problems and Process: International Law and How We Use It (Oxford:
Clarendon Press, 1994, reprinted in 2003) 1.
5
Art. 3.4 UNFCCC.
6
Marrakesh Agreement Establishing the World Trade Organization, Preamble.
7
Trade can be a Friend, not a Foe, of Conservation, Speech at WTO Symposium on Trade
and Sustainable Development within the Framework of Paragraph 51 of the Doha Minis-
terial Declaration, Geneva, 10 October 2005.
than reduce its often-noted vagueness. The challenge, therefore, is to clarify

whether there is a common understanding of sustainable development across
regime-borders.
Such clarification has important implications. While both regimes address
specific issues, regulatory overlaps exist which can amount to normative
conflicts. At the international level, however, no clear rules exist as to how
resolve such conflicts. Traditional approaches have been constrained to treaty
interpretation and conflict resolution principles which are largely insufficient
to provide adequate solutions in the event of a normative conflict of this kind.
Being characterized by the general equality of legal sources, international law,
it is claimed, does not provide for any rule of priority.
This book attempts to fill this gap by providing a conceptual framework
within which the interplay of norms can be examined. This framework rests
on the assumption that these conflicts are most adequately addressed in a
principled way. The book argues that sustainable development has a concrete
core and as a principle of integration provides an effective legal tool – a tool
which international law readily encompasses. In order to highlight the capac-
ity of the principle in resolving normative conflicts, the thesis uses the specific
interplay between WTO rules and climate measures. It is hoped, however, that
this framework will also be useful to the resolution of normative conflicts not
involving climate or WTO norms.
Why Sustainable Development?
If all the challenges of modern society, which are separately addressed by

various regimes, are to be met, some kind of overarching objective needs to
be in place that sketches out a global and long-term picture of our world and
helps to coordinate the fragmented attempts. This book puts forward the argu-
ment that the unifying factor is encompassed in the notion of sustainability:
a durable and equitable condition of humanity within the ultimate limits set
by the functioning of essential natural systems that sustain life on Earth: the
biosphere – whole and home of human life – and its protective shield, the
atmosphere.
As an ideal, sustainability has gained a status comparable to that of de-
mocracy, freedom and justice: it is universally desired, differently understood,
complex in scope, extremely difficult to establish and impossible to do away
with.8 No State would any longer claim not to be pro sustainability. But how
8
W.M. Lafferty, ‘From Environmental Protection to Sustainable Development: the Chal-
lenge of Decoupling through Sectoral Integration’ in W.M. Lafferty (ed.) Governance for
to get there? There is no master plan for sustainability. In fact, humanity might
forever strive for it. Like a state of justice, a state of sustainability may never
be fully achieved, but this is by no means a reason for not trying.
While sustainability remains an ideal, sustainable development has been
accepted by the international community as a guiding concept: ‘the golden rule
of our civilisation in the 21st century’.9 In this sense, sustainable development
has been described as the means to the end of sustainability or ‘the ‘journey
toward the elusive goal of sustainability’.10 As an idea – an abstract creation
of the human mind – sustainable development is based upon the shared val-
ues, morals and ethics of an increasingly interconnected and interdependent
world.11
The strength of sustainable development rests in the ‘inescapable logical
necessity’12 to seek reconciliation and integration between the many insti-
tutionally disconnected but intrinsically interlinked parts of global human
society.13
Outside the framework of sustainable development, the objectives of en-
vironmental protection, economic development and social justice often pull
in different directions. Yet, traditional attempts to deal separately with all of
these priorities run counter to the fundamentally interconnected nature of the
global society. Therefore, sustainable development, which addresses the need
to balance and coordinate widely divergent collective interests, while protect-
Sustainable Development: the Challenge of Adopting Form to Function (Cheltenham:

Edward Elgar, 2004) 192.
9
M. Decleris, The Law of Sustainable Development: General Principles: Report Produced
for the European Commission (Luxembourg: Office for Official Publications of the Euro-
pean Communities, 2000) 48.
10
New Zealand Parliamentary Commissioner for the Environment, Creating our Future:
Sustainable Development for New Zealand (Wellington: Office of the Parliamentary
Commissioner for the Environment, 2002) 29.
11
M.C. Cordonier Segger and C.G. Weeramantry, ‘Introduction to Sustainable Justice:
Implementing International Sustainable Development Law’ in M.C. Cordonier Segger
and C.G. Weeramantry (eds.) Sustainable Justice. Reconciling Economic, Social and
Environmental Law (Leiden: Martinus Nijhoff Publishers, 2005) 1.
12
Case concerning the Gabčikovo-Nagymaros Project (Hungary v. Slovakia) ICJ Reports
1996, 7, Separate Opinion of Vice-President Weeramantry, 4.
13
According to Huber ‘das Verdienst des nachhaltigen Entwicklung … liegt darin, diese
Elemente zu einem Muster zusammengefügt zu haben, das für einen internationalen
Mainstream konstitutiv werden konnte und das damit im Rio-Prozeß einen neuen erd-
politischen Diskussions- und Handlungskontext mit mehr Teilnehmern aus mehr gesell-
schaftlichen Bereichen und mit frischer politischer Schubkraft hervorgebracht hat.’ J.
Huber, Nachhaltige Entwicklung. Strategien für eine ökologische und soziale Erdpolitik
(Berlin: Verlag Edition Sigma, 1995) 14.
ing the regenerative capacity of the biosphere, has been accepted as ‘the way
forward for a healthy planet’.14 It may well be the only way forward.
Finding the right balance of environmental, social and economic condi-
tions to foster sustainable development, however, is no easy task. The devil
is in the detail of defining which aspects of the current social, developmental,
environmental and economic regimes are appropriate for promoting sustain-
able development and which need modification and adjustment. Discussions
around the concept’s precise content remain contentious. But it is impossible
to ignore the fact that ultimate limits to human conduct are set by securing the
functioning ecological basis on which all life and all human activity depend.
In establishing the core of sustainable development, ecological thresholds
cannot be ignored without rendering the result unsustainable. They provide
the nucleus around which clearer meaning and content of sustainable develop-
ment evolves.
That said, a wide gap still remains between theoretical explications of sus-
tainable development and the actual ‘state of the world’. Irrational exploita-
tion of the natural resource base, excessive releases of greenhouse gases and
ever-increasing pressure on the environment and its ecological functions by
expanding and globalizing societies and economies, have led and continue to
lead to a state of development that can hardly be described as sustainable.15
Accordingly, former UN Secretary-General Kofi Annan warned: ‘[u]nsustain-
able practices are woven deeply into the fabric of modern life … [t]he model
of development we are accustomed to has been fruitful for a few, but flawed
for the many. A path to prosperity that ravages the environment and leaves a
majority of humankind behind in squalor will soon prove to be a dead-end
road for everyone.’16
The concept of sustainable development demands an active transition on
all levels of modern life. It requires innovative and integrated solutions that
are based on the ultimate thresholds of the environment to provide essential
natural functions.
14
World Commission on Environment and Development (WCED) Our Common Future
(Oxford: Oxford University Press, 1987), Principle 7.
15
Worldwatch Institute, Vital Signs 2006–2007 (Washington D.C.: Norton, 2006). See also:
UNEP, Third Global Environmental Outlook: Past, Present and Future Perspectives
(GEO-3) London, 2002. According to GEO-3 is ‘one of the three pillars of sustainable
development – the environment – seriously listing because of the distortions placed on it
by the actions of human population that now numbers more than 6,000 million. The im-
portance of the environment is often underplayed even though its value to human survival
and development is incalculable. The collapse of the environmental pillar is a serious
possibility if action – from local to global – is not taken as a matter of urgency’.
16
UN Press Release SG/SM/8358, AFR/468, ENV/DEV/693, 03 September 2002, World
Summit on Sustainable Development in Johannesburg, South Africa.
The Ultimate Challenge
There is an ultimate test to the international community to find cooperative

and collaborative solutions: the task to protect the fragile conditions of the
atmosphere. In this test, the interdependence of all actors of the international
community has risen to a complexity, scale and significance that are unprec-
edented. It has become clear that climate change cannot be categorized simply
as an environmental problem. The climate change regime has a contextual
breadth and magnitude that goes far beyond environmental law. It is a chal-
lenge that covers a multitude of aspects, both environmental, developmental
and social. At its core lie complex and fundamental questions of humanity.
The causes and consequences of anthropogenically intensified climate change
touch the very core of both humanity’s interaction with nature, as well as
humanity’s relationship with itself.17
‘In order to address problems of climate change modern economies need
to reduce their dependence on hydrocarbons and should undertake a special
effort to devise climate-friendly development strategies.’ With these words
the High-level Panel on Threats, Challenges and Change informed former
UN Secretary General, Kofi Annan, about the way forward for the world com-
munity on the critical issue of climate change.18
Despite the clarity and simplicity of this mandate, the development of an
international legal response to tackle climate change is a difficult task. Yet,
it is a study par excellence of the attempt of the international community to
understand and implement sustainable development.
17
See D. French, International Law and Policy of Sustainable Development (Manchester:
Manchester University Press, 2005) 74.
18
UN Doc. A/59/565, 2 December 2004, 30.
Part I
Sustainable Development in International Law

Introduction
This part sets out from the hypothesis that the protection of the fragile equi-
librium between the atmosphere, the waters, the soils, the ecosystems and the
needs of humans to live in a peaceful, just and secure world, today and in the
future, is channeled into law by the principle of sustainable development.
As an integrative principle it aims at unifying the separate efforts to further
diverse objectives of present communities to one universal, ultimate goal: the
durable and equitable satisfaction of human needs and aspirations – whatever
they might be – within the ultimate and absolute limits set by essential eco-
logical systems that support life on Earth.
In order to support this claim, we shall undertake three tasks: First, we
shall investigate the evolution and content of sustainable development as a
concept guiding State action (chapters 1 and 2). In the second step, the assess-
ment of the concept’s reflection in the international climate change regime and
the regime governing multilateral trade (WTO) will help to develop a more
concrete understanding of sustainable development in these particular con-
texts (chapters 3, 4 and 5). Third, the legal nature of sustainable development,
in particular the question whether it could be classified as a general principle
of law, will be assessed (chapter 6).1
1
From a terminological perspective, references to the ‘concept’ of sustainable development
relate to its socio-political and/or ethical content, while the word ‘principle’ in relation
to sustainable development will be used when assessing the legal status and content of
sustainable development.
Chapter 1
Origins and Development of the Concept of Sustainable

Development in International Law
The evolution of the concept of sustainable development has been elaborated

at great length elsewhere.1 It is therefore not the aim of this treatise to provide
a full assessment of the concept’s historic roots. An overview of its history,
however, will assist the understanding of the concept.
1.1 A Concept with Ancient Roots?
The origin of the concept of sustainable development cannot be exactly dated.

It has been argued that the concept can be traced back to ancient times across
diverse civilizations.2 As Judge Weeramantry noted,
1
For a historic overview see M.C. Cordonier Segger and A. Khalfan, Sustainable Develop-
ment Law: Principles, Practices and Prospects (Oxford: Oxford University Press, 2004)
15–78; U. Beyerlin, ‘The Concept of Sustainable Development’ in R. Wolfrum (ed.)
Enforcing Environmental Standards: Economic Mechanisms as viable Means? (Berlin:
Springer, 1996) 96–101; Y. Matsui, ‘The Road to Sustainable Development: Evolution
of the Concept of Sustainable Development in the UN’ in K. Ginther, E. Denters and
P.J.I.M. de Waart (eds.) Sustainable Development and Good Governance (Dordrecht: M.
Nijhoff, 1995) 69; G. Handl, ‘Sustainable Development: General Rules versus Specific
Obligations’ in W. Lang (ed.) Sustainable Development and International Law (London:
Graham & Trotman, 1995) 35; P. Malanczuk, ‘Sustainable Development: Some Critical
Thoughts in the Light of the Rio Conference’ in Ginther, Denters and de Waart (eds.)
1995, 23; P. Sands, ‘International Law in the Field of Sustainable Development’ (1994)
65:5 BYbIL 303–381.
2
See Case Concerning the Gabčikovo-Nagymaros Project, ICJ Reports 7 (Separate Opinion
of Vice-President Judge Weeramantry), where the concept is linked to ancient irrigation
practises in Sri-Lanka, Sub-Saharan cultures, and practices in China and South America
and Europe. Judge Weeramantry contends that the concept of sustainable development is
‘one of the most ancient ideas in the human heritage. Fortified by the rich insights that
[t]he concept of reconciling the needs of development with the protection of the en-
vironment is … not new. Millennia ago these concerns were noted and their twin de-
mands well reconciled in a manner so meaningful as to carry a message to our age.3
For early societies, stability, rather than expansion, was a fundamental pre-
requisite for survival. As soon as expansionist intentions surfaced within a
society, the equilibrium between conserving environmental goods and utiliz-
ing them for various needs was threatened.
During the last two millennia population increase, expansion of populated
territories, industrialization, globalization, and the introduction of religious
and philosophical concepts that promote the unlimited utilization of nature
for human’s satisfaction and liberalization paved a developmental path that
does not recognize ecological constraints. As we shall see in the course of this
study, such a path cannot be considered sustainable.
Still, while the idea of reconciling the needs of development with the pro-
tection of the environment is not new, the concept of sustainable development
in its current understanding certainly is. Looking back to ancient civilisation
might reveal isolated examples of how societies with transparent structures
defined themselves within their natural environment. The transferable value,
however, is rather limited. Historical examples and even more modern cases4
need to be seen in the context of their place in human history and evolution.
The complexity and global scope of current modern civilizations are hardly
comparable to the structure of ancient ones. By referring to the governance of
early societies, we risk answers that are too simple and potentially misleading
for dealing with the complexity of problems humans have been creating since
the dawn of the Industrial Revolution. The massive, systematic and multilay-
ered interference with the finely tuned balance of ecological systems cannot
be dealt with by reference to, for example, ancient irrigation systems.
Rather than attempting to draw parallels, which might not exist, it is
better to acknowledge the qualitative difference between the concept in its
current understanding and its various historic predecessors.5 In particular,
can be gained from millennia of human experience, it has an important part to play in the
services of international law.’ (ibid., 12).
3
Ibid., 6.
4
One of the earliest examples can be found in the German forest management in the 18th
century, proposed by Hanss Carl von Carlowitz in his work ‘Sylvicultura Oeconomica
oder hauswirthliche Nachricht und Naturgemäße Anweisung zur wilden Baumzucht’,
Leipzig, 1713.
5
Some would even hold that sustainable development is a postmodern concept which has
no historic roots whatsoever. See B. Stark, ‘Sustainable Development and Postmodern
International Law: Greener Globalization?’ (2002) 27:137 Wm. & Mary Envtl. L. & Pol’y
Rev., 137–192.
Chapter 1 – Origins and Development of Sustainable Development 13
in international relations and international law the concept of sustainable

development is a recent development.
1.2 Sustainable Development’s Rise in the International Order
In the early 1970s several factors, such as awareness of expanding environ-

mental degradation, depletion of natural resources, poverty and social disrup-
tion, led States to realize the detrimental impact of human activity on the
environment.6 At about the same time the concept of sustainable development
surfaced in the international community and international law. It became ap-
parent that the concept of development needed ‘re-formulation’. Insofar as the
word ‘sustainable’ qualifies the way development should proceed, elaborating
the concept of sustainable development put the notion of development itself
in question.
The 1972 Stockholm Declaration marked the beginning of a new concep-
tion of development; not in an environmental context, but with regard to its
socio-political implications.7 The necessity of development was expressed in
Article 8 of the Stockholm Declaration as follows:
[e]conomic and social development is essential for ensuring a favourable living and
working environment for man and for creating conditions on earth that is necessary for
the improvement of the quality of life.
Development was no longer regarded in terms of gross national product but

as a policy aimed at ‘better living conditions for all’. However, the ideal of
unlimited development remained, with Article 11 of the Declaration calling on
States not to take any steps to promote environmental protection without duly
taking into account the effects on development policy.
This shift initiated by the Stockholm Declaration was followed by develop-
ing a stronger focus on development paths in developing countries. The notion
of ‘basic needs’ appeared alongside development aid and resourcing develop-
ing States. However, in the wake of ‘redefining’ development cooperation,8
links between development and basic environmental protection were starting
to become internationally recognized.
6
See Beyerlin, 1996, 97.
7
Declaration of the United Nations Conference on the Human Environment (Stockholm)
16 June 1972, A/CONF.151/26 (Vol. I).
8
See International Development Strategy for the Third Nations Development Decade,
UNGA Res. 35/56, adopted 5 Dec. 1980.
One of the key documents dealing for the first time explicitly with develop-
ment and its environmental limits was the 1980 World Conservation Strategy
that aimed at achieving three main objectives:
(a) to maintain essential ecological processes and life-support systems (such as soil
regeneration and protection, the recycling of nutrients, and the cleaning of wa-
ters) and which human survival and development depend;
(b) to preserve genetic diversity …;
(c) to ensure the sustainable utilization of species and ecosystems (notably fish and
other wildlife, forests and grazing lands), which support millions of rural com-
munities as well as major industries.9
Thus, by the time sustainable development was compellingly defined as “de-

velopment that meets the needs of the present without compromising future
generations to meet their own needs” in the report of the World Commission
on Environment and Development (WCED), ‘Our Common Future’ in 1987,10
it had already gained currency in international efforts to deal with environ-
mental challenges.11
Some of the earlier approaches to sustainable development aimed at es-
tablishing norms for environmental protection and conservation that were
ecology-oriented rather than utilization-oriented. They also expressed an un-
derstanding of the relevance of environmental protection for social-economic
interests and needs of developing countries.12
However, the idea of sustainable development as expressed by the WCED
had the most far-reaching implications for international law. In the report,
sustainable development was explained as
a process of change in which the exploitation of resources, the direction of invest-

ments, the orientation of technological development and institutional change are all
in harmony and enhance both current and future potential to meet human needs and
aspirations.13
9
World Conservation Strategy, prepared by the IUCN, Gland Switzerland, 1980. The
succeeding document, The World Charter for Nature, 1983, took this notion further in
its Principle 4: ‘[e]cosystems and organisms, as well as the land, marine, atmospheric
resources that are utilized by man, shall be managed to achieve and maintain optimum
sustainable productivity, but not in such a way as to endanger the integrity of those other
ecosystems or species with which they coexist.’ ILM 22 (1983), 457.
10
World Commission on Environment and Development, 1987.
11
See UNGA Resolution 7, UN GAOR 36th Sess., Suppl. No. 51, UN Doc. A/51 (1982).
12
See Beyerlin, 1996, 97.
13
WCED, 1987, 46.
The World Commission called for overall transformation of policy and law
based on the concept of sustainable development. The concept was seen as
addressing the parallel challenges of environmental degradation and social
and economic development by recognizing that economic and environmental
goals are inextricably linked. The concept of ‘needs’ was considered a central
component in the definition of sustainable development and any attempt at
understanding sustainable development requires recognition of the needs, not
just of the present generation, but also of posterity. The Commission pointed
in particular to the fact that the essential needs of a vast number of peoples
in the world’s less and least developed States are not being adequately met.
Addressing the North-South gap, the report stated
A world in which poverty and inequity are endemic will always be prone to ecological
and other crises. Sustainable development requires meeting the basic needs of all and
extending to all the opportunity to satisfy their aspirations for a better life.14
Nevertheless, ‘equitable opportunities for all’, including generations to come,

has ever since proved a controversial and contentious issue in international
relations.15
With the introduction of the concept of sustainable development, economic
development, the environment, and human rights were supposed to be treated
in an integrated manner. The WCSD formally recognized the interrelation-
ships between these different areas of human activity in particular with regard
to their detrimental impacts. Referring to environmental, developmental and
energy crises citizens were facing throughout the world, the Commission
stated
[t]hey all are one. Ecology and economy are becoming ever more interwoven – locally,
regionally, nationally and globally – into a seamless net of causes and effects.16
The report is widely viewed as the moment at which sustainable development

became a broad policy objective17 or at least an aspirational goal.18 The inter-
14
WCED, 1987, 43–44.
15
See the works by E. Brown-Weiss, ‘Our Rights and Obligations to Future Generations for
the Environment’ (1990) 84:1 AJIL 190 and In Fairness to Future Generations: Interna-
tional Law, Common Patrimony and Intergenerational Equity (New York: Transnational
Publishers, 1989).
16
WCSD, 1987, 4.
17
See Cordonier Segger and Khalfan, 2004, 19 with further references.
18
See J. Verschuuren, Principles of Environmental Law: The Ideal of Sustainable Develop-
ment and the Role of Principles in International, European and National Law (Baden-
Baden: Nomos, 2003) 21.
national reaction to the report was, however, divided. Some argued that the
WCED had not gone far enough and diluted the focus on environmental pro-
tection when simultaneously taking other interests into account.19 These schol-
ars saw environmental destruction as the root cause of social and economic
injustice. Environmental health and protection were seen as a prerequisite for
just social and economic structures.20 To others the report was ‘neo-liberal’ in
the sense that growth, progress and material wealth were seen as the dominant
aspirations of human society for the meeting of which economic growth was
a prerequisite.21
One of the most controversial issues related to the development path for
developing countries. While developing countries want to remain free to
choose their own development strategy and direction, sustainable develop-
ment would imply certain limitations. As developing countries pointed out
meeting essential needs depends on achieving full growth potential in places
where such needs are not being met. Sustainable development was thus pri-
marily perceived as imposing limitations on developed countries only while
not interfering with the choice of developing countries on which development
path to follow. It was seen as hypocritical of developed countries to insist on
sustainable production and consumption patterns in developing countries as
long as many of the former fail to rein in their own unsustainable practices.
Despite the critique of the WCED report, its impetus toward the develop-
ment of the concept of sustainable development on a global scale cannot be
underestimated. Importantly, the WCED helped to shape a new perception of
the earth and the crisis which it faces.
The UN General Assembly, in its Resolution GA Res. 42/187 of 11. Dec.
1987, endorsed the findings of the report and concurred with the Commission
that
the critical objectives for environment and development must include preserving
peace, reviving growth and changing its quality, remedying the problems of poverty
and the satisfaction of human needs, addressing the problem of population growth and
conserving and enhancing the resource base, reorienting technology and managing
risk, and merging environment and economic decision-making.22
By 1992 and the United Nations Conference on Environment and Develop-

ment (UNCED) in Rio de Janeiro, the concept of sustainable development had
19
See Cordonier Segger and Khalfan, 2004, 19.
20
See P.E. Taylor, An Ecological Approach to International Law: Responding to Challenges
of Climate Change (London: Routledge, 1998) 212 et seq.
21
See Cordonier-Segger and Khalfan, 2004, 19.
22
UN Doc. A/C.2/42/L.81.
already become an important global policy that could no longer be ignored.

It had been included in a number of non-binding documents prior 1992, for
example the 1989 Declaration of the G7 Paris Summit,23 the 1989 Hague
Declaration on the Environment,24 the 1990 Bergen Declaration of the UN
Economic Commission for Europe,25 and the 1990 Agreement establishing
the European Bank for Reconstruction and Development (EBRD).26 Conse-
quently, references to ‘sustainable development’ became incorporated into all
UNCED documents.27
The Rio Declaration, a document setting out 27 principles, while reaf-
firming the 1972 Stockholm Declaration, introduced a ‘new approach and
philosophy’ to international relations.28 The central focus of the document
was on sustainable development as defined by the WCED Report. Principle
4 is important in this regard, it affirms that in order to achieve sustainable
development, environmental protection must constitute an integral part of the
development progress. This has to be read in the context of Principle 1, which
states that
Human beings are at the centre of concerns for sustainable development. They are
entitled to a healthy and productive life in harmony with nature.
23
28 ILM (1989) 1292, para. 37: ‘In order to achieve sustainable development, we shall
ensure the compatibility of economic growth and development with the protection of the
environment.’
24
28 ILM (1989)1308: ‘Financial institutions and development agencies, by they inter-
national or domestic, must co-ordinate their activities in order to promote sustainable
development.’
25
UN Doc. A/CONF.151/PC/10, 6 August 1990, para. 6: ‘The challenge of sustainable
development of humanity depends on providing sustainability of the biosphere and its
ecosystems.’
26
29 ILM (1990) 1077, Article 2.1(vii):’ [promoting] in the full range of its activities envi-
ronmentally sound and sustainable development’.
27
These are: the Rio Declaration on Environment and Development, Agenda 21, The UN
Framework Convention on Climate Change, the Convention on Biological Diversity and
the Statement of Principles to Guide the Management, Conservation and Sustainable De-
velopment of all Types of Forests (‘Forest Principles’). For an overview over the outcome
of the UNCED with regard to the development of the concept of sustainable development
see: A. Kiss and D. Shelton, International Environmental Law, 3rd ed. (Ardsley, New
York: Transnational Publishers, 2004); P. Sands, Principles of International Environmen-
tal Law, 2nd ed. (Cambridge: Cambridge University Press, 2003), P. Birnie and A. Boyle,
International Law and the Environment, 2nd ed (Oxford: Oxford University Press, 2002);
D. Hunter, J. Salzman and D. Zaelke, International Environmental Law and Policy, 2nd
ed. (New York: Foundation Press, 2002) 178–204.
28
UN Doc. A/CONF.151/26 (Vol.1), Rio Declaration on Environment and Development
1992. See also Cordonier Segger and Khalfan, 2004, 20.
The Preamble to the Agenda 21 gives another example of the centrality of the
concept in the ‘Rio-documents’:
Humanity stands at a defining moment in history. We are confronted with a perpetuation

of disparities between and within nations, a worsening of poverty, hunger, ill health
and illiteracy, and the continuing deterioration of the ecosystems on which we depend
for our well-being. However, integration of environment and development concerns
and greater attention to them will lead to the fulfilment of basic needs, improving
living standards for all, better protected and managed eco-systems and a safer, more
prosperous future. No nation can achieve this on its own; but we together can – in a
global partnership – for sustainable development.
These two very general and legally non-binding documents emanate an aura
of ideological aspirations. In this context, criticism of the concept’s indeter-
minacy and ambiguity is comprehensible.29 When a concept is meant to cover
everything, it is likely to say nothing. Thus, decision-makers ever since have
applied a wide margin of discretion in their appreciation of how to structure
and use arguments based on sustainable development, leading to diverse,
sometimes irreconcilable and contradictory decisions.
In the decade between 1992 UNCED and the 2002 World Summit on Sus-
tainable Development (WSSD) in Johannesburg, the global community began
to embrace sustainable development. States gradually started to implement
Agenda 21 principles into national policies and laws.30
Furthermore, international organisations, such as the United Nations with
the establishment of the Commission on Sustainable Development (CSD) and
the United Nations Environmental Program (UNEP),31 the World Bank,32 the
29
See M. McCloskey, ‘The Emperor has no Clothes: The Conundrum of Sustainable De-
velopment’ (1998–1999) 9 Duke Environmental Law and Policy Forum, referring to the
concept as a ‘fine phrase without meaning’, 157.
30
See United Nations Commission on Sustainable Development, National Information
Report of the Secretary-General (New York, UN CSD, 1999). See also FAO, Law and
Sustainable Development Since Rio: Legal Trends in Agriculture and Natural Resource
Management, (Rome: United Nations Publications, 2002).
31
See for example the 1996 Final Report of the Expert Group Workshop on International
Environmental Law aiming at Sustainable Development, UNEP/IEL/WS/3/2, 4 October
1996.
32
See World Bank Sustainable Development Reference Guide, 2005. Also the creation
of a new Sustainable Development Unit, merging the Banks departments that deal with
infrastructure and environmental projects, indicates a commitment to sustainable devel-
opment. See Reuter’s Press Release, Wolfowitz creates new sustainable development unit,
27 June 2006.
World Trade Organization,33 the Global Environmental Facility (GEF),34 the

Organization of Economic Co-operation and Development (OECD),35 the
Arctic Council,36 the World Water Forum,37 and the African Union38 – just to
mention a few – have adopted the concept of sustainable development and
have been working actively to identify specific ‘indicators’ for measuring
progress toward sustainable development.39
1.3 International Treaty Law
International treaty law and non-binding documents are increasingly incorpo-

rating references to sustainable development in specific contexts.
An important number of multilateral agreements have embodied the con-
cept and thus shed light on its definition from the perspective of their respec-
tive objectives and purposes.40 As will be assessed in more detail in chapter
33
The preamble to the 1994 Marrakech Agreement Establishing the World Trading Or-
ganization (33 ILM, 1994, 15, Preamble: ‘allowing for the optimal use of the world’s
resources in accordance with the objective of sustainable development’.
34
1994 Instrument Establishing Global Environmental Facility, 33 ILM (1994) 1273, Ar-
ticle 1.4: ‘The GEF shall ensure the cost-effectiveness of its activities in addressing the
targeted global environmental issues, shall fund programs and projects which are country
driven and based on national priorities designed to support sustainable development’.
35
See DAC Guidelines: Strategies for Sustainable Development, OECD, 2001. The OECD
notes on its website: ‘OECD Ministers recognise that sustainable development is an
overarching goal for their governments and the OECD. OECD countries bear a special
responsibility in achieving sustainable development worldwide. OECD activities are
overseen by the Annual Meeting of Sustainable Development Experts (AMSDE), who
review special projects as well as progress in mainstreaming sustainable development
concepts into the overall work of the OECD’ (<http://www.oecd.org/about/>).
36
1996 Declaration on the Establishment of the Arctic Council, 35 ILM 1996, 1382, pream-
ble: Affirming our commitment to sustainable development in the Arctic region’.
37
Ministerial Declaration of the Third World Water Forum in 2003, Paragraph 1: ‘Water is
a driving force for sustainable development’.
38
2000 Constitutive Act of the African Union, Article 3 (j): ‘promote sustainable develop-
ment at the economic, social and cultural levels as well as the integration of African
economies’ (<http://www.african-union.org>).
39
See T.C. Tryzna (ed.) A Sustainable World: Defining and Measuring Sustainable Devel-
opment (Sacramento, California: International Center for the Environment and Public
Policy, 1995) 23.
40
Examples include the Convention on Biological Diversity, Article 2 and Article 8; Pre-
amble to the Cartagena Protocol on Biosafety to the Convention on Biological Diversity,
39 ILM (2000), 1027, adopted January 29, 2000, in force since September 1, 2003: ‘Rec-
ognizing that trade and environment Agreements should be mutually supportive with a
view to achieve sustainable development.’; Preamble to the International Tropical Timber
Agreement, January 26, 1994, 33 ILM 1994, 1014; Convention on Persistent Organic
2, the international climate regime makes particular reference to sustainable

development. Both the UN Framework Convention on Climate Change and its
Kyoto Protocol embrace it.41 In fact, the adoption of the Climate Convention
and the Kyoto Protocol could be seen as a universal commitment to sustain-
able development.42
Moreover, the 1994 Energy Charter Treaty,43 the North American Free
Trade Agreement (NAFTA),44 the 1994 Marrakesh Agreement Establishing
the WTO,45 the 1994 Declaration of Barbados and the Programme of Ac-
Pollutants (POPs), 40 ILM 532, Stockholm May 22, 2001, Article 7.3: ‘The parties shall
endeavour to utilize and, where necessary, establish the means to integrate national imple-
mentation plans for persistent organic pollutants in their sustainable development strate-
gies where appropriate.’ and Annex F (c) which contains ‘ movement towards sustainable
development’ as a relevant socio-economic factor in evaluating possible control measures
for chemicals under consideration for inclusion in the Convention; Preamble to the Con-
vention on the Prior Informed Consent Procedure for Certain Hazardous Chemicals and
Pesticides in International Trade, 38 ILM 1, September 10, 1998, 1994 Desertification
Convention (Convention to Combat Desertification in those Countries Experiencing Seri-
ous Drought and/or Desertification, particularly in Africa, 33 ILM (1994) Article 9.1: The
preparation of national action programmes shall be closely interlinked with other efforts
to formulate national policies for sustainable development’; 1998 Aarhus Convention on
Access to Information, Public Participation in Decision-Making and Access to Justice in
Environmental Matters, 39 ILM (1999) 517, preamble: ‘Affirming the need to protect,
preserve and improve the state of the environment and to ensure sustainable and environ-
mentally sound development’; 2003 WHO Framework Convention on Tobacco Control,
42 ILM (2003) 518, Article 26: ‘economically viable alternatives to tobacco production,
including crop diversification should be addressed and supported in the context of nation-
ally developed strategies of sustainable development.’
41
Article 3(4) UNFCCC: ‘The Parties have a right to, and should promote, sustainable
development.’
42
P. Sands, ‘International Law in the Field of Sustainable Development’ (1994) BYBIL,
304; D. French, ‘Climate Change Law: Narrowing the Focus, Broadening the Debate’ in
Cordonier-Segger and Weeramantry, 2005, 274.
43
34 ILM (1995) 360, Article 19.1: ‘In pursuit of sustainable development and taking into
account its obligation under those international agreements concerning the environment
to which it is a party, each Contracting Party shall strive to minimize in an economically
efficient manner harmful environmental impacts’.
44
32 ILM (1993) 289 and 605; preamble: ‘Promote sustainable development’. See also
the supplementary 1993 North American Agreement on Environmental Cooperation (32
ILM 1993, 1480, Article. 1: ‘promote sustainable development based on co-operation and
mutually supportive environmental and economic policies’.
45
See Preamble: ‘with a view to raising standards of living, ensuring full employment and
a large and steadily growing volume of real income and effective demand, and expanding
the production of and trade in goods and services, while allowing for the optimal use
of the world’s resources in accordance with the objective of sustainable development,
seeking both to protect and preserve the environment and to enhance the means for doing
so in a manner consistent with their respective needs and concerns at different levels
tion of the Global Conference on Sustainable Development of Small Island

Developing States,46 and the 2000 Cotonou Agreement between the EU and
the African, Caribbean and Pacific Group of States47 give further evidence of
the topically and geographically wide-spread acceptance and incorporation of
1.4 Regional and National Laws
Parallel to embracing sustainable development in an increasing number of

international legal documents, also national and regional laws and conven-
tions recognise the concept. Both developments signal a gradually growing
commitment by the international community to sustainable development.
Examples of the recognition of the concept of sustainable development
include the changes made by the 1997 Treaty of Amsterdam to both the EC
Treaty and the 1992 Maastricht Treaty on the European Union. Article 2 of the
Treaty Establishing the European Union mentions the achievement of sustain-
able development as a fundamental objective of the European Union:
The Community shall have as its task, by establishing a common market and an eco-
nomic and monetary union and by implementing common policies or activities referred
to in Articles 3 and 4, to promote throughout the Community a harmonious, balanced
and sustainable development of economic activities, a high level of employment and of
social protection, equality between men and women, sustainable and non-inflationary
growth, a high degree of competitiveness and convergence of economic performance,
a high level of protection and improvement of the quality of the environment, the
raising of the standard of living and quality of life, and economic and social cohesion
and solidarity among Member States.
of economic development’ and to ‘to develop an integrated, more viable and durable
multilateral trading system’.
46
UN Doc. A/CONF.167/9, October 1994.
47
2000 OJ L. 317/3; Article 1: ‘The partnership shall be centered on the objective of re-
ducing and eventually eradicating poverty consistent with the objectives of sustainable
development and the gradual integration of ACP countries into the world economy’,
Article 9: ‘Respect for all human rights and fundamental freedoms, including respect
for fundamental social rights, democracy based on the rule of law and transparent and
accountable governance are an integral part of sustainable development’, Article 10: ‘The
Parties consider the following elements as contributing to the maintenance and consolida-
tion of a stable and democratic political environment: sustainable and equitable develop-
ment involving, inter alia, access to productive resources, essential services and justice’
and art 32.1: ‘Co-operation on environmental protection and sustainable utilization and
management of natural resources shall aim at: (a) mainstreaming environmental sustain-
ability into all aspects of development co-operation and support programmes and projects
implemented by the various actors.’
The EU Treaty also embraces the concept in Article 6: ‘Environmental protec-

tion requirements must be integrated into the definition and implementation
of the Community policies and activities referred to in Article 3, in particular
with a view to promoting sustainable development.’
This reference also informs Article 2 of the EC Treaty thereby acting as a
‘bridge’ between the EC as an economic community and as an environmental
one.48
The Preamble of the 2001 Nice Charta of Rights refers to ‘balanced and
sustainable development’49 and the 2003 Draft Constitution of the EU to the
concept of sustainable development. Article 3(3) proclaims sustainable devel-
opment a goal of the Union:
The Union shall work for the sustainable development of Europe based on balanced
economic growth, a social market economy, highly competitive and aiming at full
employment and social progress, and with a high level of protection and improve-
ment of the quality of the environment. It shall promote scientific and technological
advance.50
According to Article 3(5) of the Lisbon Treaty, the EU is committed to pro-

moting sustainable development.
In its relations with the wider world, the Union shall uphold and promote its values
and interests and contribute to the protection of its citizens. It shall contribute to peace,
security, the sustainable development of the earth, solidarity and mutual respect among
peoples, free and fair trade, eradication of poverty and protection of human rights and
in particular the rights of the child, as well as to strict observance and development of
international law, including respect for the principles of the United Nations Charter.51
Numerous references in national laws could be added which evidence the

growing acceptance of the concept by States. Many national constitutions
48
W. Frenz and H. Unnerstall, Nachhaltige Entwicklung im Europarecht (Baden-Baden:
Nomos, 1999) 195.
49
See also Article 37: Environmental protection. A high level of environmental protection
and the improvement of the quality of the environment must be integrated into the policies
of the Union and ensured in accordance with the principle of sustainable development.
Charter of Fundamental Rights of the European Union (2000/C 364/01) 18.12.2000.
50
Draft Treaty Establishing a Constitution for Europe, CONV 850/03, 18 July 2003.
51
Article 3.5 (emphasis added) of the consolidated versions of the Treaty on the European
Union and the Treaty on the Functioning of the European Union as they will result
from the amendments introduced by the Treaty of Lisboa, signed on 13 December 2007
in Lisboa. See also H. Veinla, ‘Sustainable Development as the Fundamental Principle
of Europe’s Environmental Ius Commune’ (2005) X Juridica International, arguing
that ‘the environmental europa ius commune is framed by the sustainable development
principle’(115).
include such references. States worldwide are establishing political and le-
gal systems that incorporate sustainable development as a top priority. The
general commitment to sustainable development at the national level bears
fruit in attempts undertaken to put in place governance structures that enable
the implementation of the concept in a wide scope of institutions. Since this
present thesis is not aimed at providing empirical evidence of State practice,
a few examples must suffice to indicate the commitment to sustainable devel-
opment.52
German Basic Law, for example, ‘mindful also of its responsibility toward
future generations’ proclaims in Article 20 (a) the state’s responsibility to
‘protect the natural bases of life by legislation and, in accordance with law
and justice, by executive and judicial action, all within the framework of the
constitutional order’ as a key objective of the German State, in particular the
legislature (Staatsziel). It has been argued that this is an implicit reference to
the constitutionalization of sustainable development in German law.53
Other, non-exhaustive, examples of States explicitly incorporating sus-
tainable development into national laws and institutions include Norway,54
52
See for a more encompassing survey: R. Bartholomäi, Sustainable Development und
Völkerrecht. Nachhaltige Entwicklung und intergenerative Gerechtigkeit in der Staaten-
praxis (Baden-Baden: Nomos, 1997).
53
See K.-P. Sommermann, Kommentierung zu Article 20 a GG, in I. von Münch and Philip
Kunig (eds.) Grundgesetz Kommentar, 3 Bde., Bd. 2: Articles 20 bis 69, 5.ed. (Mün-
chen: Beck Juristischer Verlag, 2001) Nr. 11. For further discussion of the concept of
sustainable development in German laws, jurisprudence and legal literature, see E.M.
Frenzel, Nachhaltigkeit als Prinzip der Rechtsentwicklung?: Beitrag zu einer praktischen
Gesetzgebunglehre (Baden-Baden: Nomos, 2005) 60–64 and 65–77.
54
See for example, Government of Norway, Nasjonal Strategi for Bærekraftig Utvikling,
14.08.2000; Ministry for the Environment, White Paper (St meld) Nr. 58 (1996–1997)
Miljøvernpolitikk for en bærekraftig utvikling. Dugnad for framtida (Environmental
Policy for Sustainable Development. Action for the Future); Politisk plattform for en
flertallsregjering 2005–2009, Kapittel 1: Regjeringen vil bygge sin miljøpolitikk på prin-
sippet om bærekraftig utvikling. Also the Norwegian Constitution implicitly embraces
the concept in Article 110b: Every person has a right to an environment that is conducive
to health and to natural surroundings whose productivity and diversity are preserved.
Natural resources should be made use of on the basis of comprehensive long-term con-
siderations whereby this right will be safeguarded for future generations as well. (See for
a discussion of the implicit reference: Bugge, 2006a, 64–65, 74–78.) Another example
is provided by the Svalbard Act: 5te kapitel, ”Longyearbyen lokalstyre”, § 29 1. ledd:
Formålet med dette kapitlet er å legge forholdene til rette for et funksjonsdyktig lokalt
folkestyre i Longyearbyen, og for en rasjonell og effektiv forvaltning av fellesinteres-
sene innenfor rammen av norsk svalbardpolitikk, og med sikte på en miljøforsvarlig og
bærekraftig utvikling av lokalsamfunnet. (Lov 1925-07-17 nr. 11. Provision added 15
June 2001).
Australia,55 Argentina,56 and New Zealand.57

These references serve to demonstrate the commitment to the concept on
different international and regional levels and in different contexts.
1.5 The New Millennium
The United Nations Adoption of the 2000 Millennium Development Goals,

which include a clear commitment to environmental sustainability, indicates
another important step toward global acceptance of the concept of sustainable
development.58
Furthermore, in 2001 at the World Trade Organisation meeting in Doha,
Qatar, the trade ministers of the WTO Member States agreed to launch a new
round of trade and economic liberalization, called the ‘Doha Development
Agenda (DDA)’. The results of this ministerial meeting included the Ministerial
55
Australian legislation refers explicitly to ‘ecologically sustainable development’. For
example, Article 1 (b) of the Environment Protection and Biodiversity Conservation Act
1999, states as one of the objects of the Act ‘to promote ecologically sustainable develop-
ment through the conservation and ecologically sustainable use of natural resources’.
Similarly, the Environment Protection Act 1979 (Act No. 8056/1970) of Victoria em-
braces the ‘Principle of integration of economic, social and environmental considerations.
Article 1B reads: ‘(1) Sound environmental practices and procedures should be adopted
as a basis of ecologically sustainable development for the benefit of all human beings
and the environment. (2) This requires the effective integration of economic, social and
environmental considerations in decision making processes with the need to improve
community well-being and the benefit of future generations’.
56
Argentina’s Ministry for the Environment, for example provides for a Sustainable Devel-
opment and Environment Secretariat (Secretaría de Ambiente y Desarrollo Sustentable).
57
See the New Zealand Government publication Sustainable Development Programme of Ac-
tion, January 2003 (<http://www.beehive.govt.nz/hobbs/30199-med-susined-developm.
pdf>); see also the Ministry for Environment webpage where it is stated that ‘The New
Zealand Government has agreed that sustainable development principles should underpin
its economic, social and environmental policies at home, and abroad. ‘Sustainable devel-
opment” integrates concern for social, economic and environmental issues, and involves
thinking broadly about objectives, considering long-term as well as short-term effects,
assessing indirect as well as direct effects, and taking extra care when changes brought
about by development might be irreversible.” At: <http://www.mfe.govt.nz/issues/
susdev/>. See also the Report of the Parliamentary Commissioner for the Environment
‘Creating our Future: Sustainable Development for New Zealand’, August 2002, <http://
www.pce.govt.nz/reports/allreports/1_877274_03_8.shtml>.
58
7th goal in UNGA Res. 53/239 (5. Sept. 2000), see also <http://www.developmentgoals.
org>.
Declaration, which reaffirmed the commitment of the organization to the

concept of sustainable development.59
The 2002 World Summit for Sustainable Development (WSSD) aimed to
address social, environmental and economic problems in an integrated way.60
Its outcome is contained in two main documents, the Johannesburg Declara-
tion (JD)61 and the Johannesburg Plan of Implementation (JPOI).62 The JD
reviews the course taken from UNCED to the WSSD and reinvigorates a
global commitment to sustainable development. The Plan of Implementation
is more progressive for that matter as it is designed as a framework for ac-
tion to implement the commitments originally agreed at UNCED.63 The JPOI
promotes sustainable development as an integrated concept that takes a wider
array of social and developmental needs into account. In particular, the prior-
ity areas that were identified by the UN Secretary-General were given specific
attention. These areas include water and sanitation, energy, health, agriculture
and biodiversity (‘WEHAB’).
The JPOI reflects a renewed emphasis given to the need for greater co-
herence and integration among ‘the three pillars of sustainable development,
which consist of economic, environmental and social parameters.64
Already the WCED almost twenty years ago had pointed to the inequalities
between the North and the South that, again, were strongly criticised in Jo-
hannesburg. The relationship between poverty and environmental degradation
was as prominent an international issue then as it is today. The adoption of
the Millennium Development Goals (MDGs) by the United Nations General
Assembly in 2000, the agreement on the Johannesburg Declaration and the
Plan of Implementation show how much of the WCED report remains valid
59
See Doha Ministerial Declaration WT/MIN (01)/DEC/1 (20 Nov. 2001) or: <http://www.
wto.org/english/thewto_e/minist_e/min01_e/min01_e.htm>. See also M. Gehring and
M.C. Cordonier-Segger (eds.) Sustainable Development in World Trade Law (The Hague:
Kluwer Law International, 2005).
60
See for further details in Cordonier Segger and Khalfan, 2004, 25–43.
61
See Johannesburg Declaration on Sustainable Development, in Report of the World Sum-
mit on Sustainable Development, Johannesburg, South Africa, 26 Aug.–4 Sept. 2002, A/
CONF.199/20, New York, UN, 2002.
62
See Johannesburg Plan of Implementation, Report of the World Summit on Sustainable
Development, A/CONF.199/20 or: <http://www.un.org./esa/sustdev/documents/WSSD_
POI_PD/English/POIToc.htm>.
63
For an overview over the eleven chapters of the POI see Table 2.1: Structure of the Johan-
nesburg Plan of Implementation in Cordonier Segger and Khalfan, 2004, 27–28.
64
See generally K. Gray, ‘World Summit on Sustainable Development: Accomplish-
ments and New Directions?’ (2003) 52:1 International and Comparative Law Quarterly
256–268; Earth Negotiations Bulletin, Summary of the World Summit on Sustainable
Development, 22:51 ENB (2002).
today. Moreover, these new efforts are a reminder that many problems outlined
by the World Commission not only remain still unresolved but continue to
aggravate.65
The WSSD has been widely criticised for failing to make significant progress.
Apart from reiterations of its commitment to sustainable development,66 no
contribution of any substance to define sustainable development has been
made. Rather, it has been critically observed that the concept was inflated by
the addition of a number of new issues. Concerns of good governance67 and hu-
man rights protection, mostly related to poverty eradication and health issues,
are claimed to have been added to the concept of sustainable development.68
Still, the Plan of Implementation presents a conceptualization of sustainable
development that follows much the same lines as already identified by the
WCED. The JPOI stated
efforts will also promote the integration of the three components of sustainable devel-
opment – economic development, social development and environmental protection
– as interdependent and mutually reinforcing pillars. Poverty eradication, changing
65
D. French, International Law and Policy of Sustainable Development (Manchester: Man-
chester University Press, 2005) 15.
66
The Johannesburg Declaration notes: ‘Thirty years ago, in Stockholm, we agreed on the
urgent need to respond to the problem of environmental deterioration. Ten years ago, at
the United Nations Conference on Environment and Development, held in Rio de Janeiro,
we agreed that the protection of environmental and social and economic development is
fundamental to sustainable development, based on the Rio Principles. To achieve such
development, we adopted the global programme entitled Agenda 21 and the Rio Declara-
tion on Environment and Development, to which we reaffirm our commitment. The Rio
Conference was a significant milestone that set a new agenda for sustainable develop-
ment. At the Johannesburg Summit, we have achieved much in bringing together a rich
tapestry of peoples and views in a constructive search for a common path towards a world
that respects and implements the vision of sustainable development. The Johannesburg
Summit has also confirmed that significant progress has been made towards achieving a
global consensus and partnership among all the people of our planet.’ Paragraphs 8, 10,
footnotes removed.
67
2002 Plan of Implementation, para. 4: ‘Good Governance within each country and at the
international level is essential for sustainable development’
68
2002 Plan of Implementation, para. 46: ‘The goals of sustainable development can only
be achieved in the absence of a high prevalence of debilitating diseases. There is urgent
need to address the causes of ill health, including environmental causes.’ See also S.
Giorgetta, ‘The Right to a Healthy Environment, Human Rights and Sustainable Devel-
opment’ (2002) 2:2 International Environmental Agreements: Politics, Law and Econom-
ics, 171–192. See also: United Nations Development Programme (UNDP), Integrating
Human Rights with Sustainable Human Development (New York: United Nations, 1998);
and S. Jodoin, The Principle of Integration and Interrelationship in Relation to Human
Rights and Social, Economic and Environmental Objectives, CISDL Working Paper,
March 2005.
unsustainable patterns of production and consumption, and protecting and managing

the natural resource base of economic and social development are overarching objec-
tives of, and essential requirements for, sustainable development.69
The scope of sustainable development remains controversial and has brought

about numerous conceptual and practical difficulties. The fear, however, ex-
pressed by some that the WSSD broadened the scope of sustainable develop-
ment to such an extent it has lost its initial focus, turning it into an ‘umbrella
for a host of disparate issues’, a ‘catch-all phrase’70 is exaggerated.
Though there is a danger of a diluting effect of such wide rhetoric, the
WSSD highlighted correctly the broad scope of sustainable development.71
The rhetoric is only indicative of the complexity of the concept and the many
relations it aims to address.72 Moreover, the WSSD has pointed to the press-
ing urgency of promoting sustainable development within the international
community and, concurrently, the continued difficulties that exist as regards
meaningful implementation.73
As increasingly apparent, the concept of sustainable development has been
accepted and endorsed by the world community despite the absence of an
absolute and precise definition. The difficulties faced during the WSSD high-
lighted to some extent the continuing tensions and insecurities in the search
of the international community for a common understanding of sustainable
development. However, absolute precision as to the meaning and scope may
not be achievable. It might not even be desirable. As Simma notes,
perhaps it is inevitable that content and contours of an integrative concept such as that
of sustainable development which was endorsed by the world community as a whole,
lacks the kind of clarity of articulation of concepts one might be accustomed to in a
more limited, homogenous group of States. However, that needs not necessarily be
considered a disadvantage. Indeed, it may well have been the very lack of conceptual
rigor which permitted the entire world community to embrace it.74
69
2002 Plan of Implementation, para. 2.
70
See ILA, Berlin Conference 2004, 8. Also: M. Pallemaerts, ‘Is Multilateralism the Future?
Sustainable Development or Globalization as “A Comprehensive Vision of the Future of
Humanity”’ (2003) 5:1–2 Environment, Development and Sustainability, 275–295.
71
ILA, Berlin Conference, 2004, 8.
72
Gray notes that the list of issues might be much longer: ‘[n]o longer a defined environ-
mental issue, the concept of sustainable development was enlarged to include broader
concerns … However, these linkages are still far from complete’, Gray, 2003, 267.
73
See ILA, Berlin Conference, 2004, 12.
74
B. Simma, ‘Foreword’ in N. Schrijver and F. Weiss (eds.) International Law and Sustain-
able Development: Principles and Practice (Leiden: Martinus Nijhoff, 2004) vi.
One indication of the general acceptance of the concept of sustainable de-

velopment is its reflection within the legal sphere. Work on the assessment
of the legal implications of sustainable development, the development of
legal tools, institutional arrangements, international standards, procedures,
financial mechanisms and compliance and enforcement techniques in various
international institutions and commissions give clear signs of consolidation
and implementation of the concept.
In fact, one obvious outcome of the WSSD is the call for a strong ‘legal
backup’ of the concept. Though the discussions at the WSSD on international
law pertaining to sustainable development failed, the legal development is not
stagnant.75 Quite the opposite in fact, the renewed commitment to sustainable
development coupled with a broadened scope demands stronger inquiries into
the legal substance of the concept, in particular the aspect of integration. Since
integration is pivotal to sustainable development,76 more work needs to be
done to legally elucidate and implement this component.
1.6 Recent Legal and Political Developments
The concept continues to evolve and will do so even more when the interna-
tional community starts facing the fundamental challenges identified by the UN
Secretary-General’s High-level Panel on Threats, Challenges and Change.77
Among these threats, a changing climatic system has been identified as one of
the most fundamental tests to the functioning of the international community.
Given the dire implications of the manifold challenges climate change poses
not only to the cooperation between States but also to the co-existence of the
various members of the international community, the centrality of sustainable
development becomes apparent.
To further enhance the process of development and implementation of sus-
tainable development in international law, the International Law Association
75
See Cordonier Segger and Khalfan, 2004, 103–109; M. Pallemaerts, ‘International Law
and Sustainable Development: Any Progress in Johannesburg?’ (2003) 12:1 RECIEL 7.
See also L. Rajamani, ‘From Stockholm to Johannesburg: The Anatomy of Dissonance in
the International Environmental Dialogue’ (2003) 12:1 RECIEL, 23–32.
76
77
Former United Nations Secretary-General Kofi Annan established the High-Level Panel
on Threats, Challenges and Change in an address to the General Assembly on 23 Sep-
tember 2003. The Panel came up with 101 recommendations: ‘Executive Summary, Our
Shared Responsibility’, Report of the Secretary-General’s High-level Panel on Threats,
Challenges and Change, 2004. On April 17, 2007, the UN Security Council held the
first-ever debate on the impact of climate change on peace and security.
(ILA) established the Committee on Legal Aspects of Sustainable Develop-

ment, which completed its work in 2002.78 The final result of this committee’s
work is the ILA New Delhi Declaration of Principles of International Law Re-
lating to Sustainable Development.79 In this Declaration, the ILA noted how
sustainable development is now widely accepted as a global objective and that
the concept has been aptly recognized in various international and national
legal instruments. The Association expressed the view that
the objective of sustainable development involves a comprehensive and integrated

approach to economic, social and political processes, which aims at the sustainable
use of natural resources of the Earth and the protection of the environment on which
nature and human life as well as social and economic development depend and which
seeks to realize the right of all human beings to an adequate living standard on the
basis of their active, free and meaningful participation in development and in the fair
distribution of benefits resulting there from, with due regard to the needs and interests
of future generations.80
ILA then created an International Committee on International Law on Sustain-

able Development, chaired by Professor Schrijver, which published its first
report at the Berlin Conference in 2004 and the second one at the Toronto
Conference in 2006.81 Both reports identify as a key feature of the commit-
tee’s work the principle of integration, both in substantive and in procedural
terms.82 In its New Delhi Declaration, the ILA recognized that
The principle of integration reflects the interdependence of social, economic, finan-

cial, environmental and human rights aspects of principles and rules of international
law relating to sustainable development, as well as of the needs of current and future
generations.83
78
Five reports were adopted between 1994 and 2002. For the most recent see: Report of the
Seventieth Conference, New Delhi (2002).
79
ILA Resolution 3/2002, annex as published as UN Doc. A/57/329, New Delhi Declaration
of Principles of International Law Relating to Sustainable Development, International
Environmental Agreements: Politics, Law and Economics 2: 211–216, 2002.
80
Ibid., 212.
81
ILA, Berlin Conference (2004), International Law on Sustainable Development, First
Report. ILA, Toronto Conference (2006), Report of the Committee International Law on
Sustainable Development.
82
The report notes that ‘[i]n particular, in ensuring that the principle of integration is imple-
mented as fully as possible, the committee is likely to wish to pay specific consideration to
the development and/or refinement of the techniques within international law (including
judicial techniques) to resolving conflicts within the context of sustainable development.
Such conflicts are potentially both of substantive and jurisdictional nature.’, ibid., 13, fn.
67.
83
New Delhi Declaration, Principle 7.
The study of the current status in international law and the further implemen-
tation of the principle of integration will continue to constitute the principal
area of the committee’s work.
Other recent examples of continued efforts to fine-tune the understanding
of sustainable development are the ongoing work on the Draft International
Covenant on Environment and Development prepared by IUCN and the In-
ternational Council on Environmental Law,84 the 2002 International Jurists’
Mandate for the Implementation of International Sustainable Development
Law,85 the 2002 Johannesburg Principles on the Role of Law and Sustainable
Development,86 the Earth Charter Initiative,87 and the 2005–14 UN Decade of
Education for Sustainable Development.88 They are further indications of a
global commitment to sustainable development.
Within the European Union, much work has been carried out to prepare a
renewed sustainable development strategy. Member States were consulted and
their reports included into the strategy which was adopted in June 2006.89 In
June 2005, the Council approved the ‘Declaration on the Guiding Principles
for Sustainable Development’ and concluded that sustainable development is
a key principle governing all the Union’s policies and activities. In this con-
text, it is worth noting the final definition in the 2006 Renewed EU Sustainable
Development Strategy adopted by the European Council in 2007:
Sustainable development means that the needs of the present generation should be met
without compromising the ability of future generations to meet their own needs. It is
an overarching objective of the European Union set out in the Treaty, governing all the
84
The objective of the Draft Covenant is to ‘achieve environmental conservation as an
indispensable component of sustainable development though establishing integrated
rights and obligations’ (Part I, Article 1). In the Preamble the Parties express their belief
that ‘humanity stands at a decisive point in history, which calls for a global partnership
to achieve sustainable development. (<http://www.iucn.org/themes/law/pdfdocuments/
EPLP31EN_rev2.pdf>).
85
Adopted at the International Conference ‘Sustainable Justice’ 2002 in Montreal, Canada.
86
Adopted at the Global Judges Symposium held in Johannesburg, South Africa, 18–20.
August 2002.
87
See Preamble: ‘We must join together to bring forth a sustainable global society founded
on respect or nature, universal human rights, economic justice, and a culture of peace.’
(<http://www.earthcharter.org/files/charter/charter.pdf>).
88
UN Resolution on the United Nations Decade of Education for Sustainable Development
(2005–2014), 57/254, December 2002. The overall goal of the DESD is ‘to integrate
the values inherent in sustainable development into all aspects of learning, to encourage
changes in behaviour that allow for a more sustainable and just society for all’. (http://
portal.unesco.org/education).
89
For the entire process see <http:/www.europa.eu.int/comm/sustainable/pages/review_
en.htm>.
Union’s policies and activities. It is about safeguarding the earth’s capacity to support
life in all its diversity and is based on the principles of democracy, gender equality,
solidarity, the rule of law and respect for fundamental rights, including freedom and
equal opportunities for all. It aims at the continuous improvement of the quality of life
and well-being on Earth for present and future generations. To that end it promotes a
dynamic economy with full employment and a high level of education, health protec-
tion, social and territorial cohesion and environmental protection in a peaceful and
secure world, respecting cultural diversity.90
To achieve the aim of sustainable development the Council adopted a number

of objectives and principles, the first of the key objectives being environmen-
tal protection. It states:
Safeguard the earth’s capacity to support life in all its diversity, respect the limits of the
planet’s natural resources and ensure a high level of protection and improvement of the
quality of the environment. Prevent and reduce environmental pollution and promote
sustainable consumption and production to break the link between economic growth
and environmental degradation.
Moreover, the Strategy sets overall objectives and concrete actions for seven
key priority challenges for the coming period until 2010, many of which are
predominantly environmental, the first one being: climate change and clean
energy.91
Seen together, the listed efforts give evidence of a firm and wide-spread
commitment to sustainable development.
1.7 In Sum
When looking at the evolution of the concept of sustainable development it

becomes apparent that the diversity and plurality of interests within the inter-
national community have shaped and expanded the scope of objectives and
priorities that are bound together by the concept of sustainable development.
90
The Council of the European Union, Brussels, 9 June 2006 (adopted 15.-16. June 2006)
10117/06, Annex: Renewed EU Sustainable Development Strategy, 2. The strategy is
based on the Communication from the Commission to the Council and the European
Parliament, Draft Declaration on Guiding Principles for Sustainable Development,
COM(2005) 218 final, 25.5.2005 and Council of the European Union, Presidency Con-
clusions, 10255/05 CONCL 2, 18. 06. 2005. For a thorough discussion of the impact
of the strategy on EU policy making see: M. Pallemearts and A. Azmanova, The EU
and Sustainable Development: Internal and External Dimensions (Brussels: VUBPress,
2006).
91
European Council conclusions 14 December 2007 (§ 56).
There is (almost) no issue of international concern that has not or cannot be

linked to sustainable development.
Sustainable development thus provides the ‘lens’ through which the plural-
ity of issues and interests can meaningfully be discussed. Finding a balance
between the various elements, however, remains at the heart of the political
debate over sustainable development. This balance is the key to establishing
meaning and finding successful solutions to current problems of the world
community. There is, apparently, urgency to this task, as expressed by the
Council of the European Union:
Unsustainable trends in relation to climate change and energy use, threats to public
health, poverty and social exclusion, demographic pressure and ageing, management
of natural resources, biodiversity loss, land use and transport still persist and new chal-
lenges are arising. Since these negative trends bring about a sense of urgency, short
term action is required, whilst maintaining a longer term perspective. The main chal-
lenge is to gradually change our current unsustainable consumption and production
patterns and the non integrated approach to policy-making.92
The conceptualization of sustainable development in the 2002 Plan of Imple-

mentation adopted in Johannesburg gives an indication of the conditions the
international community has identified for sustainable development. As the
Plan noted,
Poverty eradication, changing unsustainable patterns of production and consumption,

and protection and managing the natural resource base of economic and social de-
velopment are overarching objectives of, and essential requirements for, sustainable
development.93
However, the discussion of diverse interests within the integrative framework

of sustainable development also raises fundamental questions about the rela-
tionship of these various components to each other. Arguably, the framing of
these objectives within the concept of sustainable development will eventually
identify indispensable priorities and, thus, establish some sort of hierarchical
structures.
The simultaneous pursuit of all these objectives and aspects might be
too demanding and challenging a task to lead to any measurable success. As
McGoldrick stated, ‘[t]he critical importance of sustainable development is
that it is an integrationist principle … The relative weighting of economic,
92
The Council of the European Union, Brussels, 9 June 2006 (adopted 15–16 June 2006)
10117/06, Annex: Renewed EU Sustainable Development Strategy, 2.
93
2002 PoI, para. 2.
environmental and human rights norms has become increasingly complex.’94

Thus, the critical aspect of sustainable development is the integration of these
components and objectives within the scope of the concept.
94
D. McGoldrick, ‘Sustainable Development and Human Rights: An Integrated Approach’
(1996) 45:4, International and Comparative Law Quarterly, 818.
Chapter 2
Integration as a Central Aspect of

Sustainable Development
2.1 Introduction
The concept of sustainable development consists of various components.

Deriving from the complexity of the concept, these components have been
defined and categorized in different ways. Depending on the field of science
undertaking to define these components, also the methodological approaches
differ significantly.1
In the legal realm, in particular in public international law, a range of
diverse components has been identified. Sands, for example, distinguishes
four main elements;2 the International Law Association defines seven core
principles;3 and a report published by the European Commission points to
1
See for an overview of quantitative versus qualitative approaches in economics and social
sciences to sustainable development: J. Korhonen, ‘On the Paradox of Corporate Social
Responsibility: How can we use Social Science and Natural Science for a New Vision?’
(2006) 15:2 Business Ethics: A European Review, 200–214.
2
Sands lists the (i) need to preserve natural resources for the benefit of future generations
(principle of intergenerational equity); (ii) the aim of exploiting natural resources in a
manner which is sustainable, or prudent, or rational, or wise or appropriate (principle
of sustainable use), (iii) the equitable use of natural resources, which implies that use
by one state must take account of the needs of other states (principle of equitable use or
intragenerational equity) and (iv) the need to ensure that environmental considerations
are integrated into economic and other development plans, programmes, and projects,
and that development needs are taken into account in applying environmental objectives
(principle of integration). Sands, 2003, 253.
3
The ILA New Delhi Declaration is based on those core principles: (i) the duty of states to
ensure sustainable use of natural resources, (ii) the principle of equity and the eradication
of poverty,(iii) the principle of common but differentiated responsibilities, (iv) the princi-
ple of the precautionary approach to human health, natural resources and ecosystem, (v)
the principle of participation and access to information and justice, (vi) the principle of
good governance; and (vii) the principle of integration and interrelationship, in particular
twelve principles.4
Despite the variability of approaches to categorizing elements of sustain-
able development, the principle of integration remains the most fundamental
and operationally significant. Article 4 of the 1992 Rio Declaration noted
that ‘[i]n order to achieve sustainable development, environmental protection
shall constitute an integral part of the development process and cannot be
considered in isolation from it.’ While this early focus on integration only
illuminated one side of the equation – the integration of environmental protec-
tion into development – present understanding sees all three main components
– the social, economic, and environmental – as integral aspects of a triangular
relationship.5
The various categorization attempts take the importance of integration for
granted, thereby underwriting its central position in the concept of sustainable
development. Sands states that ‘[i]n many ways, it [the element of integration]
is the most important’.6 Similarly, paragraph 7.1. of the New Delhi Declaration
accepts the somewhat quintangular structure of ‘[t]he principle of integration
reflect[ing] the interdependence of social, economic, financial, environmental
and human rights aspects of principles and rules of international law relat-
ing to sustainable development as well as of the needs of current and future
generations.’ Consequently, the ILA Committee on International Law on
Sustainable Development defined the reliance on the principle of integration
as the key feature of its work. It explains this focus by defining the principle
of integration not only a ‘substantive principle of international law’ but also
a ‘practical tool by which issues relevant to sustainable development can be
synthesised.’7
The Committee notes that ‘[i]ntegration is thus pivotal to the promotion
of sustainable development. It is the principle of integration that both brings
together the many challenges confronting the international community and,
in relation to human rights and social, economic and environmental objectives. See ILA
New Delhi Declaration, ILA Resolution 3/2002, annexed to UN Doc. A/57/329.
4
See the study of Michael Decleris who lists 12 principles, including the principle of (i)
Public Environmental Order; (ii) Sustainability; (iii) Carrying Capacity; (iv) Obligatory
Restoration of Disturbed Ecosystems; (v) Biodiversity; (vi) Common Natural Heritage;
(vii) Restrained Development of Fragile Ecosystems; (viii) Spatial Planning; (ix) Cultural
Heritage; (x) Sustainable Urban Environment; (xi) Aesthetic Value of Nature, and (xii)
Environmental Awareness. Decleris, 2000.
5
Verschuuren, 2003, 21 and P. Sands, ‘International Law in the Field of Sustainable Devel-
opment: Emerging Legal Principles’ in W. Lang (ed.) 1995, 53.
6
See Sands, 2003, 263.
7
See ILA Committee on International Law on Sustainable Development, Seventy-First
Report, Berlin Conference 2004, 13.
Chapter 2 – Integration as a Central Aspect of Sustainable Development 37
at the same time, provides the most realistic chance of their solution.’8 In
other words, the principle of integration ‘forms the backbone of sustainable
development’.9
It is within the context of integration that all other aspects of sustain-
able development come into play, e.g. the precautionary principle; polluter
pays principle; the principle of common but differentiated responsibility. All
of these principles have individual meanings and separate functions. In the
context of sustainable development, however, they all reinforce the notion
that human society, in particular its social and economic development, and
environmental protection need to be integral parts in the establishment and
governance of a sustainable society. Most, if not all, of these principles try
to strike a balance between human activities and their impact on the natural
environment, both in a contemporary, inter-contemporary, local, regional and
global perspective. As such they deal with the manner of integration, be it as
a matter of scientific uncertainty, an approach to risk assessment, or by alloca-
tion of costs and responsibilities.
At the legislative, administrative and judicial level, the integration of sus-
tainable development’s multitude of elements refers to the need to take all
aspects into account, i.e. States must ensure that economic and social interests,
where they are represented, do not disregard environmental considerations.
Similarly, when measures are undertaken for purposes of environmental pro-
tection, their economic or social implications need to be taken into account.
Clearly, in international law-making there is a trend toward integration in
the sense that treaties deal increasingly with intersecting and cross-cutting
issues. For example, financing and investment procedures and economic
mechanisms are included in multilateral environmental treaties in order to
provide for market forces and the necessary capital for pursuing the environ-
mental objective.10
Moreover, market mechanisms have been introduced into environmental
agreements in order to address and reduce adverse economic implications by
8
See ILA Committee on International Law on Sustainable Development Seventy-First
Report, Berlin Conference 2004, 13.
9
1995 Report of the CSD Expert Group on Identification of Principles of International Law
for Sustainable Development, Paper No 3, para. 15.
10
For an overview over financing mechanisms for global environmental protection see K.
Miles, ‘Innovative Financing: Filling in the Gaps on the Road to Sustainable Environ-
mental Funding’ (2005) 14:3 RECIEL, 202–211; see also P.A.U. Ali and K. Yano, Eco-
Finance: The Legal Design and Regulation of Market-Based Environmental Instruments
(The Hague: Kluwer Law International, 2004).
providing cost-effective and flexible means of implementation.11 At the same

time, economically and developmentally motivated agreements increasingly
take account of certain environmental objectives.12
Thus, fields of international law once thought to be isolated and concerned
only with their own domain are becoming interlinked. Such interlinking of
environmental, economic and social concerns is brought to the surface not
only in the negotiation process, but in the substantial provisions of the final
agreement and the decisions of dispute settlement bodies. This ‘conceptual
continuum’13 is particularly interesting as it traces the integrational character
of a treaty throughout its different stages of implementation and gives an indi-
cation of the extent to which integration not only is envisaged, but carried out.
The potential consequences of this continuum, particularly in international
trade law, will be elaborated further in Part III.
While an integrational aspect is emerging in international law, how to un-
dertake development in a way that is sustainable, that is, taking account of and
reconciling social, economic and environmental components, still remains a
challenge to international and national law and decision making.
2.2 Integration within the Limits of Ecological Thresholds
Integration is the central aspect of sustainable development. It is defined as

the process of ‘mak[ing] whole or becoming complete; bring[ing] (parts) to-
gether into a whole … remov[ing] barriers imposing segregation’.14 It can be
seen as a conceptual shift above existing normative barriers which separate
international economic, environmental, and social law.15 The desired outcome
11
Examples include the 1987 Montreal Protocol on Substances that Deplete the Ozone
Layer, 16 September 1987, 26 ILM 154, as amended by the London Amendments to the
Montreal Protocol on Substances that Deplete the Ozone Layer, 29 June 1990, UNEP/
OZ.L.Pro.2.3 (Annex II) and the flexible mechanisms included in the Kyoto Protocol.
Other examples of integrated development and environment treaties include the 1994
United Nations Convention to Combat Desertification in Countries Experiencing Serious
Drought and/or Desertification, particularly in Africa, 17 June 1994, 33 ILM 822, the
2000 Cartagena Protocol on Biosafety to the 1992 Convention on Biological Diversity
and the 2001 International Treaty on Plant Genetic Resources for Food and Agriculture, 3
November 2001.
12
See, for example, North Atlantic Free Trade Agreement (NAFTA), chapter 21, Art. 2101
I (incorporation of GATT Art. XX(b) and (g), and the 1994 Agreement establishing the
WTO, Preamble, GATT Art. XX.
13
This term is coined by Cordonier Segger and Khalfan, 2004, 106.
14
Webster’s New Dictionary and Thesaurus, 2004, 354.
15
Jodoin, 2005.
of this process is integrity – generally defined as completeness, wholeness or

unimpaired condition. While integrity arguably is a somewhat illusory goal,
integration is more substantiated. But what does it entail?
Should it broadly ‘be defined as a concept which attempts to integrate en-
vironmental considerations into economic and other development and which
takes into account other than environmental needs while formulating the
principles of environmental protection’?16 The question is whether sustainable
development could be defined in more specific terms? Although this definition
has some appeal, it still is extremely vague and somewhat circular.
In order to avoid tautological ‘l’art pour l’art’ definitions, it is therefore
important to not forget the ultimate goal of sustainable development. Integra-
tion does not happen in a vacuum but needs to be assessed in the context of
sustainable development. It is a tool for bringing together the several priorities
of the modern world in order to promote the ultimate aim of sustaining human
society. This is the essence to the search for a balance between the parts. Such
balance is only possible to the extent that ultimate limits are observed.
This was something the World Commission called for and it is essential
still. ‘At a minimum’ the Commission stated, ‘sustainable development must
not endanger the natural systems that support life on Earth’ adding that there
were objective limits to what nature could bear.17 These systems are generated
by a complex interplay of biological, geological, and chemical cycles driven
by solar energy and operation across a wide range of spatial and temporal
scales.
Natural ecosystems provide the critical basis for all human societies. Soci-
eties derive a wide array of important life-support and economic benefits from
the ecosystems in which they exits.18 Scientist use the term ‘ecological’ or
‘ecosystem’ services when referring to the conditions and processes through
which natural ecosystem sustain and fulfil human life.19
The framework within which sustainable development and the integration
of all aspects of society need to be viewed derives ultimately from fundamen-
16
M. Fitzmaurice, 293 Recueil des Cours, 2001, 47.
17
WCED, 1987, 44–45.
18
An ecosystem is a dynamic complex of plant, animal, and microorganism communities
and the non-living environment interacting as a functional unit.
19
Ecosystem services are thus the functions carried out by ecosystems, including the ben-
efits people obtain. The 2005 Millennium Ecosystem Assessment systemizes them into
provisioning services such as food, water, timber and fibre; regulating services that affect
climate, floods, disease, wastes, and water quality, cultural services that provide recrea-
tional, aesthetic, and spiritual benefits, and supporting services such as soil formation,
photosynthesis and nutrient cycling. Millennium Ecosystem Assessment: Living Beyond
Our Means, 2005, 3. See also G.D. Daily, Nature’s Services: Societal Dependence on
Natural Ecosystems (Washington: Island Press, 1997).
tal, universal, and indispensable ecological functions on which they depend.

To respect these functions is an absolute priority. They are irreplaceable on
a global and temporal scale: neither knowledge, technology nor economic
wealth could provide any substitute.20
Thus, integration in the context of sustainable development demands that
ultimate ecological thresholds are respected. Once this is clear, it should
also be clear that integration as a principle of sustainable development does
not necessarily and under all circumstances mean giving equal weight to all
concerns. Limits have to be defined and thresholds set. Only then may we
attempt of balancing those aspects that remain within its definitional purview.
In other words, the integration of various components needs to happen within
this frame. In fact, without a frame, integration in its etymological meaning
would make no sense.
In my view, stronger emphasis should be placed on the hierarchy of pri-
orities integration is likely to eventually bring about. Indeed, that is precisely
what is taking form within the international climate regime, i.e. the Climate
Convention and the Kyoto Protocol, where the protection of a safe global
climate system is the overarching priority. This priority sets limits on human
conduct. However, within these limits, measures to mitigate climate change
need to integrate social, environmental and economic aspects. Here, defining
the integrational aspect of sustainable development is a crucial issue. Argu-
ably, only those response measures that are based on sustainable development
will provide serious, long-term solutions to climate change. In other words,
what is sought is an integration of various aspects within the framework set
out by the ultimate objective of the Climate Convention.
The challenge is therefore to delimit the frame for the ‘balancing process’.
Integration raises the fundamental question of whether society, the economy,
human rights, good governance and environment are of equal importance or
whether their obvious connectedness needs to be brought into some sort of
systematic relationship in order to give the concept meaning.
The standard view is to accord the divergent priorities equal importance.
As a result, sustainable development is perceived as a balancing act with
supposedly unavoidable trade-offs. In fact, trade-offs are the very essence of
‘balancing’. Some trade-offs, however, cannot be made without rendering the
outcome unsustainable.
20
See Daily, ibid. A preliminary estimation of the economic value of the services provided
to humans by ecological systems and the global natural capital stock which produces
them ranges them at a price-level of US$54 trillion annually, compared to a gross global
product of US$18 trillion p.a. See R. Constanza et al., ‘The Value of the World’s Ecosys-
tem Services and Natural Capital’ (1997) 387 Nature 253–260.
While there is no doubt that balancing environmental, economic and social

factors is pivotal for sustainable development, it does not necessarily mean
treating all three (or more) in the same manner. Equal treatment can be no
more than an illusory goal in the absence of conceptual clarity.
On the contrary, insisting on the equal importance of all aspects and inter-
ests could prove to be the major obstacle to defining sustainable development.
Lafferty noted that not only the ‘insistence on all or nothing usually ends up
with later’ but also that the ‘purist insistence on trying to achieve the idealized
goal [of treating all three aspects equally] can prove an enemy of progressive
knowledge and change.’21
A similar critique can be found in Ekardt, who promotes a multidimen-
sional conception of sustainable development. He states that
[n]ach einer im wissenschaftlichen und noch mehr im populären Schrifttum verbreiteten

Ansicht meint nachhaltige ‘Entwicklung’ (…) schlicht eine ausgewogene Verfolgung
(a) ökologischer, (b) ökonomischer und (c) sozialer Belange (=drei Säulen). Doch wer
dies denkt, unterschiebt der grundstürzend neuen Idee <globale Gerechtigkeit und
Generationsgerechtigkeit> Intentionen aus dem altliberalen Wertehaushalt (…) und
versucht die neue Idee in einem geschickten Schachzug schon im Ansatz zu neutra-
lisieren. Mit dem Reden von den <drei Säulen> verkörpert Nachhaltigkeit plötzlich
nur noch die recht unspektakuläre Botschaft, dass politische Entscheidungen heutige
verschiedene Belange möglichst in Einklang bringen sollten (…). Und dies ist ganz
sicher nicht die neue große Vision, die wir brauchen. Das Thema der Nachhaltigkeit ist
eine dauerhaft und global lebenswerte Welt.22
The conditions of life make it imperative to ensure the stability of irreplace-

able natural functions. Without this, development cannot be sustainable. Sus-
tainable development demands more than the abstract juggling of ecological,
economic and social goals. It implies that ecological functions exist that are
indispensable for a durable and globally equitable human society. It requires
nations to set out and implement concrete goals that submit all other activities
under the protection of those essential natural conditions on which human
societies depend.23
21
Lafferty, 2004, 192.
22
F. Ekardt, Das Prinzip Nachhaltigkeit: Generationengerechtigkeit und globale Gerech-
tigkeit (München: Beck 2005) 27.
23
Unnerstall notes accordingly: ‘Der Vorrang des Umweltschutzes ergibt sich nicht per se
aus dem Integrationsansatz …, sondern aus dem Ziel ‘nachhaltiger Entwicklung’, auf
das er gerichtet ist.’, H. Unnerstall ‘Nachhaltige Entwicklung und intergenerationelle
Gerechtigkeit im Europarecht’ in M. Bobbert, M. Düwell, K. Jax (eds.) Umwelt, Ethik,
Recht (Tübingen: Francke Verlag, 2003) 146.
2.3 Climate Stability: An Ecological Threshold
No measure, whether legal or political, economic or social, that oversteps the

fundamental ecological thresholds can under any circumstances be judged
sustainable.
Without delving into the vast realms of natural sciences, it is suggested
here that most of the problems affecting ecological systems and functions are
well understood by scientists.24
One example of such ecological threshold is given by the limits set to pre-
vent dangerous climate change.
In its Fourth Assessment Report the IPCC mapped out the likely effects of
a changing climate on almost every facet of society. The potential effects are
broad and far reaching. The IPCC projects that the average surface tempera-
ture could increase by between 1.4 and 6.4 °C by the year 2100 compared to
1990 temperatures.25 In Europe temperatures are expected to rise between 2.0
and 6.3 °C by 2100 if nothing is done to significantly reduce emissions.26
The impacts of such an increase are far reaching. According to the sce-
narios provided by the IPCC,27 they include more frequent and destructive
extreme weather events such as droughts, floods, hurricanes, directly threat-
ening the personal safety and security of humans. Rising sea levels up to 59
cm may damage and even inundate communities, cities, or entire island na-
tions, directly linking climate change effects to issue of state sovereignty and
survival and to global security issues, such as climate refugees, immigration
movements and possible conflicts, etc.28
Rising sea levels, violent weather and higher temperatures also put severe
stress on ecological systems, including forests, wetlands, alpine regions.
24
A vast examination has been carried out by the Millennium Ecosystem Assessment,
resulting in one of the key findings that ‘Over the past 50 years, humans have changed
ecosystems more rapidly and extensively than in any comparable period of time in human
history, largely to meet rapidly growing demands for food, fresh water, timber, fiber, and
fuel. This has resulted in a substantial and largely irreversible loss in the diversity of life
on Earth.’ (Available at: <http://www.millenniumassessment.org>.)
25
IPCC, Climate Change 2007, Fourth Assessment Report, Synthesis Report, Summary for
Policymakers, 6.
26
Commission of the European Union, COM(2005) 35 final, 9.2. 2005, Winning the Battle
Against Climate Change, 3.
27
IPCC, Climate Change 2007: Impacts, Adaptation and Vulnerability. Contribution of
Working Group II to the Fourth Assessment Report of the Intergovernmental Panel on
Climate Change.
28
For a worst case scenario, see: Peter Schwartz and Doug Randall, An Abrupt Climate
Change Scenario and Its Implications for United States National Security, October 2003,
Public Report, prepared by Global Business Network (GBN) for the US Department of
Defense.
Ecological productivity and biodiversity will be altered with an increased

risk of extinction of some vulnerable species. The outlined impacts pose an
unprecedented challenge to the resilience of natural processes and a threat to
the functioning of a large variety of ecosystems for at least two main reasons.
First, the speed and scope of change are making it far more difficult – in
some cases impossible – for species to move to more suitable areas or adapt
to the new conditions by evolution. Second, the ability of plants and animals
to adjust to changing climatic conditions has been significantly constrained
by the massive changes humans have made to the landscape and the health of
ecosystem by pollution and development.29
Climate change is also projected to exacerbate threats to human health,
particularly in lower income populations. Prevalence of water- or insect-borne
diseases is likely to rise, there might be frequent disruption of agriculture in
some parts due to prolonged periods of droughts, water shortages and sea-
level rise. An increase in extreme weather events, i.e., rare or unusual weather
for a particular place or region, is predicted, which inevitably will lead to
economic losses and increased vulnerability.
Beside these obvious and direct challenges, there are a number of far more
complex and ecologically interlinked changes whose effect on human well-
being could be drastic, in particular with regard to food security.
Some models predict substantial change in the carbon cycle and biogeo-
chemistry of the oceans. One component of the complex climate system is
CO2 up-take by oceans. CO2 diffuses from the atmosphere into surface waters
of the oceans, where it dissolves and undergoes a number of chemical reac-
tions. This process is dependent on differences in CO2 concentration levels.
As the atmospheric concentration of CO2 rises, the oceans need to step up
the absorption process. While the oceans are supposed to be able to absorb
most of the carbon that is being transferred to the atmosphere by fossil fuel
burning and land clearing, it takes longer to adjust than the speed at which
atmospheric greenhouse gas concentrations are rising. Oceans do not act as a
single homogeneous sponge, absorbing CO2 equally across the entire expanse
of water. The crucial factor is the transfer of CO2 absorbed at the surface into
the waters below. This process again depends on the ocean conveyor system
where surface waters sink as they move to the poles; a complete cycle lasts
hundreds of years.30 Atmospheric CO2 concentrations, however, are increas-
29
Many species are effectively locked into ‘enclaves of nature’ surrounded by urban or in-
tensively farmed regions, shutting off ‘escape routes’ and making them highly vulnerable
to climate change. Millennium Ecosystem Assessment, Living Beyond our Means, 2005,
15.
30
See Smith and Smith, 2003, 603.
ing ever more rapidly, thus outpacing the absorptive functions of the oceans.
In addition, the effects of a warmer climate could directly interfere with the
conveyor system and thereby distort the fundamental functions of the oceans
as CO2 sinks.31
Moreover, the change in temperature and composition of the ocean waters
could also lead to the massive and rapid releases of methane stored in the
sea bed.32 Similarly massive releases of methane are predicted as a result of
melting arctic permafrost soils.
Other impacts include biochemical changes. Nutrients released from
the overturning of marine sediments are likely to decline, limiting primary
productivity in the surface waters. One consequence could thus be dramatic
changes to fish populations in the upper waters of the oceans.33
Changes in entire ecosystem structures are likely to occur. While grow-
ing seasons might extend in some northern regions, in warmer and more arid
areas, e.g. the Mediterranean biome, large parts of central Africa that already
suffer from severe droughts, significantly longer, drier and hotter periods are
likely, leading to increased erosion, loss of species, decline or cessation of
agricultural productivity, desertification, water shortages.
While each of these impacts is severe, it is, however, their accumulation,
that causes incalculable costs, including human and social, environmental and
economic costs. These costs are of incomparable magnitude, encompassing
not only loss of life and dislocation of populations, but also geopolitical insta-
bility and a pronounced decrease in the quality of life caused by the disruptive
effect of climate change to the functioning of ecosystems.34 These challenges
will not be equally distributed across human populations and State borders,
but are most likely to affect those States and their people that not only have
contributed least to the causes of anthropogenic climate change, but also have
the least human and financial capacities and technologies to deal with the
dramatic detrimental effects. Some of the countries that are expected to suffer
from devastating changes already struggle from limited resources, famine,
disease and political instability.
31
On the complex interplay of oceans and climate change see: WBGU Special Report, The
Future Oceans – Warming up, Rising High, Turning Sour, August 2006 (<http://www.
wbgu.de/wbgu_sn2006_en.html>).
32
I. Leifer, et al., ‘Natural Marine Seepage Blowout: Contribution to Atmospheric Meth-
ane’, 20:3 Global Biogeochem. Cycles, 20 July 2006.
33
A. Beeby, and A.-M. Brennan, First Ecology (London: Chapman and Hall, 1997) 225.
34
The International Climate Taskforce, Meeting the Climate Challenge – Recommendations
of the International Climate Change Taskforce (London, Washington, D.C., Canberra:
International Climate Taskforce, 2005) 1.
Scientific uncertainty remains regarding the scale, timing and location

of the abovementioned effects. Because climate change could set in motion
large-scale, high-impact, non-linear and potentially abrupt changes in physical
and biological systems over the coming decades, highly accurate predictions
remain scientifically largely impossible. Despite these uncertainties, recent
research also indicates that the threshold for dangerous interference with the
climate system can be set around 2°C temperature increase compared to pre-
industrial global mean temperatures.35
This target can be translated in an atmospheric concentration target of
about 450 ppm (parts per million) CO2 equivalents. Such concentration levels
will require urgent and drastic reductions in greenhouse gases.36 If such goal
is accepted then the absolute limit of what is tolerable in the atmosphere acts
as the baseline for discussions on what greenhouse gas reductions are required
to protect the ecology and support sustainable development.
There also is increasing scientific evidence that the benefits of limiting the
global average temperature increase to 2°C outweigh the costs of abatement
policies.37 In other words, looking at the risks, the costs of inaction will be
disproportionately higher than the cost of action.38 If temperatures continue
to rise beyond the 2°C threshold, a more rapid and unexpected reaction by
the climate system becomes likely and irreversible, catastrophic events may
35
See the scenarios outlined by the IPCC in the 2007 Synthesis Report, Summary for
Policymakers, 9. (available at: <http://www.ipcc.ch/pdf/assessment-report/ar4/syr/
ar4_syr_spm.pdf>). Also B. Metz et al., ‘Towards an Equitable Global Climate Change
Regime: Compatibility with Article 2 of the Climate Change Convention and the Link
with Sustainable Development’ (2002) 2:2–3 Climate Policy, 211–230. This target has
generally been accepted by the EU. EU Council Conclusion of December 20, 2004 “RE-
AFFIRMS that, with a view to meeting the ultimate objective of the Convention to pre-
vent dangerous anthropogenic interference with the climate system, overall global mean
surface temperature increase should not exceed 2°C above pre-industrial levels’, para.
2. This was also confirmed by the Commission of the European Communities, Brussels,
10.1.2007, COM(2007)2 final, Communication from the Commissions to the Council, the
European Parliament, the European Economic and Social Committee and the Committee
of the Regions, Limiting Global Climate Change to 2 degrees Celsius. The way ahead for
2020 and beyond.
36
The IPCC suggests that a 50 to 85 per cent reduction of global emissions of CO2 from
what was being emitted in 2000 is required to meet this stabilization goal. IPCC, 2007
Synthesis Report, Summary for Policymakers, 21.
37
The Stern Review: The Economics of Climate Change (2006) suggests that ‘the costs
of stabilising the climate are significant but manageable; delay would be dangerous and
much more costly.’ It estimates the annual costs of achieving stabilisation between 500
and 550ppm CO2e at around 1% of global GDP, summary of conclusions, 4.
38
See J. Cameron, ‘Climate Change in Business’ in D. Freestone and C. Streck (eds.) Legal
Aspects of Implementing the Kyoto Protocol Mechanisms: Making Kyoto Work (Oxford:
Oxford University Press, 2005) 29.
occur.39 At the same time it has been shown that the costs of adaptation to the
effects of climate change can be reduced by phasing in stringent mitigation
measures which cover all greenhouse gases, all major emitting sectors and
States. As Cameron observed, ‘[a]daptation costs are inevitable but adaptation
without strenuous efforts at mitigation is reckless’.40
Therefore, measures that seek to reduce the emission of greenhouse gases
at sources have to be given the highest priority when defining sustainable
development strategies. This does not mean that sustainable development
is about protecting a stable climate system only. Yet, while there are other
components as well, nothing suggests that they can be taken care of in the
framework of sustainable development as long as the climate challenge is not
solved.41
With regard to climate change, the above-mentioned controversies in the
WCED report are set aside. In fact, the World Commission saw climate stabil-
ity as the only environmental limit we had already passed, and thus the greatest
(not only, but also) environmental challenge for the planet. The Commission
noted: ‘The ultimate limits to global development are perhaps determined by
the availability of energy resources and by the biosphere’s capacity to absorb
the by-products of energy use.’42 It explicitly identified the ‘greenhouse ef-
fect’ as a ‘threat to life-support systems’ thus defining a ‘threshold that cannot
be crossed without endangering the basic integrity of the system’.43 In this
context, the limits pointed out by the WCED report and clearly defined by the
450 ppm target need to be understood as defining the ecological threshold for
39
Commission of the European Union, COM(2005) 35 final, 9.2. 2005, Winning the Battle
Against Climate Change, 4.
40
Cameron, 2005, 29.
41
For a discussion of the relationship between climate change and sustainable development
see also: C. Voigt, ’Climate Change and the Mandate of Sustainable Development’, in:
Hans Christian Bugge and Christina Voigt (eds.) Sustainable Development in National
and International Law – What did the Brundtland Report do to Legal Thinking and De-
velopment, Europa Law Publishing (2008) and C. Voigt, ‘Sustainable Development in
Practice: The Flexibility Mechanisms of the Kyoto Protocol’, in: M. Emberland and C.
Eriksson (eds.) New Developments in Public International Law, Oxford University Press
(forthcoming in 2009).
42
WCED, 1987, 58.
43
WCED, 1987, 32–33.
2.4 Scientific Uncertainty
However, ecological systems and their interdependencies are complex, and

there is a lack of coherent, multidisciplinary scientific knowledge. Moreover,
the many-faceted ways in which ecological systems bear on economic and
social systems are largely unknown.44 Therefore, only when the science is
sufficient can ecological limits and thresholds of sustainability be defined
objectively and quantitatively. An approach to such a definition is the Millen-
nium Ecosystem Assessment where a number of key ecological services that
are indispensable for human life are singled out.45
But where there is scientific uncertainty, quantitative approaches cannot
help define sustainable development, in which case we must apply a norma-
tive principle which takes account of the risk of harm.
Arguably the most prominent principle to address decision-making in the
absence of complete scientific information concerning the environmental con-
sequences of a particular activity is the principle of precaution.46 Basically,
this principle means that where there is risk of serious or irreversible environ-
mental harm, anticipatory measures have to be taken to prevent this harm as
a response to scientific uncertainty. In terms of integration, the application of
the precautionary principle means that even where scientific certainty about
the interference of social and economic systems with ecological functions is
wanting, the thresholds of ecological resilience need to be anticipated. The
44
See M.H. Huesemann, ‘Can Pollution Problems be effectively solved by Environmental
Science and Technology? An Analysis of Critical Limitations’ (2001) 37:2 Ecological
Economics, 271–287. See also K.-H. Robèrt et al., ‘Strategic Sustainable Development
– Selection, Design and Synergies of Applied Tools’ (2002) 10:3 Journal of Cleaner
Production, 197–214 and K.-H. Robèrt et al., Strategic Leadership Towards Sustainable
Development (Karlskrone: Blekinge Institute of Technology, 2004).
45
Of the 24 ecosystem services examined in the Assessment, the scientists found that 15
(62.5 percent), including regulation of air quality, climate, water, erosion, fresh water
and water purification, waste treatment, pests, genetic resources, pollination and natural
hazards, are being degraded or used unsustainably, a trend that ‘could grow significantly
worse during the first half of this century.’ UN Millennium Ecosystem Assessment, 2005.
See for a similar conclusion: WorldWatch Institute, Vital Signs 2006–2007, July 2006. In
this report it was noted ‘The decline of ecosystems is undermining the vital services they
provide, including the provision of fresh water and food and the regulation of climate
and air quality. Ecosystem decline is also increasing the risk of disruptive and potentially
irreversible changes such as regional climate shifts, the emergence of new diseases, and
the formation of low-oxygen “dead zones” in coastal waters’. WWI Press Release, 12.
July 2006.
46
See N. De Sadeleer, Environmental Principles. From Political Slogans to Legal Rules,
(Oxford: OUP, 2002), 94 et seq.; and A. Trouwborst, Evolution and Status of the Precau-
tionary Principle in International Law (The Hague: Kluwer, 2002).
value of precaution lies primarily in the assumption that ecological systems

are vulnerable, as opposed to resilient.47 As Cordonier Segger and Khalfan
note, ‘[a]lthough it is generally agreed that the environment can tolerate some
abuse, there is a tendency to believe and act as if the environment can tolerate
a particular human activity or set of activities unless scientific information
demonstrates otherwise.’48 The precautionary principle works as a remedy to
this tendency.
Even if scientific uncertainty exists as to the clear identification of such
ecological functions in each specific situation, precaution implies the mini-
mization of risks to these functions.49 Precaution is, thus, especially important
for sustainable development because the capacity of ecological systems as
well as the global environment to resist external stresses is mostly unknown
or uncertain.
As such, the precautionary principle is intrinsically linked with sustainable
development by providing a necessary tool to avoid that economic and so-
cial developments have detrimental effects on ecological functions on which
human life ultimately depends – even if the effects or the risks thereof are
unknown.
2.5 Environmentalism and Sustainable Development
Despite the necessity to protect certain fundamental ecological functions, it

would be a grave mistake to view the concept of sustainable development as
being about ‘environmental issues’ only.50 While the principle of sustainable
development encompasses an environmental aspect, it is not about ‘environ-
mentalism’. Environmentalism can be defined as activism to protect nature
from ravages of human activities, including economical ones. Sustainable
development in contrast is a much more complex and fundamentally different
concept. It is about redesigning human activity, including the economy, itself
47
See A.M.H. Clayton and N.J. Radcliffe, Sustainability: A Systems Approach (London:
Earthscan Publications, 1996) 213.
48
Cordonier Segger and Khalfan, 2004, 152. Ehrenfeld interprets this tendency of ‘sit and
wait’ in a more ironic way by suggesting that it might be due to ‘a form of insanity as
defined by some as continuing to act in the same manner but expecting the outcome to
be different’, J.R. Ehrenfeld, ‘Industrial Ecology: Paradigm Shift of Normal Science?’
(2000) 44:2 American Behavioral Scientist, 229–244.
49
On the extent of risk and definition of thresholds, see: E. Rehbinder, ‘Precaution and
Sustainability: Two Sides of the Same Coin?’ in A. Kiss and F. Burhenne-Guilmin, A
Law for the Environment: Essays in the Honour of Wolfgang E. Burhenne (Gland: IUCN,
1994) 93.
50
WCSD, Foreword, xi.
and defining it within the ultimate limits set by fundamental ecological proc-
esses. This is a unique challenge.
Environmentalism can be considered a movement against pollution, envi-
ronmental degradation and serious loss of nature. It is ‘a managerial approach
to the environment within the context of present political and economic
practices’.51 Sustainable development, on the other hand, is a move toward
new action and behaviour. Not isolated environmental protection issues per
se, but the integrated protection of life supporting systems within the wider
framework of social and economic development and the transformation of
society toward a sustainable state lie at the heart of the concept.52 Recognising
the vast, qualitative difference entailed in the change from ‘old environmental
law’ to the ‘new law of sustainable development’ Decleris notes how
[t]he old law was inspired by the then reductionist reasoning that it could and should
stick to its defensive role, in other words just prevent extremes of ruthless develop-
ment, without in other respects intervening in economic policy. But in many ways
reductionist thinking let to ‘paper law’ and became the alibi for continuing ruthless
development … The new law is not defensive or deterrent … In contrast, the new law
must guide the behaviour of the administration, organisation and individuals toward
(…) interventions which, having incorporated the fundamental criterion of sustainable
development, provide a sustainable result in all areas of human activity.53
Thus, the complexity of its objective makes it obvious that there is a fun-
damental qualitative difference between environmentalism and sustainable
development. Basically, the development from environmental protection to
sustainable development is a change from analytical to systemic thought.
It has been pointed out that sustainable development and environmental
protection can be incompatible.54 While conflicts should be expected due to
the fragmented nature of environmental law, it is my conviction that environ-
51
A. Dobson, Green Political Thought, 3rd ed. (London: Routledge, 2000) 34.
52
This finds an echo in Gro Harlem Brundtland’s statement: ‘When the terms of reference
of our Commission were originally being discussed in 1982, there were those who wanted
its considerations to be limited to ‘environmental issues’ only. This would have been a
grave mistake. The environment does not exist as a sphere separate from human actions,
ambitions, and needs, and attempts to defend it in isolation from human concerns have
given the word’ environment’ a connotation of naivety in some political circles … But the
‘environment’ is where we all live; and ‘development’ is what we all do in attempting to
improve our lot within that abode. The two are inseparable.’ WCSD, 1987, Chairman’s
Foreword, xi.
53
Decleris, 2000, 7 and 14.
54
T. Hurka, ‘Sustainable Development: What do we owe Future Generations?’ in Environ-
mental Ethics: Sustainability, Competition and Forestry, University of British Columbia,
available at: <http://www.ethics. ubc.ca/papers/susdev.html>.
mental protection is really possible only if environmental concerns via the

concept and respective legal theory of sustainable development are systemati-
cally integrated into all other areas of law.
Another point of criticism relates to the human-centred focus of sustain-
able development. There is common ground on the meaning of the principle of
sustainable development as a vision of society embracing quality of life, op-
portunity, and freedom of humans. As such, it is a primarily anthropocentric
concept, as opposed to ecocentric. Despite the criticism levelled at it in this re-
spect, sustainable development is uniformly understood as a quest to improve
the quality of human lives and surroundings without destroying resources
and life-supporting systems on which present and future generations depend.
Thus, it is a concept that seeks to achieve a balance between economic, social
and environmental goals of human society that provides the foundation for the
above-mentioned vision.55
However, while sustainable development is a fundamentally anthropocen-
tric concept, it does not preclude ecocentric aspects and implications.56
2.6 Integration and Transgenerational Justice
One way of legitimising this understanding of sustainable development is by

investigating the relationship of sustainable development to justice. In other
words, does the socio-political concept of sustainable development that aims
at attaining a more equitable standard of living within the carrying capacity of
ecosystems presuppose an equivalent moral duty to maintain intact ecological
functions in order to do justice to both present and future generations (trans-
generational justice)?
Why, for what ethical reasons, should we worry about transgressing
ecological limits leading to climate change, rising sea levels, and ecosystem
degradation?
Sustainable development as a normative concept has a value-based sub-
stance. In fact, it has been claimed that ‘[t]he language of sustainable develop-
ment is the language of the morality of aspirations’.57 The WCED called it a
‘new global ethics’. This corresponds to the ILA’s requirement of a renewed
55
J.C. Dernbach, ‘Sustainable Development: Now More Than Ever’ (2002) 32:1 ELR
10004. See also International Institute for Environment and Development (IIED) 2001,
The Future is Now, Vol. 1 (London: IIED, 2001).
56
Verschuuren, 2003, 46–50.
57
See Adams, 2003, 82. Similar, Verschuuren, 2003, 49, distinguishing with reference to
Leon Fuller (The Morality of Law, New Haven 1974) between the morality of duty and
the morality of aspiration. Sustainable development, in his view, adheres to the latter.
interest in the ethical dimensions of sustainable development. The 2004 report

states that
[i]n fact, this appeal to ethics is not as impractical as many might think. In cases of
conflict and tension between the various values that sustainable development has tra-
ditionally encompassed, a greater appreciation of the ethical perspective will hopefully
provide a much clearer perspective as to how the integration process should operate
and, more specifically, how potentially contrasting and competing values should be
considered.58
Sustainable development is understood as the development of the global hu-

man society toward a state of balance, i.e. sustainability, between human needs
and the protection of stable, functioning life-sustaining ecological systems
(so-called ecological integrity). Thus, it is based on the supreme principle (or
ultimate norm) which can be expressed as the duty to establish and keep this
balance between human needs and ecological integrity. Such balance or sus-
tainability is presumed to be in the common interest of all members of society
for reasons of fundamental importance to the aspirations of humankind. This
duty therefore is founded on the moral obligation to sustain and increase wel-
fare of the global human society. Ultimately, however, is it based on the urge
for survival of modern human societies.
It follows that the concept of sustainable development serves the interests
of justice.59 It is in its essence about transgenerational justice, i.e. caring for
humans living today and those living tomorrow, while preserving the integrity
of the planetary ecosystem. In other words, it is not enough to focus on de-
velopmental issues today without protecting the natural processes that sustain
life if they are at risk.
Transgenerational justice requires the preservation of freedom of choices
for generations to come.60 These choices include the needs of future gen-
erations, their aspirations and development paths. For principled reasons the
58
59
See also H.C. Bugge, ‘The Ethics of Sustainable Development – a Challenge to the Legal
System’ in E.M. Basse (ed.), 1995. See also H.C. Bugge, ‘Legal Issues in Land Use and
Nature Protection – an Introduction’ in H.T. Anker and E.M. Basse (eds.) (Copenhagen,
2000) 27; and H.C. Bugge, University of Oslo, 29 May 2001; H.C. Bugge & L.Watters,
(2003)15 Geo. Int’l Envtl. L. Rev., 359.
60
According to Brown-Weiss, freedom of choice is based on the conservation of at least
three conditions: (1) the conservation of options, which requires conservation of the
diversity of the planetary resources so as not to restrict unduly the options available to
future generations, (2) the conservation of quality which requires that the planet is passed
on in no worse condition than received, and (3) the conservation of access, which has both
an intergenerational and an intragenerational dimension. See for an overview Redgwell,
1991, 46.
present generation is unable to determine the own needs of future generations.

It is therefore considered proper to ensure the basis for making choices, i.e.
to ensure conditions are in place, that permit choice of various options. This
freedom is ultimately conditioned on the functioning of essential natural proc-
esses that sustain life. The reasonable conclusion, therefore, is the moral duty
to pass on the integrity of the planetary ecosystem, including the stability and
safety of the climatic system.
In order to encompass the concept of sustainability, the notion of justice
needs to include global intragenerational and long-term intergenerational re-
lationships among people based on their fundamental dependence upon the
natural and inanimate world.61
Such a notion of justice then recognizes as a precondition to any human
aspiration, now and in future and to human survival as such the integrity of
the biosphere. It takes ecological limits on the freedom of human action in
relationship to nature into account. The environmental dimension of justice
then becomes not only a mere issue of fair distribution and allocation of rights
and duties but the integrity of the environment itself is regarded as an integral
part of the concept of justice.
Although human aspirations and choices might differ and change over
time and are not determinable from our present perspective, there are some
basic assumptions that can be made from our time horizon. Brown-Weiss rec-
ognizes the right of future generations to be assured that ‘we will not pollute
ground water, load lake bottoms with toxic wastes, extinguish habitats and
species or change the world’s climate dramatically – all long-term effects that
are difficult or impossible to reverse – unless there are extremely compelling
reasons for doing so, reasons that go beyond mere profitability.’62 Similarly, as
Barry points out, though ‘we don’t know what the precise tastes or our remote
descendants will be … they are unlikely to include a desire for skin cancer,
61
See B. Almond, ‘Rights and Justice in the Environmental Debate’ in D.E Cooper and J.A.
Palmer (eds.) Just Environments: Intergenerational, International and Interspecies Issues
(London: Routledge, 1995) 18. There are several theories about how such an inclusion
could come about. One of them is the concept of ecological justice that seeks to extend
the justitia communis to the biosphere per se. This view is based upon the recognition
of a moral duty towards and moral standing of the natural environment. This approach
opens for the integration of a wider spectrum of interests and could be better equipped
to deal with the many interlinked challenges of our complex world. See K. Bosselmann,
‘The Concept of Sustainable Development‘ in K. Bosselmann and D. Grinlinton (eds.)
Environmental Law for a Sustainable Society (Auckland: New Zealand Center for Envi-
ronmental Law, 2002) 81–96; and Bosselmann, 1999, 30–57.
62
Brown-Weiss, 1998, 198 and 206.
soil erosion, or the inundation of all low-lying areas as a result of melting

ice-caps.’63
In other words, if justice is to be accommodated, ecological and physi-
cal conditions on which all life depend become a non-derogable condition.
That means that unsustainable social, legal or economic structures, principles
and processes and institutions are unjust and demand reform.64 According to
Rawls, ‘laws and institutions no matter how efficient and well arranged must
be reformed or abolished if they are unjust.’65
The principle of sustainable development, I claim, can therefore be used
– like the principle of justice – as a corrective to unsustainable and therefore
unjust practices and laws.
In sum, the concept of sustainable development can be said to be a principle
of justice to the extent that it concerns establishing equitable living conditions
in a transgenerational context. These conditions include the satisfaction of hu-
man needs of the existing and future world populations. Even when starting
with the most basic needs for survival: food and fresh water, it is apparent that
equitable living conditions depend on the conservation of the natural resources
base and on ecological processes, like filtration and purification. Natural
processes provide the very foundation of living conditions. Equity therefore
concerns the access to and the responsibility for intact ecological processes.
Thus, the care for human societies in the short as well as long-term – in a trans-
generational context – presupposes the care for natural processes that sustain
life. The concept of sustainable development demands meeting present global
needs while not compromising future generations’ ability to meet their own
needs. Thereby it expresses an inherent preference for ecological intactness,
or integrity. This preference needs to be given due regard in the process of
‘balancing’ and weighing of competing interests. ‘Integration’ in the context
63
Barry, 1977, 274–275. Elsewhere he remarked ‘Perhaps people in the future might learn
to find satisfaction in totally artificial landscapes, walking in the astroturf amid plastic
trees while electronic birds sing overhead. But we cannot but believe that something
horrible would have happened to human beings if they did not miss real grass, trees and
birds.’ B. Barry, ‘Sustainability and Intergenerational Justice’ in A. Dobson (ed.) Fair-
ness and Futurity: Essays on Environmental Sustainability and Social Justice (Oxford
University Press, Oxford, 1999) 102.
64
Similar Ekardt: ‘Ohne eine neu fundierte Lehre von der gerechten Grundordnung und
eine Neuinterpretierung unserer Verfassungen, ohne ein auf beiden Ebenen neuformiertes
Freiheitskonzept, vor allem aber ohne Generationsgerechtigkeit und Gerechtigkeit zwi-
schen den Völkern dieser Erde können wir nicht länger sagen, dass unser Zusammenleben
gerecht ist. (…) Ganz besonders die Jahrhundertaufgabe Nachhaltigkeit, unter die wir die
Generationen- und globale Gerechtigkeit seit kurzem begrifflich fassen, wird ohne ein
solches Konzept nicht zu meistern sein. 2005, 9.
65
Rawls, 1999, 3.
of justice is to be understood as integrating the protection of intactness of the

planetary ecosystem into all other law and institutions.
2.7 In Sum
Only if the fundamental requirements of sustainable development, that is the

protection of essential natural resources and ecological processes that sus-
tain all life and on which nature and human life, not to mention social and
economic development depend, are understood as ‘staking the field’ of the
balancing process can results be found that solve conflicts between various in-
terests in a sustainable way. Integration of the many ‘priorities’ of sustainable
development can only be achieved if the protection of such essential ecologi-
cal functions is designated status primus inter pares among the multitude of
different aspects of the concept.
Integration is eventually about making compromises. But these compro-
mises have to be sustainable and – even more crucially – the sum of all com-
promises has to be sustainable. Because it will be the sum of all measures that
gives an indication of their sustainability.
By constituting these essential ecological conditions as a de minimis re-
quirement of sustainable development, the concept inhabits a non-derogable
core. At this core lie the ‘unchanging and universal laws of nature’ with
which human activities need to be brought and kept in harmony.66 This core
can be used as a point of departure and a ‘principled priority’ guide on how
these widely divergent priorities need to be balanced. From this perspective,
it becomes clear that sustainable development is about reconciling develop-
ment (the meeting of human needs) with the environment by recognizing the
limited capacity of the environment to absorb negative impacts observing the
carrying capacity of ecosystems67 and by securing the basic functioning of
ecosystems.
66
This is what the WCED noted already early on: ‘Human laws must be reformulated to
keep human activities in harmony with the unchanging and universal laws of nature.’
WCED, 1987, 330. It can be claimed that eventually, the concept is about values. The
ILA’s International Committee on International Law on Sustainable Development rec-
ognizes that in order to acknowledge the concept’s underlying challenges and tensions it
‘requires a renewed interest in the ethical dimensions of sustainable development’. ILA,
Berlin Conference, 2004, 6.
67
The ‘carrying capacity’ of ecosystems can be generally defined as the maximum number
of individuals of a species that an ecosystem will sustain. See A. Beeby, Applying Ecol-
ogy, (London: Chapman and Hall, 1993). Also: W. Rees and M. Wackernagel, ‘Eco-
logical Footprints and Appropriated Carrying Capacity: Measuring the Natural Capital
Requirements of the Human Economy’ in A.-M. Jansson et al. (eds.) Investing in Natural
Such understanding of sustainable development has obvious importance

for defining the relationship of climate change measures and trade norms. The
global climate system is clearly one of those fundamental natural systems
that sustain life on earth and its stability is essential to human welfare. In
the next chapter we shall therefore look at the concept of sustainable de-
velopment in a climate change context. While so far we could only arrive
at general conclusions about the ‘principled priorities’ within the integration
of the various elements of sustainable development, a close investigation of
the relationship of the concept and climate change should facilitate a more
refined understanding.
Capital: The Ecological Economics to Sustainability (Washington D.C.: Island Press,

1994) 262–390; and W. Rees, ‘Ecological Footprints and Appropriated Carrying Capac-
ity’ (1992) 4:2 Environment and Urbanization 121–130; G. Hardin, ‘Paramount Positions
in Ecological Economics’, in R. Costanza (ed.) Ecological Economics: The Science and
Management of Sustainability (New York: Columbia University Press, 1991) 47–57.
Chapter 3
The International Climate Regime
3.1 Introduction
Climate change is a defining issue for the twenty-first century. The political
concern over the risk of a globally changing climate is the result of the realisa-
tion that intensification by human activity of greenhouse gas concentration
in the atmosphere is not without consequences. In negotiating and adopting
the 1992 United Nations Framework Convention on Climate Change and the
1997 Kyoto Protocol the international community expressed its recognition of
the dangerous link between anthropogenic activities and climate change. Be-
cause of the far-reaching and dire challenges represented by climate change,
the Parties to the Convention acknowledged ‘that the change in the Earth’s
climate and its adverse affects are a common concern of humankind’.1
In preambular language they express the concern that
human activities have been substantially increasing atmospheric concentration of

greenhouse gases, that these increases enhance the natural greenhouse effect, and that
this will result on average in an additional warming of the Earth’s surface and atmos-
phere and may adversely affect natural ecosystems and humankind.
Given the complexities of causes and consequences, responses to climate

change are intrinsically linked to issues of global justice. Solving the chal-
lenge of climate change requires taking into account historic and current emis-
sion trends in developed countries and the still rather low per capita emissions
in developing countries. It includes acknowledgement of the vulnerability of
developing countries to the effects of climate change and the severe conse-
quences that are predicted in already vulnerable parts of the world. Further-
more, to address climate change means addressing inequalities in levels of
development. Addressing climate change demands cooperation of all coun-
1
UNFCCC, Preamble (emphasis added).
tries. At the same time, due regard has to be given to different responsibilities
and respective capabilities of countries, their economic and social conditions,
and their authority to determine their own social and development policies and
access to energy and natural resources.
Intragenerational justice is a dominant issue in climate negotiations:
measures to reduce greenhouse gas emissions are to be taken by those who
contributed most in addition to providing financing means of limiting climate
damages, also in developing countries. While developing countries are wary
of forestalling their own developmental progress by climate mitigation meas-
ures, developed countries are required to take the lead. A still more complex
issue is that protection of the climate system is not only for the benefit of
present but also of future generations.2 The intergenerational aspect lies in the
fact that measures taken to combat climate change are unlikely to be felt by
those who implement them. Due to the inertia of climate system past emis-
sions will cause an additional rise in the global average temperature during
the 21st century. Similarly, substantial reductions in emissions today will only
start having a palpable effect in many decades from now.
The challenge of climate change goes to the heart of the structure of
modern societies, industries, economies and global relationships. What has
become apparent is that climate change is a far more complex issue than any
other issue public international law aims to address. Climate change cannot
be categorized simply as an environmental problem. Nor is it simply a matter
of development or economic growth. The challenge of global climate change
exceeds time and space limitations that previously defined singular problems
of the world community and their respective legal responses. Unprecedented
questions of global equity, such as fairness in cost and responsibility sharing
and differences in vulnerability and social aspects, link climate change to a
multitude of interlinked problems of late modern society. The breadth and
contextual richness of the climate regime go far beyond singular responses
and challenge not only the fragmented structure of international law, but the
structure of world community in general.
The response to climate change is indicative of humankind’s hard struggle
toward sustainable development. Finding a solution to climate change is not
just a central aspect in achieving sustainable development. It is decisive.
As we have seen, the concept of sustainable development is framed to
precisely address these issues. This is why it is opportune to investigate the
relationship of sustainable development and climate change.
My argument is that tackling the challenge of climate change is a defining
component of sustainable development and vice versa. In other words, the
2
UNFCCC, Article 3.1 and Preamble.
Chapter 3 – The International Climate Regime 59
problem of climate change engages in a direct and reciprocal manner with

sustainable development. Adequate measures to address climate change can-
not be designed independently of sustainable development any more than sus-
tainable development can be achieved without solving the problem of climate
change.
3.2 Normative Framework of the Climate Regime
In this section, we will undertake a closer investigation of the normative as-

sumptions underlying the climate regime, in particular the Kyoto Protocol.
3.2.1 Object and Purpose of the UNFCCC
The concerns raised in the scientific community and disseminated throughout

the international community led to the adoption of the 1992 United Nations
Framework Convention on Climate Change (UNFCCC) and its 1997 Kyoto
Protocol, in force since 16 February 2005.
The UNFCCC establishes as an ultimate goal for its Parties ‘the stabiliza-
tion of greenhouse concentration at a level that would prevent dangerous an-
thropogenic interference with the climate system’ (Article 2). The unspecific
time frame hinges on three broad parameters: to allow ecosystems to adapt
naturally to climate change; to ensure that food production is not threatened;
and to enable economic development to proceed in a sustainable manner.3
The objective sets an environmental threshold (quality standard): pollution
of and interference with the climate system are permitted up to this point of
‘dangerous interference’. The stabilization of concentrations to avoid this
point being reached provides the common long-term objective of the climate
regime.4 Stabilization of greenhouse gas concentrations means, however, a
significant reduction of emissions. According to the IPCC, the stabilization of
GHG emissions at near-current levels will not lead to stabilization of atmos-
pheric concentrations; the stabilization of GHG concentrations at any level
requires the reduction of global GHG emissions to a small fraction of the
current emission level.5
3
Art. 2 UNFCCC.
4
See F. Yamin and J. Depledge, The International Climate Change Regime: A Guide to
Rules, Institutions and Procedures (Cambridge: Cambridge University Press, 2004) 61.
5
IPCC, Climate Change 2001: Mitigation. Contribution of Working Group III to the Third
Assessment Report of the Intergovernmental Panel on Climate Change (B. Metz et al.,
The essentially value-laden question of which concentrations constitute

‘dangerous anthropogenic interference with the climate system’ has long been
controversially discussed.
While certain changes are accepted as unavoidable, ‘dangerous’ changes
and their impacts still await assessment from natural, technical and social
science perspectives. The IPCC has also stressed that a decision on what
constitutes dangerous interference must be determined through socio-political
processes, such as the decision-making process of the COP, taking into ac-
count considerations such as development, equity and sustainability, as well
as uncertainties and risks. The IPCC has so long refused to specify exactly
where the concentration limit would be.6 In international research, however,
a consensus seems to emerge to set the threshold at a 2°C temperature rise
above pre-industrial levels or on a concentration of 450 ppm.7
The commitments of the Parties to the Kyoto Protocol not to exceed their
assigned amounts which equal an aggregate emission volume at 5 per cent be-
low their 1990 emission levels (Article 3.1) is clearly not aimed at preventing
dangerous climate interference and should not be confused with the ultimate
objective of the Convention.
The second sentence of Article 2 of the Convention provides additional
guidance on the timing of actions to stay within the threshold. Stabilization of
GHG concentrations should be achieved within a time frame sufficient to allow
ecosystems to adapt naturally to climate change, to ensure food production is
not threatened and to allow economic development to proceed in a sustainable
manner’. This part of the Convention first and foremost reflects the concept
of ‘ecological limits’8 which must be respected and which set a constraint on
both the timing and the scale of changes human interference can cause to the
climate system.9 Importantly, this also indicates the preventative character of
the Convention’s objective.10 It is important because it means that mitigation
scenarios that fail to provide for natural adaptation of ecosystems (generally
eds. Cambridge University Press, 2001b) d: Question 5.

6
IPCC, 2001b, d: Question 1. See B. Metz et al., ‘Towards an Equitable Global Climate
Change Regime: Compatibility with Article 2 of the Climate Change Convention and the
Link with Sustainable Development’ (2002) 2:2–3 Climate Policy 211–230; and B.C.
O’Neill and M. Oppenheimer, ‘Dangerous Climate Impacts and the Kyoto Protocol’
(2002) 296:5575 Science 1972.
7
See for a discussion of the long-term scenarios for this threshold: Verheyen, 2005,
57–66.
8
Bodansky, 1993, 500, fn 29.
9
Yamin and Depledge, 2004, 61.
10
P. Sands, ‘The United Nations Framework Convention on Climate Change’ (1992) 1:3
RECIEL 272; and H.E. Ott, Völkerrechtliche Aspekte der Klimarahmenkonvention’ in
Brauch (ed.) Klimapolitik: Naturwissenschaftliche Grundlagen, internationale Regime-
those that defer stringent mitigation into the future on cost-effective grounds)
must be evaluated in terms of the ultimate objective of the Convention.11
Together with the other two qualifying components this part of the objec-
tive gives already an indication of the delicate balance that needs to be drawn
between these parts. It is not difficult to see why the climate system is a test
case for the ability of the current international order to meet the challenge of
sustainable development. The Earth’s ecological limits, however, are setting
the pace and scale of action.12
3.2.2 Principles of the UNFCCC and the Kyoto Protocol
The Kyoto Protocol sets a quantitative cap on greenhouse gas emissions (as-
signed amount units, AAUs) for all countries included in Annex I of the UN-
FCCC.13 The quantified emission limitations shall be achieved primarily by
implementing national policies and measures (Article 2.1). Those measures,
however, go to the very heart of industry, energy and transport policies and
bear significant economic implications. By quantifying the aggregated GHG
emissions of the Annex I countries, the Protocol treats the capacity of the
earth’s atmosphere to store greenhouse gases on a balanced level as a scarce
natural resource.
Article 3 UNFCCC introduces principles to ‘guide’ the Parties in achieving
the objective of the Convention and inform Parties in implementing commit-
ments and other actions taken to achieve the objective. These principles are
important interpretative tools for the primary provisions contained in both
the Convention and the Kyoto Protocol.14 Because of the almost universal
membership to the Convention, it has been argued that they could also provide
legal reasoning for primary duties to prevent dangerous climate change out-
side the framework of the climate regime.15 The principles listed in Article 3,
bildung und Konflikte, ökonomische Analysen sowie nationale Problemerkennung und

Politikumsetzung (Berlin: Springer Verlag, 1996) 62, 64.
11
12
See F.R. Rijsberman and R.J. Swart (eds.) Targets and Indications of Climatic Change
(Stockholm: The Stockholm Environmental Institute, 1990). The authors conclude that,
to allow ecosystems to adapt naturally, the rate of global warming must not exceed 0.1°C
per decade, viii.
13
Art. 3.1 Kyoto Protocol.
14
The Kyoto Protocol provides that its Parties agree to ‘being guided by Article 3 of the
Convention’, Preamble, para. 4.
15
See Verheyen, 2005, 67. But see Yamin (ed.) 2005, 67.
together (‘inter alia’) with those mentioned in the Preamble inform the legal
obligations of the Parties.
The legal nature of the principles has been subject to debate. The negotia-
tion history gives some evidence of the intention of the Parties to avoid that
the principles have the legal effect of giving rise to additional commitments
and, hence, to actionable claims justifying recourse to dispute settlement
proceedings.16 On the other hand, the text of Article 3 explicitly employs the
word “shall”. Therefore, it has convincingly been argued that because of this
wording and the placing of Article 3 in the operative part of the Convention,
there can be no doubt about the binding legal force of the principles in the
context of climate change.17
Of the several principles entailed, only three will be mentioned here, as
they are of particular importance in the context of sustainable development.
a) Common But Differentiated Responsibilities and Respective Capabilities

The ‘common concern’, mentioned above, includes a common responsibility
to prevent damage to the climate system. This responsibility is differentiated
according to the respective capacities of the Parties. Article 3.1 of the Con-
vention establishes the principle of ‘common but differentiated responsibili-
ties and respective capabilities’, which results in the obligation of developed
countries to ‘take the lead in combating climate change and the adverse effects
thereof’. Accordingly, the Convention divides Member States into three main
categories: Parties included in Annex I to the Convention (all OECD countries
and countries with ‘economies in transition’18); Parties included in Annex II
(OECD countries only); and ‘all Parties’. The Convention sets out a variety
of obligations in Articles 4, 5, 6 and 12, both substantive and procedural, that
differentiate between these various categories, creating an asymmetry of obli-
gations. In recognizing the differing economic capabilities of developing and
industrialized countries in contributing to the protection of the global climate
system, this principle obliges to date only industrialized countries to take spe-
cific quantified mitigation action (Article 4.2 Convention and Article 3 Kyoto
Protocol with Annex B of the Kyoto Protocol).
The principle of common but differentiated responsibilities is a reflection
of the notion of equity and justice in international law. Verheyen notes that the
16
See Yamin and Depledge, 2004, 67; Bodansky, 1993, 501 et seq.
17
See B. Kellersmann, Die gemeinsame, aber differenzierte Verantwortlichkeit von In-
dustriestaaten und Entwicklungsländern für den Schutz der globalen Umwelt (Berlin:
Springer, 2000) 145. See also Verheyen, 2005, 69.
18
Former Soviet and Eastern European countries.
formal equality of States does not always mean that all States have the same
duties. In particular if some States have better economic means to effectively
protect the global environment.19 It is, thus, a new principle to distribute re-
sponsibility according to historical action or inaction, economic ability and
the state of development.20
b) Precaution and Cost-Effectiveness

The principle of precaution, as a legal principle,21 aims at giving guidance
in cases of scientific uncertainty or unknown risks (ignorance). Basically, it
means that States shall not advance scientific uncertainty as a reason not to
take action to prevent a certain outcome, e.g. environmental damage or an
event like climate change. In the context of climate change Article 3.3 of the
Convention provides that
Parties should take precautionary measures to anticipate, prevent or minimize the

causes of climate change and mitigate its adverse effects. Where there are threats of
serious or irreversible damage, lack of scientific certainty should not be used as a
reason for postponing such measures taking into account that policies and measures
should be cost-effective so as to ensure global benefits at the lowest possible cost.
It is safe to state that the principle essentially informs the entire climate re-
gime. It calls upon Parties to the Convention to take measures to protect the
global climate and to prevent damages even if there are ‘many uncertainties
in predictions of climate change, particularly with regard to the timing, mag-
nitude and regional patterns thereof’.22 It complements moreover Article 2 of
the Convention in giving guidance in defining the threshold of ‘dangerous’
interference, mentioned above. It has further been suggested that it demands
19
Verheyen, 2005, 70.
20
See Kellersmann, 2000, 38, 41 et seq.; Bodansky, 1993, 473 et seq. Both authors also
point to the fact that the origin of this principle does not lie in the historic responsibility
for emissions (polluter pays principle), but was included as a result of the opposition to
the inclusion of the polluter pays principle.
21
For an overview of the principle’s history and development, see De Sadeleer, 2002. Its
legal status is contentious. While on the level of the European Union it is implemented
in various Directives, e.g. Art. 2(11) of Annex IV IPPC Directive as legally binding, its
binding force as a legal principle of international law is still debated, though strong argu-
ments have been put forward that recognize it as a binding principle. See the discussion
by Sands, 2003, 266–279.
22
Preamble UNFCCC.
of Parties to take mitigation measures even in the absence of agreed and bind-
ing targets, though it does not dictate specific regulatory requirements.23
Importantly, differing from the principle’s formulation in Article 15 of the
1992 Rio Declaration (‘where there are threats of serious or irreversible dam-
age, lack of full scientific certainty shall not be used as a reason for postponing
cost-effective measures to prevent environmental degradation’), Article 3.3
of the Convention does not make cost-effectiveness a selective criterion for
the kind of environmental measure to be implemented. It only requires that
considerations of cost-effectiveness be taken ‘into account’.24 Article 3.3 does
not mandate a cost-benefit approach, nor does it open for a general weighing
of mitigation against adaptation. Out of the context of the climate regime, it is
evident that Parties are well aware that some damage would occur regardless
of mitigation activities. Basically, this means that there can be no question
of mitigation or adaptation. It requires both, but with a particular emphasis
on mitigation. Scientific models predict today that adaptation costs will rise
disproportionately with higher greenhouse gas concentrations in the atmos-
phere. Verheyen notes that this fact renders a comparison between mitigation
and adaptation based on cost-effectiveness extremely difficult and eventually
meaningless.25 ‘Adaptation is always the second-best option, because there
is never a guarantee that the changes (which could have been prevented by
taking early and effective mitigation action) can or will be counterbalanced
through adaptation.’26
The phrase in Article 3 that ‘measures to deal with climate change should
be cost-effective so as to ensure global benefits at the lowest possible cost’ has
to be understood as referring to the global nature of the challenge and the fact
that mitigation measures can be undertaken in a more cost-effective manner
if done multilaterally and globally, rather than suggesting the selection of one
measure prior to another based on the likely costs of the two approaches.
In the context of sustainable development, this conclusion is of importance
when the question of balancing diverse interests is at stake. Article 3.3 demands
proactive mitigation rather than waiting for damage to occur even where the
particular effects of climate change (as regards locality, timing, magnitude)
still lack scientific certainty. Cost-effectiveness considerations cannot be used
as a reason for increasing the threshold for action or for rendering mitigation
23
See Verheyen, 2005, 74.
24
Yamin argues that the formulation of this ‘stronger’ version of the precautionary principle
was advocated by small island developing States, emphasizing that for them pure survival
is at stake, Yamin (ed.) 2005, 71.
25
Verheyen, 2005, 77.
26
Ibid.
measures less effective. Rather mitigation measures need to be implemented

in a way that reduces overall costs, by, for example, making use of multilateral
flexibility mechanisms.
c) Sustainable Development
Article 3.4 UNFCCC is the climate regime’s anchor for the concept of sustain-
able development. It states that ‘Parties have a right to, and should, promote
sustainable development’. Article 3.4 also notes that climate measures shall
be appropriate to the specific conditions of each Party and integrated with
national development programmes while recognizing that ‘economic devel-
opment is essential for adopting measures to address climate change’. The
textual reference to sustainable development in Article 3.4 is rather vague and
gives no clear indication of how the concept should be construed. Negotiation
history only partly helps to elucidate the meaning of these provisions. Initially,
developing countries demanded the inclusion of a ‘right to development as
an inalienable human right’.27 Developed countries refused to accept a right
to development on the ground that it could possibly be used by developing
countries to demand financial assistance from developed countries. Developed
States, on the other hand, wished the inclusion of a duty to aim at sustain-
able development. In contrast, developing countries feared that sustainability
might become conditional on development assistance as well as inhibiting
their national development plans.28
The result is a compromise of both proposals. The Convention sets out
that the Parties have a right to, and should, promote sustainable development,
which is less than the ‘duty to sustainable development’ sought by developed
countries, but qualitatively different from the ‘right to development’ demanded
by developing countries. The reference to sustainable development in Article
3.4 can thus be seen as standard-setting for both mitigation of and adaptation
to climate change in a way that it determines the legal standards and decisions
regarding damage control or remedy for climate change damage.29
In assessing the impact of this reference to sustainable development on
decision making, the evolution of the concept in general public international
27
Consolidated Working Document, Report of the Intergovernmental Negotiating Commit-
tee for a Framework Convention on the Work of its 4th Session, U.N. GAOR INF/FCCC,
4th Sess., U.N. Doc. A/AC.237/15 (1992), Annex II, art.II.1; Joint Statement of the Group
of 77, UN GAOR INC/FCCC, 4th Session, Working Group I, Agenda Item 2(a), UN Doc.
A/AC. 237/WG.I/L.8 (1999).
28
See Bodansky, 1993, 504–505.
29
So also Verheyen, 2005, 78.
law plays a significant role. The development of the concept of sustainable

development since the time of its inclusion in the Climate Convention in 1992
gives a more differentiated answer to the legal content of sustainable develop-
ment in a climate context.
Essentially, Article 3.4 now requires all Parties to consider the circum-
stances and overall, global and long-term environmental as well as societal
effects of measures addressing climate change, while balancing the risks to
and interests of current and future societies. It does not, however, modify the
duty of all Parties to prevent dangerous interference with the climate system
according to Article 2 UNFCCC. It would therefore be contrary to the prin-
ciple of sustainable development to delay mitigation action for the economic
benefit of the current generation, while accepting disproportionately stronger
negative consequences of anthropogenically caused climate change for future
generations.
Although the demands of sustainable development are certainly wider than
the reference in Article 3.4 UNFCCC reveals; tackling climate change and
sustainable development are closely linked. The climate regime can, in fact,
be seen as a test case of the ability of the international order to meet the
broader challenge of sustainable development.30 At the same time, sustainable
development will not be possible without tackling the challenge of climate
change.
Concluding, it can be said that the principles contained in Article 3 UN-
FCCC represent binding principles of international law to be applied in the
specific context of climate change. All principles inform and complement the
duty contained in Article 2 UNFCCC to prevent dangerous interference with
the climate system.
These principles can be used to guide decision-making processes, whether
they concern future regulation of climate change mitigation strategies, the
implementation of the Convention and the Kyoto Protocol into national legal
systems, or the relationship and linkages with other international legal regimes.
The principles thereby set the ‘parameters’ for interpretation and implementa-
tion and for the direction in which the future climate regime has to develop.
30
J. Gupta and M. Grubb (eds.) Climate Change and European Leadership: A Sustainable
Role for Europe? (Dordrecht: Kluwer, 2000).
3.2.3 Obligations
The climate regime sets out different types of obligations for different groups
of Members (all Parties, Annex I and Annex II Parties).31 The main substan-
tive commitments comprise mitigation obligations (Article 4 UNFCCC and
Article 3 Kyoto Protocol) flanked by obligations concerning research and
systematic observation, education, training, public awareness (Article 5 and
6 UNFCCC) and reporting (Article 12). Adaptation to the adverse effects of
climate change entails a number of obligations, such as adaptation preparation
and certain planning commitments (Article 4.1(b) UNFCCC, Article 10 (b)
Kyoto Protocol), technology commitments (Article 4.1. UNFCCC and Article
10(c) Kyoto Protocol), financing and technological assistance (Articles 4.1,
4.3 and 4.4. UNFCCC, Article 10 and 12.8 Kyoto Protocol) capacity-building
and special adaptation-related provisions for Least Developing Countries
(LDCs) (Articles 4.8 and 4.9 UNFCCC and Articles 2.3, 3.14 and 10(g) Kyoto
Protocol), although no time scales, targets or particular policy solutions are
mandated.
For the purpose of this study, mitigation commitments, in particular those
quantified by the Kyoto Protocol for Parties included in Annex I of the Con-
vention, are of central importance. Other obligations that help to understand
the concept of sustainable development will be assessed where relevant in
the discussion of the relationship between the climate regime and sustainable
development below in section 2.3.
The mitigation commitments lie at the heart of the climate regime. Mitiga-
tion commitments (‘general commitments’) of all Parties are found in Article
4.1 of the Convention. The more stringent substantive commitments (‘specific
commitments’) of Annex I Parties are contained in Article 4.2 UNFCCC,
which obliges Annex I Parties to ‘adopt national policies and take correspond-
ing measures’ to reduce greenhouse gas emissions and to protect and enhance
greenhouse gas sinks, to communicate detailed information … with the aim
of returning individually or jointly to their 1990 levels of … emissions of
carbon dioxide and other greenhouse gases (Article 4.2.[b]), by the end of the
present decade (Article 4.2.[a]), i.e. by the year 2000. Taking such measures
would ‘demonstrate that developed countries are taking the lead in modifying
longer-term trends in anthropogenic emissions consistent with the objective
of the Convention’.
The legal status of Article 4.2 UNFCCC was subject to debate. Most
scholars agree that Article 4.2 UNFCCC does not constitute an obligation of
31
For a comprehensive overview over the diverse obligations under the Convention and the
Kyoto Protocol, see Yamin and Depledge, 2004.
result, i.e. a return to 1990 levels by 2000.32 However, with a view to scientific
advances since 1992 and the fact that the time frame indicated in Article 4.2
has elapsed, could the wording be interpreted as an obligation of conduct, i.e.
a primary rule of concrete damage prevention which when broken could be
applied in the context of State responsibility.33 Independent of the Kyoto Pro-
tocol, and in addition to it, Article 4.2 of the Convention in conjunction with
Article 2 retains the primary obligation of Annex I States to modify long-term
trends of greenhouse gas emissions in order to stabilize atmospheric concen-
tration at safe, i.e. non-dangerous, levels.
Such a reading of Article 4.2 UNFCCC is mandated by Articles 18 and
31 of the VCLT. Article 18 stipulates that a Party is obliged to ‘refrain from
acts which would defeat the object and purpose’ of the treaty. With regard to
the objective of preventing dangerous interference with the climate system
(Article 2), this means that every Annex I Member is obliged to omit actions
running counter to the objective. Given the current status and trend of emis-
sions, this obligation is a positive one, i.e. to actively contribute to the signifi-
cant reduction of greenhouse gases in order to stabilize gas concentrations in
the atmosphere. This primary obligation of Annex I Members follows from
Articles 4.2 and 3.1 (‘taking the lead’). The Convention’s objective, however,
applies to all Member States. If it becomes clear that Article 2 will not be
achievable without effective mitigation action by developing countries, a duty
also for developing country arises to co-operate and to participate in mitiga-
tion efforts.
The commitments of Annex I States are further quantified by Article 3.1
of the Kyoto Protocol in conjunction with Annex B, generally referred to as
‘quantified emission limitation and reduction obligations’ (quelros). The Kyoto
Protocol complements the Convention, it does not, however, replace it.
The obligations of Annex I Parties contain clear targets and timetables add-
ing up to about 5 per cent reduction in aggregate greenhouse gas emissions
compared to levels emitted in 1990 in the period 2008 to 2012 (‘first commit-
ment period’). The Kyoto targets allow for a ‘net approach’ to reduction of
greenhouse gases, i.e. accounting for both emissions and up-take of carbon by
terrestrial sinks.
Each Annex I Party has an assigned amount of greenhouse gas emissions
which it shall not exceed (Article 3.1). This amount equals the overall emis-
sions of the six greenhouse gases listed in Annex A (‘basket approach’) in
1990 minus the percentage target listed in Annex B (Article 3.7).
32
Verheyen, 2005, 81; Bodansky, 1993, 521; Sands, 1992, 274.
33
Verheyen, 2005, 81.
The quelros are no specification of Article 2 UNFCCC, let alone an at-

tempt to apply Article 2 in terms of quantified emission allowances on the
basis of stabilizing atmospheric concentrations. They are the result of political
bargaining. In fact, taking into account the withdrawal of the US as one of
the main emitters, together with actual emission reductions due to political
developments in Eastern Europe and Russia and the use of carbon sinks for
accounting purposes, the Kyoto Protocol actually lowers the target for Annex
I countries as a whole by 1.9 per cent from the original target of 5.2 per cent.
Accordingly, the implementation of the Kyoto commitments would represent
a factual stabilization of emissions at 1996 levels by 2012.34
While the Kyoto Protocol is undeniably inadequate in terms of reaching
the objective of the Convention, its significance has to be understood from its
place and context in the climate regime. It was clear from the beginning that
the estimated targets of the Protocol would only marginally modify global
emission trends. However, in going further than the Convention in setting
out binding reduction targets, the Protocol is an important, if small, first step.
The climate regime and the structure of the Protocol in particular are designed
to evolve toward an increasingly ‘climate effective’ system of measures and
instruments, including respective stronger targets and ambitious timetables.35
According to Article 3.9 of the Kyoto Protocol, consideration of commitments
for subsequent periods shall start to be considered in 2005.
On a ‘dual-track’ at COP 11, a post-2012 process was also initiated under
the Convention, which was seen to better allow for broadening scope and cov-
erage, both on substance and participation. At COP 13 in 2007 the so-called
‘Bali Road Map’ was signed by all Member States to the UNFCCC. In this
document the willingness of these States was expressed ‘to launch a compre-
hensive process to enable the full, effective and sustained implementation of
the Convention through long-term cooperative action, now, up to and beyond
34
See for an explanation of calculations: GRID Arendal, available at: <http://www grida.
no>.
35
See, for example, the EU proposal of an emissions reduction target of 15–30% by 2020
and 60%-80% by 2050. European Parliament Resolution on ‘Winning the Battle Against
Global Climate Change’ (2005/2049(INI), P6_TAPROV(2005) 0433, 3. Also: Commis-
sion of the European Communities, Brussels, 10.1.2007, COM(2007)2 final, Commu-
nication from the Commissions to the Council, the European Parliament, the European
Economic and Social Committee and the Committee of the Regions, Limiting Global
Climate Change to 2 degrees Celsius. The way ahead for 2020 and beyond. Germany
considers the reduction of global greenhouse gas emissions by 50% by 2050 necessary
for keeping global temperature increases within an acceptable limit. See: BMU Report
(Federal Ministry for the Environment); Umwelt-Wirtschaft-Innovation: Der Anfang ist
gemacht (Die ersten 100 Tage), 27. February, 2006, at 2 (available at <http://www.bmu.
de>); see also: C. Voigt, ‘Year in Review – Germany’ 16 YbIEL 2005.
2012’ based on ‘a shared vision for long-term cooperative action, including

a long-term global goal for emission reductions, to achieve the ultimate ob-
jective of the Convention, in accordance with the provisions and principles
of the Convention, in particular the principle of common but differentiated
responsibilities and respective capabilities’.36
Summarizing, it can be stated that in the light of the common duty of all
Members to the Convention to prevent dangerous interference with the cli-
mate system, the compromise of the Kyoto Protocol represents, so far, the
consensus of the overwhelming majority of 177 States37 on how to approach
the objective of the Convention. This approach is evidence of the understand-
ing of the State community on how to deal with a severe environmental threat
in a global and long-term perspective while taking into account the social
and economic impacts, both of actions and the omission to act. In this sense,
the Kyoto Protocol represents the most defined approach to sustainable de-
velopment as it is currently understood by the international community. This
applies equally to Members of the Convention that are not Parties to the Kyoto
Protocol as long as they do not come up with an – at least equally – effective
climate change mitigation strategy. Also they are committed to the objective of
stabilising greenhouse gas concentrations in the atmosphere at a level which
prevents dangerous anthropogenic interference with the climate system. States
included in Annex I are further committed to taking the lead in combating
climate change and its effects (Article 4.2 and 3.1 UNFCCC).
The close relationship between the normative design of the Kyoto Protocol
and the requirements of sustainable development becomes particularly evi-
dent with the introduction of the so-called flexibility mechanisms, which aim
at increasing cost-effectiveness of climate mitigation measures by reducing
compliance costs. As will be shown in part III, while this attempt has come far
en route to sustainable development, potential for improvement remains.
3.3 The Flexibility Mechanisms of the Climate Regime
The Parties included in Annex I can make use of so-called ‘flexible mecha-
nisms of the Kyoto-Protocol’. These flexible mechanisms are market-based
tools that allow for meeting the emissions reduction obligations by means of
joint projects among Annex I countries (Joint Implementation – JI, Article 6
Kyoto Protocol), projects in developing countries (Clean Development Mecha-
36
Decision –/CP.13, Bali Action Plan.
37
<http://unfccc.int/files/essential_background/kyoto_protocol/application/pdf/kpstats.
pdf> (last visited 3. March 2008).
nism – CDM, Article 12 KP) and emissions trading among Annex I countries
(Article 17 Kyoto Protocol). While CDM and JI are project-based mechanisms,
enabling Annex I countries to cooperate on specific greenhouse gas reduction
projects with other countries where abatement costs are lower, international
emission trading aims at the establishment of an international market for buy-
ing and selling emission credits, which can be used to comply with the specified
reduction targets. Tradable emission units can be the assigned amounts units
(AAUs) accorded to Annex B countries of the Protocol or the rights derived
from project-based activities, i.e. Certified Emission Reductions (CERs) from
CDM activities and Emission Reduction Units (ERUs) from JI. Emission units
can be traded freely on the market and their price will depend on demand and
supply. Each Government can issue as many emission certificates as quanti-
fied by its assigned amounts and allocate them to public and private entities
according to its national climate change policy. In order to prevent overselling,
a country is required to hold a certain minimum of units in its national registry
at any time (so called Commitment Period Reserve, CPR).38 This system is
supposed to stimulate policy changes since polluting entities have to decide
whether it is more costly to buy emission certificates or reduce the amount of
GHG emissions.
The flexible instruments of the Kyoto Protocol are intended to serve two
goals: first, to significantly lower compliance costs of the Kyoto Parties with
their emission reduction and limitation obligations. Since 1990 many of the
Annex I Parties to the Kyoto Protocol have substantially increased their
emissions. The commitment to reduce emissions to 1990 levels by 2012 has
therefore become commensurably more rigorous, and the potential economic
impact of these obligations unparalleled in international law. Second, to pro-
vide incentives for sustainable development. It has been warned however that
these mechanisms need to be governed by clear rules for emission reduction
measurement and compliance procedures to ensure that measures taken by
developed countries are accompanied by genuine emission reductions.39
38
The Commitment Period Reserve is set at 90 per cent or above of a Party’s assigned
amount or 100 per cent of five times its most recently reviewed inventory, whichever is
the lowest. (Decision 5/CP.6) This reserve can be composed of any Kyoto units valid for a
commitment period. The limit adopted is supposed to protect against non-compliance by
overselling without limiting the liquidity of the market. The Marrakesh Accords require
that ‘a Party shall not make a transfer which would result in these holdings [of AAUs,
CERs, ERUs, and/or RMU’s] below the required level of the commitment period reserve’.
(Decision 18/CP.7, Annex, paragraph 8).
39
See X. Wang and G. Wiser, ‘The Implementation and Compliance Regimes under the
Climate Change Convention and its Kyoto Protocol’ (2002) 11:2 RECIEL 187.
The flexibility mechanisms are based on the global geographic availability

of mitigation efforts and the theory of ‘marginal abatement costs’. The cost of
financing emission reduction is relatively lower in countries with lower levels
of industrialization. Because location of abatement measures is climatically
irrelevant, global cost-effectiveness prescribes basically that measures should
be implemented where they are cheapest.
Key developed countries considered the introduction of flexibility in the
way they could implement their commitments as a requirement of equity. Part
of the argument for flexibility was that marginal costs vary from country to
country, from sector to sector and source to source.40 To require all coun-
tries to meet their targets by using a prescriptive list of policies and measures
was considered insufficient and ineffective. Equity considerations therefore
demanded flexibility in sharing the burden of meeting commitments. This
flexibility is premised on the idea that countries with high costs for meeting
their environmental obligations and countries that can provide low cost op-
portunities should benefit by cooperating and thereby exploiting comparative
advantages.41
While strong arguments can be made in favour of the use of flexible instru-
ments, also criticism against them needs to be addressed. Based on ethical
arguments, emissions trading in particular has been characterized as ‘turn-
ing pollution into a commodity to be bought and sold’, thereby removing the
‘moral stigma that is properly associated with it … rendering pollution just
another cost of doing business, like wages, benefits and rent.’42 The ‘legiti-
macy’ of such criticism depends on whether one considers all emissions of
greenhouse gases to be ‘wrong’ by definition or whether to accept some level
40
D. Stowell, Climate Trading – Development of Greenhouse Gas Markets (Basingstoke:
Palgrave Macmillan, 2005) 15.
41
See Cullet, 1999, 171.
42
See generally, M. Sagoff, Controlling Global Climate: The Debate over Pollution Trad-
ing, Report from the Institute for Philosophy and Public Policy, 1999, available at: <http://
www.puaf.umd.edu/IPPP/winter99/controlling_global_climate.htm>. See also C.D.
Stone, The Gnat is Older than Man: Global Environment and Human Agenda (Princeton,
N.J.: Princeton University Press, 1993) 141–149. Also: C. Blumm, ‘The Fallacies of Free
Market Environmentalism’ (1992) 15 Harvard Journal of Law and Public Policy, 371,
and G. Torres, ‘Who Owns the Sky? Seventh Annual Lloyd K Garrison Lecture on Envi-
ronmental Law’ (2001) 18:2 Pace Envtl. L. Rev., 227. Torres argues that the ‘privatization
of the atmosphere results in an abuse of the global commons, for which States have the
responsibility to protect, not to give away. By treating the atmosphere as though it were a
common resource of no substantial public interest other than the protection of its quality
and by dividing it in little pieces that get distributed to States and industries, govern-
ments have taken too narrow a view and neglected their duty as trustees towards public
resources by transferring significant public resources to private hands, especially where
this happens free of charge.
of pollution. With regard to the emission of greenhouse gases, which also

occurs naturally, such absolute ethical positions are difficult to sustain.
Another critical argument concerns the overall focus on economic effi-
ciency and cost-minimization for Annex I Parties which may consolidate the
economic power of industrialized countries by allowing them to ‘buy their
way out of their obligations’. This argument can be met with reference to the
‘price tag’ that is put on emissions by a cap-and-trading system. ‘Buying out’,
in fact, entails internalizing the costs of emitting greenhouse gases. Further-
more, incentives to circumvent domestic reductions and to avoid necessary
technological changes by Annex I Parties will be drastically reduced by a
stringent regulatory framework for emissions trading coupled with a strict
emission cap, the avoidance of ‘hot air’ as well as stringent methodologies for
baseline scenarios and additionality, and monitoring and reporting require-
ments backed up by an effective compliance and enforcement mechanism.
Prior to the Kyoto Protocol, the use of market-based mechanisms as a
tool in international agreements to address environmental concerns had not
been widely tested. The primary focus of environmental regulation was on
traditional command and control or voluntary approaches. Thus, only a very
few countries had experience of emissions trading.43 The application of eco-
nomically motivated mechanisms on a global scale is thus unprecedented in
international law. Project-based mechanisms that enable countries to carry out
projects abroad in order to receive credits that could assist them in meeting
their national commitments at the same time as they support development
in host countries are absolutely novel. The regulation of these mechanisms
therefore has been described as the ‘cutting edge of international environ-
mental law’.44 It might not be too far off the point to generalize this state-
ment to international law, at least as far as the complex and novel procedural
and technical challenges as well as the moral, economic and environmental
considerations which these new mechanisms raise are concerned. That the
far-reaching and speedy developments entailed by the mechanisms have at-
tracted the close attention of States, the scientific community, business and
environmental organisations alike is therefore not surprising.
43
Examples include the Ontario SOx and NOx Trading Scheme under the Environmental
Protection Act, entered into force 31 December 2001 and the UK Emissions Trading
Scheme (see <http://www.defra.gov.uk/environment/climatechange/trading/ukets.htm#
rules>).
44
Sands, 2003, 389.
3.4 International Emissions Trading
International emissions trading is subject to the modalities agreed at Mar-

rakesh45 and adopted by the MOP1 in Montreal in 2005.46 These modalities
set out the principles, nature and scope of emissions trading and address issues
relating to equity, fungibility and environmental integrity.47 To ensure this, the
Kyoto Protocol combined with the Marrakesh Accords set up strong require-
ments for national registries and inventories, accounting, baselines and their
methodologies, monitoring and reporting. In fact, compliance of the Parties
included in Annex I with their quantified emission limitation and reduction
targets will – inter alia – depend on the rigorous design of the flexibility
mechanisms.
3.4.1 Private Participation
The participation of private companies and other private entities in emissions

trading is clearly desired although not explicitly mentioned in the Kyoto
Protocol. Article 17 contains no reference to the private sector in contrast
to other articles of the Protocol. It is nevertheless generally accepted among
Annex I countries that private entities may participate in such trading with
the authorization of the respective Party.48 Authorization can be given by the
implementation legislation, government acts or by single authorization, e.g.
via letter of approval.
Authorized non-State entities could use the allocated emission units for
compliance or for trading with other private or public entities within the same
45
FCCC/CP/2001/13/Add.2, Decisions 15 and 18/CP.7, ET Modalities. Decision 15 sets
out the principles, nature and scope of all three mechanisms while Decision 18 contains
operational rules for emissions trading.
46
FCCC/KP/CMP/2005/3, FCCC/KP/CMP/2005/Add. 1–4.
47
Environmental integrity in this particular context refers to the ability of a climate measure
to support the objective and purpose of the climate regime. It therefore relates to the qual-
ity of the regime, its instruments and institutions. The extent to which the means are able
to achieve the ultimate objective of the Convention as stated in its Article 2 is essential
for considering the environmental integrity of the climate regime. With regard to the flex-
ibility mechanisms, it will depend on their capacity to ensure that the Parties included in
Annex I do not exceed their assigned amounts. Emissions, reductions and removals need
therefore not only be quantifiable by using the same standard worldwide but also real,
complete, accurate, environmentally conservative, comparable and verifiable.
48
C. Hepburn and C. Brown, ‘Privatising the Commons? A Global Greenhouse Emissions
Trading Regime at COP-6’, 19 Austral. Mining & Petro.L.J. (2000) 169–70. T. Voon,
‘Sizing up the WTO: Trade-Environment Conflict and the Kyoto Protocol’ (2000) 10:1 J.
Transnational Law & Policy, 94; Werksman 1999, 253.
or foreign countries. Transborder trading needs to involve the reciprocal rec-

ognition by the States involved of each other’s emission trading system and
respective allowances or credits.
Private entities, when engaging in emission trading, cannot actually ac-
quire, hold or transfer any of the rights created by the Kyoto Protocol. They
are not bound by international law in general nor by the Kyoto Protocol or any
of the WTO covered agreements since public international law in general only
binds States. According to the traditional – but still widely accepted – view,
private entities cannot be held directly responsible for sovereign obligations
that emanate from a public international legal agreement between States. As
much as a private entity cannot be held responsible for State failure to com-
ply with sovereign obligations, a private entity cannot fulfil this sovereign
obligation. The exchange of emission units at this level perceives its validity
from domestic regulation of the respective State. If private entities engage
in a transboundary transfer of emission allowances, their transfers require
the simultaneous exchange of sovereign obligations between the respective
States.49
Therefore, as mentioned above, any transboundary transaction of trad-
able emission units between private entities of different countries needs to
be mirrored by a sovereign transaction between two involved States which
leads to a ‘reallocation’ of assigned amounts.50 After the start of the first
commitment period in 2008, sovereign-to-sovereign exchanges of emission
units are to be seen as re-allocations of commitments with the consent of the
States involved in the transaction. The need to parallel transactions of private
emission units with a transfer of AAUs is indicated in the negotiation texts.51
Furthermore it is a necessity under international law because States, whose
private entities trade with emission units will remain obliged to fulfil their
quantified reduction obligations.52
Despite the complexity of private entity involvement, the interest of Kyoto
Parties to engage private entities in emissions trading is high. There are vari-
ous reasons for this. First, emission of greenhouse gases is only in the fewest
instances the result of public activity. Mostly, private activities generate and
emit greenhouse gases. The obligations under the Kyoto Protocol however
49
Werksman, 1999, 253.
50
Ibid., 252.
51
Report of the first part of COP6 in FCCC/CP/2000/5/Add.3 (Vol. V) and the consolidated
negotiation text proposed by the chairman in FCCC/CP/2001/2/Add.2.
52
See J. Werksman and J. Lefevre, WTO Issues Raised by the Design of an EC–Emissions
Trading System, Scoping Paper No. 3 (London: FIELD, 1999), 6; and M. Buck and R.
Verheyen, International Trade Law and Climate Change – A Positive Way Forward
(Bonn: FES, 2001) 24.
remain sovereign obligations of the State Parties to the Protocol.53 States

therefore will need to regulate private industries in a way that enables the State
to comply with its international obligations. In order to link the international
obligation of the State with the actual emitters States may authorize private
undertakings to acquire, hold or transfer emission allowances.
Second, the involvement of the private sector seeks to encourage the im-
plementation of the international emissions limitation and reduction obliga-
tions by States at the place where emissions occur. Emissions trading with
private entity involvement aims at producing more cost effective regulation
than State-to-State emissions trading or traditional regulation to the extent that
significant differences in the marginal costs of emission control and reduction
exist between pollution sources.54 Emissions trading is, for example, consid-
ered more attractive than the imposition of carbon taxes, because a tax system
extracts revenues from firms without offering any compensation. Even if an
undertaking was obliged to buy emission allowances to cover all of its emis-
sions, it still acquires the value of these allowances (and permits) which can be
sold in the future if its actual emissions are lower than the allowed limit. This
in turn creates an incentive for firms to comply with their ‘caps’.55
Third, politically the introduction of a cap-and-trade system might face
lower political resistance than the introduction of taxes.
3.4.2 The Global Carbon Market and Linking of Domestic Trading

Schemes
The institutional structure between domestic systems and the international

trading system is still somewhat ambiguous. It is interlinked, though complex
and not clearly defined yet. Attempts to link existing domestic emissions trad-
ing schemes under the Kyoto Protocol between Member States. Linking is a
means to support and embed an international emissions trading scheme. In
fact, the extension of the EU ETS – which is the world’s largest emissions
trading scheme – by linking to the other flexibility mechanisms and to other
53
See in particular para. 33 of FCCC/CP/2001/13/Add.2, Decision 17/CP.7.
54
See J.T.B. Tripp and D.J. Dudek, ‘Institutional Guidelines for Designing Successful
Transferable Rights Programs’ (1989) 6:2 Yale J. on Reg., 374.
55
See Z.X. Zhang, ‘Greenhouse-Gas Emissions Trading and the World Trading System’ in
W.B. Chambers (ed.) Inter-linkages: The Kyoto Protocol and the International Trade and
Investment Regimes (Tokyo: United Nations University, 2001) 121–123.
national trading schemes, such as those of Norway, Japan or New Zealand

could be seen as the first step in establishing an IET scheme.56
Under the Kyoto Protocol, each Annex I Party is required to have a Na-
tional Registry in place before it can engage in transboundary or international
emissions trading.57 National registries may also perform the same or similar
functions for units issued in any domestic or regional scheme.58 National
registries ensure compliance with emissions limitations and reduction com-
mitments either imposed on Parties to the Kyoto Protocol or private/public
entities within the countries.
If the following conditions are fulfilled, international emissions trading can
be made real: the participant is eligible to participate and, if a private entity,
is authorized to hold, receive and transfer Kyoto units; it holds an account
(government or private account) in a National Registry that complies with
the requirements and technical standards set out by the Marrakesh and Delhi
Decisions; and the National Registry is linked to the Independent Transaction
Log (ITL).
In fact, the system of National Registries establishes the heart of the in-
ternational emissions trading system by making the holding, accounting, and
transfer of Kyoto units possible.59 At the international level, the UNFCCC-
based ITL links all National Registries and acts as a central communication
‘clearing house’ through which National Registries will exchange data.60 Once
the National Registries are in place and linked up to the ITL, Kyoto Parties
(Annex I) themselves will be able to transfer Kyoto Units to and from their
national accounts held by the National Registries. The linking of the EU ETS
follows this envisaged path.
56
D. Meadows, The Emission Trading Scheme and Linking Greenhouse Gas Markets, paper
presented at IEA-EPRI 4th Annual Workshop on Greenhouse Gas Trading, Paris, 4 Octo-
ber 2004. Meadows calls the EU ETS ‘the nucleus of the international carbon market’.
57
The Marrakesh Accords in Decision 19/CP.7 set out the key functional requirements for
National Greenhouse Gas Emissions Trading Registries to satisfy the requirements of
the Kyoto Protocol. These registries are electronic databases for recording and tracking
Kyoto Units, necessary for accurate accounting of the issuance, holding, transfer, acquisi-
tion, cancellation, banking, and retirement of all units.
58
According to the EU ETS, each Member State’s registry must be capable of functioning
as that Member State’s National registry pursuant to the Kyoto Protocol. Art. 6(1) of
Decision 280/2004/EC. Each National registry is linked to the Community Independent
Transaction Log, which is then linked to the ITL. Transaction in the EU ETS which will
also be transaction under the Kyoto Protocol will be checked and processed simultane-
ously.
59
See A. Hobley and P. Hawkes, ‘GHG Emissions Trading Registries’ in Freestone and
Streck (eds.) 2005, 134.
60
Decision 19/CP.7 and Decision 24/CP.8 (Delhi Decision).
Moreover, initiatives emerge to link domestic trading schemes of Kyoto

Annex B States with national or sub-national schemes of non-Kyoto Members,
e.g. Regional Greenhouse Gas Initiative of some US States.61 Such linking
initiatives are contract-based and aim at the further development of a single
global carbon market where States can participate irrespective of their Kyoto
membership.
At present, the global carbon market comprises of the EU ETS, CDM and
JI projects and some national emissions trading schemes. Recent analysis
shows a strong growth of the market. In 2006, 1.6 billion t CO2 eqv. were
traded equalling €22.5 billion.62 Another recent study reveals that carbon
trading reached an estimated value of $59.2bn in 2007 – an 80% growth from
2006.63
However, managing the expansion of the international carbon market will
be a complex task. Alone the linking of emissions trading schemes to an interna-
tional emissions trading system holds a number of intricate legal challenges.64
One of the major challenges is the insurance of environmental effectiveness
of international emissions trading. Environmental effectiveness requires total
emissions by all sources to be equal to or less than the combined caps.65 Link-
ing, however, opens for a number of environmental risks in this regard. It can
increase non-compliance which again compromises effectiveness.66 The strin-
gency of the cap, common requirements for eligibility, monitoring, reporting
61
See RGGI (Regional Greenhouse Gas Initiative): under the RGGI seven Northeast US
states: Connecticut, Delaware, Maine, New Hampshire, New Jersey, New York and Ver-
mont – Maryland is to join by June 2007 – will launch a regional cap-and-trade system.
Beginning in 2009, emissions of CO2 from power plants in the region would be capped
at approximately current levels – 121 million tons annually – with this cap remaining in
place until 2015. The states would then begin reducing emissions incrementally over a
four-year period to achieve a 10 percent reduction by 2019. Compared to the emissions
increases the region would see from the sector without the program, RGGI will result in
an approximately 35 percent reduction by 2020. See: Model Rule and Memorandum of
Understanding, published 15. August 2006 at: <http://www.rggi.org/modelrule.htm>.
62
Point Carbon, Carbon 2007. A New Climate for Carbon Trading, 13 March 2007.
63
Worldwatch Institute, Vital Signs, 2007.
64
See M. Mehling, ‘Bridging the Transatlantic Divide: Legal Aspects of a Link between
Regional Carbon Markets in Europe and the United States’, 7 Sustainable Development
Law and Policy (2007).
65
Environmental effectiveness and environmental integrity are used interchangeably in the
context of the flexible Kyoto mechanisms: both terms refer to the ability of the measure
to contribute to the ultimate objective of the UNFCCC, i.e. stabilization goal. In effect,
they mean the capacity of the measure to secure real, measurable emissions reductions.
66
See E. Haites and X. Wang, Environmental Effectiveness of Linked Trading Schemes,
paper presented at the Conference ‘Linking Schemes: Potential Impacts of Linking the
European Union Emissions Trading System with Emerging Carbon Markets in other
Countries’, Brussels, May 30 2006.
and verification, integrity of the allowance registries and means of effective

enforcement as well as mutually agreed targets and timetable are some of the
crucial safeguards to sustain environmental effectiveness.67
The Kyoto Protocol creates an incentive for Annex B national govern-
ments to systematically ensure environmental effectiveness when linking of
trading schemes with other Kyoto Parties.68 Linking with non-Kyoto Parties,
however, could potentially endanger the environmental integrity of the emis-
sions trading system under the Kyoto Protocol.69 Because trading with non-
Kyoto Parties is generally excluded under the Kyoto Scheme, such trading
can only be based on individual contractual relationships, most likely in the
form of bilateral agreements between the Kyoto Party and the non-Member. In
this case, an absolute cap on emission by the non-Kyoto State is an essential
requirement that none of the States which have not ratified the Kyoto Protocol
is yet able to fulfil.
Thus, while all States listed in Annex B of the Kyoto Protocol can exchange
AAUs based on the institutional design of IET under the Kyoto Protocol, non-
Members are systemically excluded from such trading, unless agreed other-
wise. The negotiation of trading contracts lies within the sovereign discretion
of the respective States. Still, a bilateral trading agreement which does not
require strong safeguards for environmental integrity might endanger the en-
vironmental performance of international emissions trading and of the entire
Kyoto regime. Kyoto Member States might therefore choose not to extent
their trading schemes to States that have not ratified the Kyoto Protocol.
Such exclusion may have significant trade implications which will be fur-
ther discussed in part II.
3.4.3 Supplementarity to Domestic Action
During the negotiations of the Kyoto Protocol concerns were raised that emis-
sions trading and the use of the project mechanisms might consolidate as well
as exacerbate existing emission inequalities between Annex I and non-Annex
I countries by encouraging the former to seek cheap reductions abroad. The
Marrakesh Accords therefore include the provision that Annex I Parties ‘shall
67
Ibid., and Meadows, 2004.
68
Haites and Wang, 2006.
69
R. Schüle, Linking Schemes: Potential Impacts of Linking the European Union Emissions
Trading System with Emerging Carbon Markets in other Countries, paper presented at the
Conference ‘Linking Schemes: Potential Impacts of Linking the European Union Emis-
sions Trading System with Emerging Carbon Markets in other Countries’, Brussels, May
30 2006.
implement domestic action in accordance with national circumstances and

with a view to reducing emissions in a manner conductive to narrowing per
capita differences between developed and developing countries while working
toward achievement of the ultimate objective of the Convention’,70 and take
such considerations into account when reviewing demonstrable progress under
Article 3.2 of the Protocol.
Further, Article 17 clearly requires emissions trading to be supplemental
to domestic action. This has so far be interpreted as ‘constituting a signifi-
cant element’, which entails no concrete quantitative connotation. However,
in order to support sustainable development, it will be necessary to further
concretise this requirement as it is a prerequisite for environmental effective-
ness promoted by the emissions trading system. This argument will be further
discussed below in part III.
3.4.4 In Sum
Emissions trading is a flexible and cost-effective means of meeting an environ-

mental goal that allows Annex I Parties to ‘take the lead’ in climate mitigation.
It seeks to integrate economic concerns as well as considerations of develop-
mental inequalities and differentiated responsibilities into the achievement of
the emissions limitation and reduction obligations of the Kyoto Parties without
modifying the environmental aim. In this context, it can be seen as a practical
example of an attempt to implement sustainable development.71
3.5 The Clean Development Mechanism
The Clean Development Mechanism (CDM) and Joint Implementation (JI)

represent the two project-based instruments that allow for investments in for-
eign countries, i.e. in Parties with quantified emission limitation and reduction
commitments for JI and in non-Annex Parties for CDM, which seek to reduce
greenhouse gas emissions or increase sequestration capacities. As a result,
these investments can generate emission credits that, if verified, confer the
right to the benefit accruing with respect to a certain removal or reduction of
GHG emissions to the entity carrying out the project and its home State, if
the government recognizes these credits. While the CDM and JI have certain
70
Decision 15/CP.7, Preamble and para. 6.
71
P. Sands, ‘International Law in the Field of Sustainable Development’ (1994) 65:5 BYBIL,
304; French, 2005a, 274.
common features, for example the requirement that emission reductions need
to be ‘additional’72 or the need for approval by all Parties involved, in par-
ticular the host country,73 there are significant differences between the two
mechanisms.
The CDM emerged out of separate, non-overlapping negotiations that were
characterized by the attempt to (i) give developing countries the possibility to
benefit from the economic instruments laid down by the Protocol; while (ii)
adhering to the interests of developed countries in involving developing coun-
tries in mitigation action; (iii) providing developed countries a cost-effective
means to achieve compliance with their commitments under the Kyoto Pro-
tocol; and (iv) contributing to the ultimate objective of the Convention.74 The
multifaceted objective of the CDM is stated in Article 12.2 KP.
The operation of the CDM is supervised by the Executive Board (EB),
operating under the MOP. The EB’s function is, inter alia, to accredit opera-
tional entities (Designated Operational Entities – DOEs) that will validate a
proposed activity on the basis of a Project Design Document (PDD). A differ-
ent DOE verifies and certifies emissions reductions, before the EB, based on
the certification report by a DOE, finally issues Certified Emission Reduction
credits (CERs) and distributes them to the accounts of Parties and project
participants as requested by them.75
The question of legal ownership of CERs has been given little considera-
tion and is not explicitly dealt with in the Kyoto Protocol and the Marrakesh
Accords. The general approach is that in the absence of any law or contract
to the contrary the home country of the project developer is the ‘legal owner’
of any CERs and entitled to deal with them exclusively. It has been argued
that the ‘nationalization’ of credits by the host Government would remove
incentives for investors, and tendencies in this direction exist. Nonetheless,
the international legal nature of the Kyoto Protocol remains, providing rights
and obligations for State governments. Accordingly, CERs should generally
be considered sovereign rights which can only be legally owned by govern-
ments. Legal ownership can, however, be determined by State contracts or
laws, which can allocate private ownership to these sovereign rights. However,
the sovereign rights do not cease to exist when allotted to private entities but
are (also) transferred to the home Government (Annex I Party) of the project
72
Arts. 6(1)(b) and 12(5)(c) Kyoto Protocol.
73
Arts. 6(1)(a) and 12(5)(a) Kyoto Protocol.
74
See for an overview over the history of the CDM: J. Werksman, ‘The Clean Development
Mechanism: Unwrapping the “Kyoto Surprise”’ (1998) 7:2 RECIEL 151.
75
See for information Marrakesh Decision 17/CP.7, Annex; see also <http://unfccc.int/
cdm/index.html>. Also Yamin and Depledge, for an overview of the project cycle, 2005,
162–164.
developer to whose quantified emission limitation and reduction obligations

they will be added (Article 3.12 KP). The situation gets even more complicated
when there are multiple project participants, for example, different land and
forest owners, constructors, lessees of the land, project manager, multi-Party
joint ventures etc. The legal title to emission credits needs then to be defined
by a network of complicated legal arrangements.76
A share of the proceeds from a CDM activity is automatically deposited
in the CDM registry to fund adaptation in developing countries vulnerable to
climate change77 and to cover CDM-associated administrative expenses.78
The process cycle leading to the issuance of CERs requires stringency and
multilateral oversight both by the EB and the DOEs. The high transaction costs
and the rather complex and lengthy process have been criticised as creating
disincentives for investors to engage in CDM.79 However, the lack of quantita-
tive mitigation commitments of host countries and the interest of the project
developer in receiving a possibly high number of credits creates incentives
to inflate the amount of CERs claimed80 which necessitates a clearly defined
process with reliable methodologies and independent evaluation.81
76
For a more detailed discussion on the various forms of contracts, see M. Wilder, M.
Willis and M. Guli, ‘Carbon Contracts, Structuring Transactions: Practical Experiences’
in Freestone and Streck (eds.) 2005, 295–311; I.L. Worika, M. Brown and S. Vinogradov,
‘Contractual Aspects of Implementing the CDM and other Flexibility Mechanisms Under
the Kyoto Protocol’ in Chambers (ed.) 2001, 215–246; For a discussion of arbitration
in ‘carbon contracts’, see D. Ratliff, ‘Dispute Settlement in ‘Flexible-Mechanism’ Con-
tracts’ in Freestone and Streck (eds.) 2005, 377–400
77
The share of proceeds that goes to the Adaptation Fund is 2% (FCCC/CP/2001/L.7).
78
MOP 1 decided that the share of proceeds for administrative purposes should be US$
0.10 for the first 15,000 CERs issued to a project per calendar year and US$ 0.20 for the
remaining amount (FCCC/KP/CMP/2005/L.7).
79
Twenty-seven items for reform of the CDM were registered during the negotiations of
COP11/MOP1, relating to general issues, governance, methodological issues, broader
participation and resources.
80
See for an early warning note, A. Michaelowa, ‘Joint Implementation – the Baseline Issue:
Economic and Political Aspects’ (1998) 8:1 Global Environmental Change 81–92; see
also J. Lefevere, Greenhouse Gas Emission Allowance Trading in the EU: a Background
Report, FIELD, 27 September 2002, 9.
81
See A. Michaelowa, ‘Determination of Baselines and Additionality for the CDM: a Cru-
cial Element of Credibility of the Climate Regime’ in Yamin (ed.) 2005, 289.
3.5.1 Additionality
One of the key issues for the environmental integrity of CDM projects is the
additionality of emission reductions or removals.82 Article 12(5)(c) provides
that CERs shall be certified if based on reductions that are additional to any
that would occur in the absence of the project. Additionality is a necessary
requirement for making the CDM function as a mechanism to compensate for
emissions that are not being reduced domestically by Annex I Parties. If CERs
are created that represent emission reductions which would have happened
anyway, these ‘paper reductions’ will undermine the integrity of the Kyoto
Protocol.
3.5.2 Prospects
The CDM is becoming a popular instrument of climate change regulation by

providing a cost-efficient means of complying with the requirements of the
Protocol. A CDM project attracts substantial transfers in financial and techno-
logical services to developing countries while promoting climate protection
and diminishing the extent of national climate change mitigation in developed
countries. Given the importance of this market mechanism in the structure of
the global climate regime, it is particularly important – and opportune – that
the design of CDM aims for a synergetic relation with the concept of sustain-
able development.
There are currently about 950 registered CDM projects in 49 developing
countries, of about 3000 projects in the project registration pipeline. The
registered projects have resulted in almost 200,000,000 issued CERs.83 The
CDM is expected to generate more than 2.7 billion CERs by the time the first
commitment period of the Kyoto Protocol ends in 2012, each equivalent to
one tonne of carbon dioxide.84
Considering the CDM market size, the price of incoherence may be high,
risking not just the investment but also the credibility and public acceptance of
the climate change regime. It is this credibility and the environmental integrity
82
Other ‘safeguards’ for environmental integrity are the determination of baselines, their
methodology and modalities to avoid ‘leakage’, that is, the increase of GHG emissions
elsewhere. See E. Meijer and J. Werksman, ‘Keeping it Clean – Safeguarding the Envi-
ronmental Integrity of the Clean Development Mechanism’ in Freestone and Streck (eds.)
2005, 197–203.
83
<http://cdm.unfccc.int/Statistics/index.html> (last visited 09.03.2008).
84
Ibid.
of CDM projects which will have crucial implications for the future of any
market-based international environmental measures.
The CDM is without precedent in facing such a wide variety of interest and
legal challenges with regard to establishing a coherent legal system of non-
conflicting inter-linkages with other regulated fields. Making such measures
operational while ensuring environmental integrity of this mechanism will
demand legal finesse and, not the least, political willingness.
Whether it will provide a basis of future multilateral climate policy will
depend on the willingness of nations to commit themselves to the deeper
emission cuts scientific evidence suggests are necessary.85 Discussions on the
CDM during the negotiations of COP11/MOP1 in Montreal, December 2005,
signified the considerable potential of the CDM to bring about consensus on
the terms of global climate policy at some point in the future. But it will also
depend on the CDM’s ability to meet its triplet goals in an environmentally
safe manner.
The implementation of the Protocol’s Clean Development Mechanism,
however, has the potential to interact with trade-related regulation. CDM is
promoting investments in Parties not included in Annex I of the UNFCCC.
Eligibility to host a CDM project will be granted to developing countries only,
while eligibility requirements for receiving CERs as a result of a successful
CDM includes the ratification of and continued compliance with the Kyoto
Protocol. In other words, projects from non-Annex I countries and non-com-
plying Annex-I countries are not eligible. These requirements establish re-
strictions on services and investments likely to clash with non-discrimination
clauses, common to trade and investment regulation.86
While the focus primarily needs to be on the avoidance of conflict by ap-
propriate legal design, it does not mean that the CDM should be compromised
by free-market imperatives. Some requirements of the mechanism might nec-
essarily conflict with trade regulation in order to guarantee its environmental
integrity. Those cases and their possible outcome will be assessed in part II of
this book.
85
Haites, 2005, 337.
86
See: J. Werksman, K.A. Baumert and N.K. Dubash, Will International Investment Rules
Obstruct Climate Protection Policies? (Washington D.C.: World Resources Institute,
2001); J. Werksman and C. Santoro, ‘Investing in Sustainable Development: The Potential
Interaction between the Kyoto Protocol and a Multilateral Agreement on Investment’ in
W.B Chambers (ed.) Global Climate Governance: Inter-linkages between the Kyoto Pro-
tocol and other Multilateral Regimes (Tokyo: United Nations University, 1998) 59–74;
K. von Moltke, An International Investment Regime: Issues of Sustainability (Winnipeg:
IISD, 2000.)
3.6 Joint Implementation
The third flexibility mechanism, Joint Implementation (Article 6 KP) was en-
visioned already in the UNFCCC.87 Developed further, Kyoto Protocol Article
6 now allows Annex I Parties to jointly meet their Article 3.1 commitments
by transferring to, or acquiring from another Annex I Party, Emission Reduc-
tion Units (RMUs) achieved by investment in specific project activities. Such
projects either entail actual reduction of emissions or the enhancement of
removal by sinks, both vis-à-vis an established baseline scenario. The amount
of ERUs generated by a JI project equals the difference between the baseline
emissions and the project emissions.
JI projects are supposed to be of particular interest to EIT (Economies in
Transition) States, such as Eastern European and the former Soviet States,
and Annex I States outside Europe, in particular New Zealand, Japan and
Canada.88
The particularity of JI is its combination of elements of emissions trading
under a cap-and-base system with a baseline-and-credit approach. Accord-
ingly, it is a ‘hybrid’ mechanism to be placed between international emissions
trading and the CDM.
Once a minimum number of requirements have been met, that is – inter
alia – the membership of and compliance with the Kyoto Protocol by both
State Parties, approval by the States, and proof of additionality of the reduc-
tions to any that would otherwise have occurred, Joint Implementation of a
project can be carried out in one of two ways (Track I and II). Under the
Track I Procedure, the host country itself may verify reductions in anthropo-
genic emissions and removals by sinks if it has met extensive monitoring and
inventory requirements. Upon such verification, the host country may issue
the appropriate number of ERUs in accordance with Decision 19/CP.7. This
is done by converting host country AAUs into ERUs and transferring them
87
JI has its roots in Articles 3.3, 4.2(a) and 4.2(d) UNFCCC. Art. 3.3 opens for flexibility
and cost-effectiveness, while Art. 4.2(a and d) explicitly provides for implementation of
measures ‘jointly’ with other Parties and mandates the COP to take decisions regarding
criteria for such implementation. See for an early discussion: R. Loske and S. Oberthür,
‘Joint Implementation under the Climate Change Convention’, 6:1 International Envi-
ronmental Affairs, 1994, 45–58. For a historic overview see Yamin and Depledge, 2004,
188–189 and C. Streck, ‘Joint Implementation: History, Requirements, and Challenges’
in Freestone and Streck (eds.) 2005, 107.
88
See for an overview over JI policies in New Zealand and Japan, M. Wilder, ‘Implementing
the Clean Development Mechanism and Emissions Trading beyond Europe’ in Freestone
and Streck (eds.) 2005, 244–246.
through the system of National Registries to the acquiring country’s account

while reducing the amount from the host countries assigned amount.
Track II differs to the extent that it involves a complex approval and veri-
fication process by an independent entity, which is to be conducted under an
international procedure overseen by the JI Supervisory Committee. The pro-
cedure is based on the validation and registration requirements of the CDM,
including the design and scope of PDD and the methodologies for measuring
a project’s additionality. The contentious question of designation of independ-
ent entities was finally resolved in Montreal. In this compromise solution,
private audit DOEs under the CDM do not automatically qualify for evaluat-
ing Track II JI projects. Instead, entities have to apply for accreditation. Until
they are accredited they can serve as provisional independent entities.89 Still,
countries engaging in JI projects remain ultimately responsible for achieving
their emission targets and JI projects do not challenge the ‘fixed cap’ of Annex
I Parties involved in a project.
JI also requires the acquisition of ERUs to be supplemental to domestic
actions (Article 6.1(d) KP).
JI has been accorded the lowest priority in negotiations on the three flex-
ibility mechanisms. Complex negotiations on the other mechanisms and on
compliance issues resulting in capacity constraints, the absence of a cohesive
political bloc of JI host countries in negotiations and of a coherent vision on
JI modalities in general, together with contentious financial questions and the
assumed competition between CDM and JI, have led to a slow progress on
JI. The decisions taken in Montreal are, however, expected to speed up the
process of operationalizing JI especially if the funds necessary to support the
work of the JI Supervisory Committee are set up.
For the purpose of this study, the focus of the remaining chapters will
therefore primarily be confined to emissions trading and the CDM.
3.7 Concluding Remarks
The clear advantage of flexibility mechanisms, such as emissions trading and

joint implementation, is the finite number of emission units, clearly defin-
ing the environmental goal. This ‘absolute cap’, if combined with a strong
compliance mechanism,90 ensures that it will become unattractive for States to
emit more than they are allowed under the Kyoto Protocol.
89
FCCC/KP/CMP/2005/L.6.
90
See for a comprehensive overview of the compliance system under the Kyoto Protocol:
J. Werksman, ‘The Negotiation of a Kyoto Compliance System’ in O. Schram Stokke, J.
The climate regime must – and the flexibility mechanisms make it more
likely to – progressively convince a wide range of currently hesitant or resist-
ant actors to reframe climate protection as the (only) sustainable way forward.
This shift in conviction, however, involves not only legal measures, but com-
plex and dynamic social processes. Still, as Mitchell supposed, ‘the flexibility
mechanisms … may, over time, initiate social processes that lead to deep-
seated normative changes that, in turn, may produce the dramatic, long-term
changes in human behaviour that are necessary to avert climate change.’91
The use of economic flexibility instruments, in particular the JI and CDM,
can promote the development and distribution of new technologies, generat-
ing capital flows and transfer of technologies into regions with cheaper, older
technologies or limited financial means and capacities to implement climate
friendly technologies, promoting not only emission reductions at reduced
costs but also positive feedback across the whole, global economy.92
Hovi and G. Ulfstein (eds.) Implementing the Climate Regime: International Compliance
(London: Earthscan, 2005) 17–37.
91
R.B. Mitchell, ‘Flexibility, Compliance and Norm Development in the Climate Regime’
in Stokke, Hovi and Ulfstein (eds.) 2005, 81.
92
See J. Lefevre, ‘The EU Greenhouse Gas Emission Allowance Trading Scheme’ in Yamin
(ed.) 2005, 92.
Chapter 4
Sustainable Development in the Context of

International Climate Change Law
4.1 Introduction
Climate change touches two questions of fundamental importance: human-

kind’s interaction with and relation to nature and humanity’s relationship with
itself. The principle of sustainable development addresses the same questions.
Climate change, however, not only lifts these questions into a real-world sce-
nario, but urgently demands a practical answer. In other words, climate change
requires the international community to define what it means by sustainable
development. It poses the challenge of integrating ecological limitations into
all other aspects and sectors of human life, both in an intragenerational and
intergenerational context.
The apparent, albeit complex, symbiosis of the challenge of tackling
climate change and sustainable development has been captured by the Inter-
governmental Panel on Climate Change in its 2007 Fourth Third Assessment
Report:
A key finding is that through climate mitigation alone, it will be extremely difficult
and expensive to achieve low stabilization targets (450 ppmv CO2) from baseline sce-
narios that embody high emission levels … Achieving low emission baseline scenarios
consistent with other principles of sustainable development, that is viewing climate
change through a sustainable development lens, would illustrate the significant contri-
bution sustainable development can make to stabilization.1
1
IPCC, Sustainable Development and Mitigation, in: Climate Change 2007: Mitigation.
Contribution of Working Group III to the Fourth Assessment Report of the Intergovern-
mental Panel on Climate Change, 696. Already the Third Assessment Report commented
at this relationship in the following way: ‘The climate change issue is part of the larger
challenge of sustainable development. As a result, climate policies can be more effec-
tive when consistently embedded within broader strategies designed to make national
and regional development paths more sustainable. This occurs because the impact of
Similarly, the 2001 UNFCCC Marrakech Ministerial Declaration assumes a

close connection between measures undertaken within the climate regime and
the aim of sustainable development. The Preamble of the Declaration express-
es the belief of the negotiators that ‘addressing the many challenges of climate
change will make a contribution to achieving sustainable development.’2
The importance of successful climate change strategies as one of the main
issues in the context of sustainable development was reaffirmed at the 2002
Johannesburg World Summit on Sustainable Development. Recalling the pre-
ambular wording of the Climate Convention, the ‘Plan of Implementation’
states that ‘change in the Earth’s climate and its adverse effects are common
concern of humankind’ and refers to the UNFCCC as being
the key instrument for addressing climate change, a global concern” and affirms the
“commitment to achieving its ultimate objective of stabilization of greenhouse gas
concentrations in the atmosphere at a level that would prevent dangerous anthropo-
genic interference with the climate system, within a time frame sufficient to allow
ecosystems to adapt naturally to climate change, to ensure that food production is
not threatened and to enable economic development to proceed in a sustainable man-
ner, in accordance with our common but differentiated responsibilities and respective
capabilities.”3
The analysis of sustainable development in the context of the climate regime

aims at providing a better, more practical understanding of the concept. At the
same time, there is a positive feed-back loop. A better understanding of the
principle of sustainable development is not only a desirable side-effect of this
analytical endeavour, it is a necessary condition for the success of the interna-
tional climate regime. As long as the claim of conceptual uncertainty surround-
ing sustainable development remains, also the development of an international
consensus on climate change is hindered, if not endangered. But as long as the
climate regime remains ineffective, it impairs the achievement of sustainable
development. Long-term solutions to resolving the threat of climate change
climate variability and change, climate policy responses, and associated socio-economic
development will affect the ability of countries to achieve sustainable development goals.
Conversely, the pursuit of those goals will in turn affect the opportunities for, and success
of, climate policies. In particular, the socio-economic and technological characteristics
of different development paths will strongly affect emissions, the rate and magnitude
of climate change, climate change impacts, the capacity to adapt, and the capacity to
mitigate.’ IPCC, 2001c, 4.
2
FCCC/CP/2001/13/Add.1, 3f, Preamble, para. 3.
3
See Report of the World Summit on Sustainable Development, UN Doc. A/CONF.199/20.,
PoI, para. 38. For more information on the political reasons for choice of this wording see
Gray, 2003.
Chapter 4 – Sustainable Development in the Context of Climate Change Law 91
depend on the comprehension of sustainable development while sustainable

development requires effectively tackling the climate challenge.
In order to find a long-term solution to the global challenge of climate
change, I suggest envisaging the linkage between sustainable development
and climate change strategies in a direct and reciprocal manner. In fact, they
need to be seen as two sides of the same coin.
Sustainable development is inherently defined by ecological limits set by
fundamental natural processes and functions, among which a stable global
climate is arguably the most crucial. The ability of the global community to
tackle the challenge of climate change by setting up a comprehensive and
effective international climate regime is giving an indication of the attempt to
understand and implement sustainable development as a global concept.4
Phrased in a slightly different way, the consensus of the world community
regarding the core of sustainable development is decisive for the success of
the climate change regime. As climate change is a challenge to be addressed in
a sustainable – global, long-term, effective and equitable – manner, only solu-
tions that are based on commitments of the entire world community may be
considered as ‘tackling’ climate change. In order to gain worldwide consensus
and commitment, however, these solutions need to be based on the concept of
My argument, is that sustainable development should be seen as a global
norm – a principle – to approach issues of vital and global importance, such
as climate change.
Simultaneously, the climate challenge in all its complexity makes clear the
urgent need to further defining sustainable development and to developing a
common understanding of this concept. The linkage between climate change
and sustainable development might thereby lead to a renewed appreciation of
fundamental ecological limits at the core of sustainable development.
Coherence between climate strategies and sustainable development is nec-
essary. Not only because coherence between climate change strategies and
sustainable development is a precondition for the functioning of any ‘climate
deal’,5 it is also a prerequisite for dealing with other ‘international priorities’
like the globalization and liberation of trade, where they seem to overlap with
climate measures. But coherence in design and structures presupposes a co-
herent understanding. It is my claim that such a coherent understanding – or
conceptualization – of the relationship of climate change measures to other
‘priorities’ and sustainable development is possible and is slowly evolving.
4
Sands, 1994, 304; French, 2005a, 274
5
See for support of this argument: T. Athanasious and P. Baer, Dead Heat, Global Justice
and Global Warming (New York: Seven Stories Press, 2002).
Furthermore, the inter-relationship between sustainable development and

the design of climate measures also has important implications for the status
of climate law in a wider context. As will be shown in Part III, the relationship
of climate law to other areas of international regulation, e.g. international trade
law, will ultimately be defined by the level of coherence between climate law
and sustainable development. In other words, a consensus on climate measures
based on a consensus on sustainable development might provide the strongest
argument for the precedence of climate law where it threatens to overlap and
come into conflict with other areas of international law.
In this section it will be shown that the concept of sustainable development
is a central element already of the multilateral climate regime. Numerous
provisions in both the UNFCCC and the Kyoto Protocol reiterate references
to sustainable development. The design of the climate regime itself gives an
indication of sustainable development as seen in a climate context. In fact, the
analysis of the multilateral response to climate change is a study par excel-
lence of the attempt by the international community to understand and imple-
ment sustainable development.6 The continuing debate surrounding climate
negotiations highlights the difficulties facing the international community in
applying sustainable development to a particular – but complex – global is-
sue. At the same time, it is evidence of an increasing acceptance of the core
parameters of sustainable development.
This evidence, as will be demonstrated below, can be drawn from explicit
references to sustainable development in the Climate Convention and the
Kyoto Protocol, as well as from central characteristics of the climate regime.
4.2 References to Sustainable Development in the UNFCCC
The term ‘sustainable development’ is used twice in the text of the Conven-
tion. Article 3 on ‘Principles’ notes that ‘The Parties have a right, and should,
promote sustainable development,” (para. 4) while para. 5 calls for ‘sustain-
able economic growth and sustainable development in all Parties, particularly
developing country Parties’. There are numerous references to sustainable
economic growth, and sustainable social and economic development. Para-
graph 22 of the Preamble, for example, recognizes that
all countries, especially developing countries, need access to resources required to

achieve sustainable social and economic development and that, in order for developing
countries to progress toward that goal, their energy consumption will need to grow taking
6
See French, 2005, 73.
into account the possibilities for achieving greater energy efficiency and for controlling
greenhouse gas emissions in general, including though the application of new technolo-
gies on terms which make such application economically and socially beneficial.
More importantly, Article 2 refers to a time frame for dealing with climate
change which allows economic development to proceed in a sustainable man-
ner. Article 2 states that
[t]he ultimate objective of this Convention and any related legal instruments that the
Conference of the Parties may adopt is to achieve, in accordance with the relevant
provisions of the Convention, the stabilization of greenhouse gas concentrations in the
atmosphere at a level that would prevent dangerous anthropogenic interference with
the climate system. Such a level should be achieved within a time frame sufficient to
allow ecosystems to adapt naturally to climate change, to ensure that food production
is not threatened and to enable economic development to proceed in a sustainable
manner.
Meeting this objective will clearly entail radical changes in human behaviour
in the shorter and longer term. Humankind does not have much experience in
making long-term predictions and commitments such as demanded by sus-
tainable development. The challenge of climate change, however, demands
the self-imposition of stringent patterns of behaviour on States, the impact
of which will primarily be perceived by future generations, though already
present impacts are palpable.7 Thus, the objective of the climate regime as
such can be seen as a regulatory attempt to define a sustainable development
path that, by seeking to meet the needs of the present generations, does not
compromise freedom of future generations to decide for themselves. It is this
complex task which led to the Convention’s more programmatic than pre-
scriptive character.
Another reference to the term ‘sustainable’ is found in Article 4.1(d) which
specifies under the heading ‘commitment’ that countries must promote sus-
tainable management of sinks and reservoirs of greenhouse gases. And finally,
Article 4.2(a) notes that developed countries will need ‘strong and sustainable
economic growth’ in order to achieve the objective of the Convention.
Thus, one is left with a puzzling array of references to sustainability, sus-
tainable development or sustainable growth while no explanation or definition
is given within the text of the Convention. The Convention comprises of an
amalgamation of sustainability issues. Our assessment in chapter 2 could help
7
See C. Voigt, ‘From Climate Change to Sustainability – An Essay on Sustainable Devel-
opment, Legal and Ethical Choices’ (2005) 9:1 Worldviews, 112–137.
to overcome conceptual ambiguities and to establish a coherent reading and

understanding.
Most references suggest that Parties used the terms sustainable economic
growth and sustainable development synonymously. At the same time, how-
ever, Article 3.4 suggests the opposite. Sustainable development is explicitly
referred to as a right. In this context it appears to be a central term in the
entire convention, which contains two substantive rights – the other one being
the sovereign right of States to exploit their own resources, pursuant to their
own environmental and developmental policies.8 The reference to sustainable
development as a right gives this term a different standing to sustainable eco-
nomic development. Furthermore, Article 3.5 suggests that the two terms are
not synonymous, as it calls for both ‘sustainable economic growth and sus-
tainable development in all Parties, particularly developing country Parties’.
From the Convention alone, therefore no clear preference can be ascer-
tained for either one of these terms.
4.3 References to Sustainable Development in the Kyoto Protocol and

Subsequent Documents
The Kyoto Protocol gives stronger credentials to sustainable development.

The preambular reference to the ultimate objective of the Convention – which
follows already from Article 2 of the Convention – incorporates the concept of
‘economic development in a sustainable manner’ into the Protocol.9
In addition, an explicit reference is made in Article 2.1(a) of the Protocol
where a list of policies and measures is presented that Annex I Parties (i.e.
developed country Parties) in achieving their quantified emission limitation
and reduction commitments under Art. 3 ‘in order to promote sustainable de-
velopment’ shall ‘[i]mplement and/or further elaborate, both individually and
co-operatively’. These policies and measures include – inter alia – enhancing
energy efficiency, promotion, research, development and increased use of new
and renewable form of energy, of carbon dioxide sequestration technologies
and of advanced environmentally sound technologies.
All obligations listed in Article 3 are thus subject to the goal of sustainable
development according to the mandate in Art. 2.1 and on the grounds that
the commitments to reduce greenhouse gas emission amounts to 1990 levels
according to the assigned amounts (targets) and the commitment to show
8
Preamble, para. 8.
9
Art. 2 UNFCCC notes explicitly “this Convention and any related legal instrument”. Such
an instrument is, inter alia, any adopted Protocol under Art. 17 UNFCCC.
demonstrable progress by 2005 are in themselves requirements of sustainable

development.10
Article 10 of the Protocol stresses that all Parties need to implement their
commitments according to Article 4 of the UNFCCC with regard to financial
assistance to developing countries, technology transfer, and the special role
of developing countries in the implementation of the Convention in order
to achieve sustainable development. In the course of implementation, cost-
effective national programmes with measures to update local emission factors,
energy, transport, industry and agriculture, forestry and waste-management
and to further cooperation with developing countries are to be taken.
Moreover, Article 12.2 states that the purpose of the Clean Development
Mechanism shall not only be to assist Annex I Parties in meeting their emission
limitation and reduction commitments and to contribute to the Convention’s
ultimate objective, but should also ‘assist Parties not included in Annex I in
achieving sustainable development’, despite the already existing commitment
to sustainable development.11 This reference to the concept is a good example
of what is often referred to as a ‘win-win’ situation where the solution to
a specific problem, e.g. greenhouse gas emission reduction, is linked to the
wider goal of sustainable development.
Finally, the Marrakech Accords add further emphasis to our conclusions
concerning the importance and understanding of sustainable development
in the Kyoto Protocol. The Marrakech Declaration states that decisions to
deal with climate change may contribute to sustainable development.12 More
clearly, it demands that
the synergies between the United Nations Framework Convention on Climate Change,
the Convention on Biological Diversity, and the United Nations Convention to Combat
Desertification … should continue to be explored through various channels in order to
achieve sustainable development.13
In particular, the Declaration’s references to capacity-building in developing

countries and countries with economies in transition are closely aligned with
sustainable development. Capacity building ‘will, in a coordinated manner,
assist them in promoting sustainable development while meeting the objec-
tive of the Convention’. Furthermore, it demands technological assistance and
10
Arts and Gupta, 2004, 524.
11
Some authors contend that the reference to sustainable development in Art. 12 was not
necessary, “since a general obligation for all policies to be consistent with sustainable
development already exists”. See Art and Gupta, 2004, 525.
12
Decision 1/CP7.
13
Ibid., para. 3.
capacity building to ‘effectively integrate vulnerability and adaptation assess-

ments into sustainable development programmes.’14 Sustainable development
is further referred to in provisions on adaptation, land-use and forestry activi-
ties and the flexibility mechanisms.15
In the subsequent instruments, sustained economic growth occupies a less
dominant position to its place in the Convention. Thus, a clearer perception of
sustainable development and climate change emerged in the evolution of the
climate regime. It can safely be said that sustainable development is generally
prioritized and that all measures undertaken to combat climate change are
linked to the achievement of sustainable development.16 Much of the above-
mentioned ambiguity of the Convention has disappeared in the Protocol. By
including sustainable development in the introductory clause of Article 2 of
the Kyoto Protocol, all policies and measures implemented by Annex I Parties
are subject to the requirement of consistency with sustainable development.
Certain specific, innovative elements included in the Kyoto Protocol will
be briefly assessed in the following two sections. First, the North–South re-
lationship has received specific attention along with issues associated with
funding and technological assistance. Second, the inclusion of flexibility in-
struments is relevant to sustainable development by allowing a certain degree
of flexibility and alleviation of economic burdens.
4.4 Implicit References to Sustainable Development
Sustainable development is not only explicitly mentioned in the legal docu-

ments of the climate regime, it also is implied in the very structure and design
of the regime.
4.4.1 Intragenerational Equity: Differentiation, Partnerships and Funding
a) Differentiation
Climate change is a global problem but contributions to it differ. Disregarding
where gases are emitted, they all contribute equally to the problem. But there
are large differences between States regarding their historic and (still) present
greenhouse gas emissions. So far, the development paths of industrialized
countries have caused most of the anthropogenic greenhouse gases that are
14
Ibid., 17.c.
15
See generally the decisions of CDM 17/CP.7.
16
See Arts and Gupta, 2004, 533.
currently concentrated in the atmosphere and which already are impacting

on climate stability. Future climatic changes will however be equally if not
largely determined by the developmental patterns of the currently less devel-
oped countries, for example, India, China and Brazil.
Also the negative impacts of rising greenhouse gas concentrations will be
unevenly distributed. Developing countries are in general more vulnerable to
climatic changes than industrialized countries, although differences exist also
among the former.
Many developing countries have a higher dependence on agriculture,
limited infrastructure, partial lack of a profound knowledge base and
capacities, lack of technology and limited means of financial and institutional
governance.
To account of these contributive and distributional differences, the entire
climate regime in its current form operates basically on the principle of equity
based on the differentiation between countries included in Annex I of the Con-
vention and those that are not.17 This differentiation expresses the recognition
that taking measures to tackle climate change must be in accordance with
States’ ‘common, but differentiated responsibilities and respective responsi-
bilities and their social and economic conditions’.18
With regard to climate change this means that each State has a responsibil-
ity to protect the climate system. In this regard, common responsibility and
common concern express both a sense of ‘commonality’ regarding the climate
problem and its consequences.19 Certain legal responsibilities are attributable
to all States in respect of the stability of the climatic system. The legal in-
terest in the stability of the climate system includes a legal responsibility to
prevent damage to it. However, there is a need to take account of the differing
circumstances regarding each State’s special responsibility, capability and
needs. ‘Differentiated responsibilities’ require historical, social, economic,
geographic, contextual, and other circumstances to be considered when at-
tributing roles and responsibilities under international law.20
The UNFCCC states in Article 3(1) and 4 (2.a) that developed country Par-
ties ‘should take the lead’. The concept of common but differentiated respon-
sibilities becomes evident in that so far only developed countries have specific,
quantified obligations to reduce greenhouse gas emissions. Moreover, different
17
See F. Yamin, ‘Equity, Entitlements and Property Rights Under the Kyoto Protocol: The
Shape of ‘Things’ to Come’ (1999) 8:3 RECIEL 265–274.
18
Preamble and Art. 3.1 UNFCCC. See also: L. Rajamani, ‘The Principle of Common but
Differentiated Responsibility and the Balance of Commitments under the Climate Re-
gime’ (2000) 9:2 RECIEL 120–131.
19
Sands, 2003, 286.
20
See Melkas, 2002, 125.
reporting requirements apply to the respective country groups.21 Different roles

are ascribed to different States based on the abovementioned criteria. In this
regard the principle applies differentiation as a requirement of fairness and
justice to the otherwise substantial equality of States.22 The sovereign equality
of States has been modified in order to take account of other factors than state-
hood. Nowhere is the application of common but differentiated responsibili-
ties – implying preferential and non-reciprocal treatment of developing States
– more pronounced than within the climate regime. In fact it appears likely
that the climate regime stands as a landmark of differentiation in a sustainable
development context, integrating economic and social requirements within the
ecological limit set by ‘safe atmospheric greenhouse gas concentrations’.
The Convention and the Protocol recognize differentiations based on his-
toric and current emissions trends of developed countries and vulnerability
and special circumstances of developing countries. The Convention allows
for special circumstances of developing countries and their right to develop-
ment in the Preamble and Article 3(2), even after considering the potential that
development will increase the share of emissions from those countries. In this
context, the concept of sustainable development is of importance.
The Convention does not state that increased emissions from developing
countries are generally compatible with the ultimate objective. What it says is
that the share of emissions coming from developing countries might increase –
but to the disadvantage of the shares of developed States. The third paragraph
of the Preamble makes it clear: if the share of global emissions originating
in developing countries is to rise, it implies that the share of emissions from
developed countries is supposed to decline. Both shares have to be seen in
relation to the overall aim of keeping atmospheric concentrations on a level
below 450 ppm CO2 eqv. Thus, if the differentiation of emission amounts is to
be equitable and in accordance with the common but differentiated responsi-
bilities and respective capabilities of Parties, drastic reductions of emissions
in developed countries and decoupling economic growth and carbon emis-
sions in particular in developing countries need to be the main goals of climate
change mitigation.23 The references to sustainable development support this
view. As we explored above, sustainable development implies developing
within global ecological limitations. If equity concerns allow for increased
21
See UNFCCC Arts. 4 and 12.
22
See Melkas, 2002, 123.
23
E. Claussen and L. McNeilly, Equity and Global Climate Change: The Complex Elements
of Global Fairness, reprinted edition (Arlington, VA.: Pew Center on Climate Change,
2000).
emissions in some less developed parts of the world, these increases have to
be ameliorated by significant decreases in developed countries.
The global nature of climate change calls for the widest possible coop-
eration. Despite differentiation, there is a fundamental common responsibil-
ity to find a solution. In this context, differentiation between developed and
developing countries in the Protocol has to be seen as a ‘first step toward
comprehensive climate strategies’.24
In addition, developing countries are no longer a homogeneous group
that in its entirety is distinguishable from developed States. The traditional
North–South divide is no longer the only line of differentiation. There are
further groups of countries that find themselves in particular situations with
regard to the climate challenge. Low-lying small island States for example,
like Tuvalu and Fiji; least developed countries and countries with particularly
fragile ecosystems, in particular a number of Central-African countries, and
parts of Asia; large industrial developing countries, like India and China and
countries with economies that to an especially high degree depend on income
generated from fossil fuels, generally the members of the Organization of
Petroleum Exporting Countries (OPEC) – whose economies are not so much
threatened by the effects of climate change as by the international responses
to it – give an indication of much more complex divisions within the group of
‘developing countries’.
The climate regime attempts to give due regard to the various aspects that
are of particular interests to the several groups. This attempt, however, requires
us to ask how far these diverse concerns could stand in the way of establishing
a ‘comprehensive’ and effective climate strategy. If sustainable development
meant taking account of all and every interest in the name of equality or politi-
cal and economic justice, then it might indeed obstruct progress in meeting
the climate challenge. As argued above, this is not what sustainable devel-
opment requires. The concept sets a clear preference for protecting a stable
climatic system to other developmental interests. Or, in other words, other
developmental interests have to be defined in relationship to their contribution
to protecting a stable global climate system.
The differentiation in obligations between the various players according
to their contributions, exposure to damage, their capacities and vulnerability
is a means to establish an equitable system within the limitations set by a
safe global climate. It gives evidence of the understanding that social and
economic considerations need to play a significant role in determining appro-
priate responses to the climate threat – without putting in danger the overall
aim of the climate regime. However, the urgency of the task coupled with the
24
Preamble, UNFCCC.
complexity of the matter may not allow for a stronger differentiation. Rather
all States will eventually be required to actively contributing to solving this
challenge.
Munansinghe addressed the dynamic connection between society, develop-
ment and climate change. In his words, ‘climate change measures and impacts
address the larger question of how complex social, economic and environmen-
tal sub-systems interact and shape prospects for sustainable development’.25
b) North-South Partnerships
Developed countries have a responsibility not only to commit to sustainable
development themselves but also to assist developing countries’ sustainable
development.26 Based on equity concerns, financial resources and other forms
of assistance, such as capacity building and technical cooperation, shall be
made available to developing countries to address climate change. These con-
tributions range from adaptation measures that deal with the negative impacts
of climate change; to measures that aim at increasing energy sufficiency or
which have a positive impact on the global climate and guide national policies
and measures toward sustainable development.
The Convention seeks to establish a solution to break the deadlock between
the ‘affluent’ and the ‘aspiring’ in that it not only addresses climate change but
also a development strategy where developed countries not only are supposed
to develop sustainably but where they also should fund the sustainable devel-
opment of the South. Article 4.5 UNFCCC states, for example, that
developed country Parties and other developed Parties included in Annex II shall
take all practical steps to promote, facilitate and finance, as appropriate, the transfer
of, or access to, environmentally sound technologies and know-how to other Parties,
particularly developing country Parties, to enable them to implement the provisions
of the Convention. In this process, the developed country Parties shall support the
development and enhancement of endogenous capacities and technologies of develop-
ing country Parties.
25
See M. Munasinghe, Analysing the Nexus of Sustainable development and Climate
Change: An Overview, OECD, 2003, COM/ENV/EPOC/DCD/DAC(2002)2/FINAL, 8.
See also: M. Munasinghe and R. Swart, Primer on Climate Change and Sustainable De-
velopment. Facts, Policy Analysis, and Applications (Cambridge: Cambridge University
Press, 2005); M. Munasinghe and R. Swart (eds.) Climate Change and its Linkages with
Development, Equity and Sustainability (Geneva: IPCC, 2000); Metz et al., 2002, 212.
26
See Y. Matsui, ‘The Principle of “Common but Differentiated Responsibilities”’ in Schrij-
ver and Weiss (eds.) 2004, 85.
The commitments of developed countries to financial, technological and other

forms of cooperation with less developed or developing countries are not
just a unilateral promise, but form part of the negotiated nexus of rights and
responsibilities between the Parties to the UNFCCC.27 This is made clear by
Article 4.7 of the UNFCCC:
The extent to which developing country Parties will effectively implement their com-
mitments under the Convention will depend on the effective implementation by devel-
oped country Parties of their commitments under the Convention related to financial
resources and transfer of technology and will take fully into account that economic and
social development and poverty eradication are the first and overriding priorities of the
developing country Parties.
These commitments can be described as ‘partnership-obligations’28 or ob-

ligations of cooperation.29 The legal status of such a solidarity provision is
contentious. For some it is merely descriptive of the economic and political
reality of the situation. It is seen as a means of persuasion.30 But persuasion
also functions the other way. The effects of making obligations conditional in
this way is to give developing States a means to put pressure on developed
States. If developed countries wish developing countries to adopt and imple-
ment certain commitments, the developed world will have to contribute to the
additional expenditure such measures involve. Or as Birnie and Boyle put it
in similar words, ‘it becomes irrelevant whether developed States have a legal
duty to provide assistance: if they want developing countries to participate
actively in securing the goals of each agreement they must honour the expec-
tation that the necessary resources will be provided.’31
At the same time, the solution of global problems like climate change de-
mands cooperation at a widest possible level. Such co-operation clause could
therefore be considered a kind of precautionary measure that ensures effec-
tive implementation by and compliance of developed countries. Developed
27
28
Ibid.
29
This kind of cooperation has been called for by the 1992 Rio Declaration. In its Preamble
the Declaration notes: “With the goal of establishing a new and equitable global partner-
ship through the creation of new levels of cooperation among states.”
30
Boyle notes, for example, “the arguments for linking [financial and technology transfer]
provisions to environmental protection measures are different from the focus on eco-
nomic self-determination that prevailed in the resource conflicts of the 1970s. Now the
problem is to persuade developing states to participate in treaty regimes that may be
perceived as offering little benefit or as hindering their freedom to develop.” Boyle, A.
‘Comment on the Paper by Diana Ponce-Nava’ in W. Lang (ed.) Sustainable Development
and International Law (1995) 138.
31
Birnie and Boyle, 2002, 94.
States increasingly recognize how much they stand to lose in political, legal
and moral authority if they fail to respect the terms of the original compro-
mise. Article 4.7 encapsulates within a single provision the very nature of the
climate regime. It is ‘a carefully negotiated, evenly balanced and, most im-
portantly of all, a mutually interdependent compromise’.32 This compromise
reflects to some extent current thinking on and commitment to sustainable
development.
c) Funding and Financial Obligations

Financial contributions from developed countries are meant to meet the ad-
ditional costs incurred by the implementation of the commitments under the
climate regime. According to Article 3 UNFCCC, these costs are divided into
two main categories: first, the ‘agreed full costs’ of a developing country’s
communication to the COP as required under Article 12.1 UNFCCC, and sec-
ond the ‘agreed full incremental costs’ of activities undertaken by developing
countries under Article 4.1 UNFCCC, which sets out the general obligations
of all Parties. Into the first category fall costs such as national inventories of
anthropogenic greenhouse gas emissions under Article 12.1(a). The second
category is more difficult to define. The notion of ‘incremental costs’ remains
debated, in particular its relation to ‘global benefits’ and the promotion of
sustainable development (Article 4.1(d)). The extent of this funding is still to
be ‘agreed’ by the developing States that undertake to implement their com-
mitments under Article 4.1 UNFCCC and the ‘international entity or entities’
entrusted to operate such funding. To continue to make the concept of agreed
incremental costs and global benefits more understandable, the process for de-
termining incremental costs should be transparent, flexible and pragmatic.33
Furthermore, the reference to ‘new and additional financial resources’ in
Article 4.3 clearly means additional financial support for developing coun-
tries. Here, traditional channels – mostly foreign aid, direct foreign investment
or official development assistance (ODA) – need to be extended and sup-
plemented by more innovative means and sources of financial assistance for
reasons of global environmental protection.34 In particular, the Clean Develop-
ment Mechanism as an investment mechanism is supposed to contribute also
financially to the host country’s development. However, these contributions
32
French, 2005, 94.
33
Decision5/CP.8 para. 4.c
34
A. Jordan and J. Werksman, ’Financing Global Environmental Protection’ in J. Cameron,
J. Werksman and P. Roderick (eds.) Improving Compliance with International Environ-
mental Law (London: Earthscan, 1996) 248.
need to be evaluated separately from and in addition to Article 4 UNFCCC.35

Financial contributions for climate reasons are additional if they do not lead
to diminished financial flows for poverty eradication and development needs
otherwise.
Other provisions indicate further, broader financial commitments. Article
4.4 requires developed country Parties to assist developing countries that are
particularly vulnerable in meeting adaptation costs, while Article 4.8 calls
for funding, insurance and transfer of technologies to meet specific needs of
developing country Parties from the effects of climate change or from the
effects of response measures. Articles 10 and 11 of the Kyoto Protocol extend
the financial commitments of developed countries. As mentioned above, also
Article 12 opens for additional financial contributions.
Article 11 of the UNFCCC defines a financial mechanism. The debate
around this particular mechanism remains contentious. While developed
States have expressed a strong desire to avoid the creation of a new institu-
tion, developing countries are calling for a new multilateral fund or funding
institution under the auspices of the Parties themselves.36 However, despite
the establishment of two funds under UNFCCC and one under the Kyoto
Protocol,37 most climate projects in developing countries are funded by the
World Bank-based Global Environment Facility (GEF).
In sum, it can be said, that the inclusion of funding mechanisms and means
in the climate regime is an indication of the consensus of the international com-
munity as to their necessity and appropriateness. All these measures concern
the relation of developed to developing countries with regard to the delicate
balance of responsibility, distribution of costs and allocation of commitments,
evidence of the general understanding of intragenerational justice as a part of
sustainable development.38
35
Meijer and Werksman, 2005; Huq and Reid, 2005.
36
See J. Werksman, ‘Consolidation Governance of the Global Commons: Insights from The
Global Environmental Facility’ (1995) 6 YbIEL 49.
37
The two funds under UNFCCC are a Special Climate Change Fund (SCCF) to provide
financial means for adaptation, technology transfer, energy, transport, agricultures, for-
estry and waste management in developing countries and a Least Developed Countries
Fund (LDCF). Under the Kyoto Protocol there is the Kyoto Adaptation Fund (AF), which
shall finance specific adaptation projects in developing country Parties and receives a
share of proceeds of 2% of the CERs generated under the CDM. These three funds are to
be financed on a voluntary basis by Annex I parties. The EU, Canada, Iceland, Norway
and New Zealand issued a joint political declaration on their preparedness to collectively
contribute US$450 million annually to these new funds.
38
See G. Loibl, ‘The Evolving Regime on Climate Change and Sustainable Development’,
in N. Schrijver and F. Weiss (eds.) International Law and Sustainable Development
(Leiden: Martinus Nijhoff, 2004) 113–114.
4.4.2 Intergenerational Equity
The intergenerational aspect of the climate change regime is prompted by the

fact that while the climate regime seeks to guide States to take action to miti-
gate climate change today, the effects may not be felt for many years.
This aspect concerns primarily mitigation measures. In the absence of
response measures, the effects of continuing climate change are likely to be-
come more severe, affecting future generations disproportionately. This links
to our previous discussion in chapter 2 about the ethical issue of duty to save
future generations from detrimental impacts.
It is in this context the reference to climate change in UNFCCC’s Preamble
as a ‘common concern of humankind’ can provide guidance. Common concern
indicates the universality of the issue,39 and measures to address this common
concern should be based on a supreme principle of duty.
Because future generations and those living today are fundamentally equal,
they are in principle entitled to the same stable climatic conditions. It follows
that present generations, represented by States, are obliged to abstain from
actions that threaten climatic stability and required to take actions to protect a
safe climate system.
Having said that, absolute stability of climate conditions is impossible to
achieve not only because of natural variations, but because changes are already
underway and likely to continue however drastic the mitigation measures. This
is why the ultimate objective of the UNFCCC is the prevention of dangerous
anthropogenic interference with the climate system, stated in scientific terms
as maintaining GHG concentrations below levels likely to cause a 2°C rise in
mean temperature above the pre-industrial level. However, even this rather
minimal increase in global temperatures will bring about detrimental climatic
changes.40
Arguments promoting the application of intergenerational justice to the
climate challenge have been put forward. They are mainly based on five con-
siderations, namely the seriousness and urgency of the problem, the potential
for irreversible damages, the need for new ways of thinking about new chal-
lenges, the possibility for developing acceptable measures for accountability
and the degree to which the problem serves as a useful prototype for analysis
of crises that occur in other contexts.41
39
This has to be seen together with the fact of almost universal ratification of the Conven-
tion. As of March 2008, 192 States have ratified the document. (<http://www.unfccc.
org>).
40
IPCC, Fourth Assessment Report, 2007 Synthesis Report, Summary for Policymakers, 9.
(available at: <http://www.ipcc.ch/pdf/assessment-report/ar4/syr/ar4_syr_spm.pdf>).
41
Redgwell, 1991, 54.
Considerations of intergenerational justice can already be identified in the

design of the international climate regime. Intergenerational justice concerns
have been explicitly recognized both in the UNFCCC and the Kyoto Protocol.
In the Convention several references are made to future generations. Article
3.1 states that ‘the Parties should protect the climate system for the benefit of
present and future generations of humankind, on the basis of equity and in ac-
cordance with their common but differentiated responsibilities and respective
capabilities.’
Closely linked with inter-generational justice is the precautionary princi-
ple, one of the guiding principles of the climate regime.42 Article 3.3 of the
UNFCCC obliges Parties
to take precautionary measures to anticipate, prevent or minimize the causes of cli-

mate change and mitigate its adverse effects. Where there are threats of serious or
irreversible damage, lack of full scientific certainty should not be used as a reason for
postponing such measures, taking into account that policies and measures to deal with
climate change should be cost effective so as to ensure global benefits at the lowest
possible cost.
The precautionary principle is based on the intrusion of uncertainty. Anticipa-

tory, preventive action is envisaged as a response to risk of harm. Rather than
requiring irrefutable proof that certain damage might occur, the principle urges
Parties to ‘act first, and then ascertain the facts.’43 The precautionary principle
incorporates into the climate regime an understanding of the threat of a chang-
ing climate as so severe and irreversible a phenomenon that (despite the lack
of scientific uncertainty in several areas of climate change science) action to
mitigate climate change is perceived necessary. Given the fact that mitiga-
tion actions will not have an immediate effect, probably not for many years,
the linkage to intergenerational concerns becomes apparent. The principle of
precaution can in this regard be recognized as a constituent of the principle of
sustainable development.44
42
On the precautionary principle see: Kiss and Shelton, 2004, 206–211; Sands, 2003,
266–279; De Sadeleer, 2002, 91–223; A. Trouwborst, 2002.
43
De Sadeleer, 2002, 91. Also for a historical overview see: C. Voigt, ‘The Precautionary
Principle and Genetic Engineering in New Zealand’ (2002) 6 New Zealand Journal of
Environmental Law, 43–96.
44
See for a strong proposition of the precautionary principle in this respect, Dissenting
Opinion of Judge Weeramantry to the Order of the Court regarding the Request for an Ex-
amination of the Situation in Accordance with Paragraph 63 of the Court’s of December
20 1974 in the Nuclear Tests Case (New Zealand v. France) 22 September 1995.
In sum, the protection of the climate system by the present international

regime is motivated by the benefit future generations might derive from
measures undertaken by the present generation.45
4.4.3 Economic Flexibility
The relationship of the flexibility mechanisms to considerations of environ-

mental effectiveness as well as to justice and equity and, thus, to sustainable
development is still an intricate issue. Cost-effectiveness and environmental
effectiveness or equity might not always be mutually supportive.46 Still, even
if the rationale for flexibility mechanisms is cost-effectiveness, their imple-
mentation has to accord to the general principles of the Convention as well as
to general principles of international law in general.47
The flexibility mechanisms of the Kyoto Protocol address equity concerns
among developed countries. In order to comply, however, with wider objec-
tives, such as intergenerational equity and the insurance of overall environ-
mental integrity, these objectives need to be particularly safeguarded.48
a) Emissions Trading
The establishment of an efficient flexibility mechanism alone is no guarantee
of effective and equitable solutions. The market as such will function in one
way or the other. Whether it also produces the desired results depends on its
regulation. Therefore it is suggested that the initial allocation and the regula-
tion of the market itself bear upon the ability of the mechanism to deliver
equitable results. Both aspects will be given some more consideration.
First, equity considerations with regard to emissions trading can arise at the
level of initial allocation of tradable allowances. Emission units may be sold or
auctioned to covered entities or allocated free of charge on the basis of historic
or current emission levels. The consequence of this so-called ‘grandfathering’
method, which seems to be currently supported by most States when setting
45
See UNFCCC Preamble, Art. 3.1 and UN General Assembly Resolutions 43/53 of 6 De-
cember 1988, 44/207 of 22 December 1989, 45/212 of 21 December 1990 and 46/169 of
19 December 1991 on the protection of the global climate for present and future genera-
tions.
46
See K. A. Baumert, J. F. Perkaus and N. Kete, ‘Great Expectations: Can International
Emissions Trading Deliver an Equitable Climate Regime?’ (2003) 3:2 Climate Policy
137–148.
47
Cullet, 1999, 173.
48
See Meijer and Werksman, 2005.
up a domestic emissions trading scheme, is the promotion of economic stabil-

ity. Problematic in this context is that in praxis historic and current polluters
have been given emission amounts almost equivalent to their current emission
levels, allowing them to carrying on their polluting activities.49
There are, however, different rationales for allocative systems. Some
proposals seek to employ criteria such as future needs, population size and
dynamism, ability to pay, responsibility for emissions of greenhouse gases
or a combination of factors.50 However, it is in particular those proposals that
are most environmentally effective or that rest on egalitarian principles or
principles of fairness and justice or focus more directly on the need to take
action to mitigate climate change that are perceived as disruptive to the global
economy.
Furthermore, when considering the inclusion of developing countries in the
global climate mitigation strategy, the distribution of burdens becomes a com-
plicated issue. Developing countries seem to support an egalitarian approach
based on equal per-capita entitlements,51 while the proposal supported by most
developed States seeks to establish a basis for allocation which recognizes
States’ different historic contributions to the problem, the different capacities
to respond to the problem and the link between economic development and
environmental degradation.52 So far, developing countries are not included in
the scope of eligibility for emissions trading.
Allocation criteria at both levels – national and international – reflect eco-
nomic factors combined with egalitarian and fairness principles. While equal-
ity needs to be taken into account in the allocation process, promoting stability
and confidence are at least equally decisive.53 Allocation that is purely based
on equality might not necessarily lead to a functioning trading system.54 At
the same time, allocation that is exclusively based on historic emissions and
49
See for a discussion of over-allocation in the EU ETS: S. Long and G. Kaminskaite-
Salters, ‘The EU ETS – Latest Developments and the Way Forward’, 1 Carbon and
Climate Law Review 2007, 64–72.
50
See, for example, T. Banuri, et al., ‘Equity and Social Considerations’ in J.P Bruce, H.
Lee, and E.F. Haites (eds.) Climate Change 1995: Economic and Social Dimensions of
Climate Change (New York/Melbourne, Cambridge University Press, 1996); and Tόth, F.
and Mwandosya M., ‘Decision-Making Frameworks’ in Climate Change 2001: Mitiga-
tion. Contribution of Working Group III to the Third Assessment Report of the Inter-
governmental Panel on Climate Change, B. Metz et al.(eds.) (Cambridge: Cambridge
University Press, 2001).
51
See Melkas, 2002.
52
See Cullet, 1999, 173.
53
See Baumert, Perkaus, and Kete, 2003, 146.
54
Ibid. Furthermore, at the international level, allocation of national allowances on a per
capita basis is widely seen as creating an incentive for increased population levels. See,
economic stability will forestall climate friendly technological changes. Find-

ing a balance, however, proves to be a challenging task.
Second, not only allocation, but also the general design of both national
and the international emissions trading scheme will be decisive for the func-
tioning of the emissions trading market and its environmental integrity. A
robust trading system, for example, cannot depend on only few predominant
actors, whether sellers or buyers. In particular the success of the international
emissions trading system will depend on the widest possible participation of
States, on the stability of its regulatory framework, and on the way it pro-
motes fairness, transparency, accountability and compliance. The Marrakech
Accords contain a number of ‘safeguards’ that aim at mitigating systemic risks
which could otherwise damage the credibility and jeopardize the underlying
environmental goal. Such safeguards, for example, are included in trading
eligibility requirements are ‘required reserves’ of non-tradable allowances.55
By aiming at ensuring the environmental integrity of emissions trading, these
requirements are also safeguards for sustainable development.
Accountability and liability rules are of central importance for environ-
mental integrity of the flexibility mechanisms. Higher flexibility of States in
meeting their commitments increases the demands on compliance and en-
forcement mechanisms. While in international law – and environmental law
in particular – liability rules and their enforcement are still in their infancy,
the Kyoto Protocol provides a notable exception. The advantage of the Kyoto
(‘two-tier’) approach is the facilitation of compliance rather than deterring
non-compliance.56 Compliance problems are to be resolved in a cooperative
manner, rather than adversarially.57 Still, if compliance cannot be obtained,
hard enforcement consequences remain available. The inclusion of such a
‘hidden stick’ can be explained by the stringency of the commitments and their
economic and political impacts.58 Furthermore, the ‘flexibility carrot’ held out
to States and the ‘stick’ of hard enforcement mechanisms are two sides of the
for example, O. Benestad, ‘Energy Needs and CO2 Emissions: Constructing a Formula
for Just Distributions’ (1994) 22:9 Energy Policy, 725–734.
55
FCCC/CP/2001/13/Add.1–4.
56
See for a comprehensive overview of the compliance system under the Kyoto Protocol:
J. Werksman, ‘The Negotiation of a Kyoto Compliance System’ in O. Schram Stokke, J.
Hovi and G. Ulfstein (eds.) Implementing the Climate Regime: International Compliance
(London: Earthscan, 2005) 17–37.
57
It has been questioned, however, whether such managerial, non-confrontational ap-
proaches can be fully effective if countries start to take in stronger obligations under the
climate regime. Mitchell argues that initial compliance – even if relatively easy achieved
– will “help establish a strong international norm that countries that fail to take action to
reduce GHG emissions are acting improperly”. Mitchell, 2005, 65.
58
Ulfstein and Werksman, 2005, 59.
same coin. The more flexible the system, the more depend its effectiveness
and integrity of environmental performance on the availability of authorita-
tive determination of compliance59 and enforcement measures responding to
non-compliance.
The non-compliance mechanism under the Kyoto Protocol and the Mar-
rakech Accords can be seen as a safeguard to ensure the functioning and
environmental integrity of the climate regime in general and of the flexibility
mechanisms in particular.
However, while the compliance system under the Kyoto Protocol aims at
ensuring the compliance of States that have committed themselves to quantita-
tive reduction and limitation, the conduct of private participants is not covered.
Indeed, the inclusion and involvement of the private sector in an inter-State
agreement could place the demands of equity and environmental integrity and,
thus, sustainable development, aside if care is not taken in regulating their
liability. Cullet notes that
private enterprises are taking on a much more prominent role and benefiting much
more directly from the international regime in place. It becomes extremely important
to devise a framework to ensure accountability and liability of these actors since inter-
national law is not well equipped at the moment for direct enforcement against private
actors.60
While private companies gain access to new markets under the flexibility
mechanisms, there has been a lack of emphasis on the definition of corre-
sponding duties under international law. Accordingly, strengthening of private
liability rules under international law is an important asset.61 The traditional
State-to-State focus of State responsibility seems to become ‘clouded’.62 The
engagement of the private sector triggers the application of domestic regula-
tory frameworks, as well as private international and domestic laws generated
by commercial contracts. The intricate web of laws governing the flexibility
mechanisms demands careful examination and, possibly, legal developments,
such as, for example, rules on investor accountability and liability.
In sum, while the emissions trading system still awaits some improvements
there is no doubt that it has come to stay. Still, a number of shortcomings exist
which yet remain to be addressed. As we will explore further, these concern
the safeguarding of environmental effectiveness of emissions trading by
59
For the role of Expert Review Panels and due process requirements, see Ulfstein and
Werksman, ibid., 49–54.
60
Cullet, 1999, 173.
61
Ibid., 175.
62
See Meijer and Werksman, 2005, 194.
avoiding possibilities for circumvention and manipulation of the environmen-

tal goal back trading. Moreover, it has to be ensured that emissions trading
does not lead to forestalling technological development. Rather, emissions
trading needs to be designed in a way that encourages rather than discourages
investment in new and low-carbon technologies in the long-term. The lat-
ter requirement calls for international political decision and the creation of a
predictable long-term climate strategy.
b) Clean Development Mechanism

With regard to promoting sustainable development, the clean development
mechanism plays a special role in that it seeks to combine a micro and a macro
level approach to sustainable development.
At a micro level, the CDM is intended to promote sustainable development
of host countries according to Article 12 KP. This requirement is generally
subject to determination by the host country. The Marrakesh Accords state
that Parties participating in the CDM shall designate a national authority for
the CDM. The purpose of the authority is to provide
written approval of [1] voluntary participation from the designated national authority
of each Party involved, including [2] confirmation by the host Party that the project
activity assists it in achieving sustainable development.63
During the negotiations of the Kyoto Protocol consensus could not be reached
on standard sustainability indicators, criteria or objectives for host countries.
It was agreed that these should be determined at the national level.64
Many host countries already include the concept of sustainable develop-
ment in national laws and policies. Sustainable development criteria are often
incorporated into environmental laws, for example, as part of environmental
impact assessments or as constitutional provisions.65 In the absence of sus-
63
FCCC/CP/2001/13/Add.2, Decision 17/CP.7/CMP.1 ‘Modalities and procedures for a
clean development mechanism’, Annex, para. 40(a).
64
S. Thorne and S. Raubenheimer, Sustainable Development Appraisal of Clean Develop-
ment Mechanism Projects – Experience from the SouthSouthNorth Project, available at:
<http://www.southsouthnorth.ort>. See also C. Sutter, Sustainability Check-up for CDM
Projects: How to Assess the Sustainability of International Projects under the Kyoto
Protocol (Berlin: Wissenschaftlicher Verlag, 2003) 26, who notes that there is a general
agreement on the integration of economic, social and ecological sustainability.
65
See R. O’Sullivan and C. Cormier, ‘Meeting Participating Country Responsibilities under
the CDM: Designating a National Authority’ in Freestone and Streck (eds.) 2005, 217,
giving the example of approaches taken by South African, Chile, Morocco, Argentina,
Peru, Colombia, India and Uruguay.
tainable development criteria that focus on project level assessment, most

countries have adopted an approach that combines references to national
legislation with general sustainable development indicators provided by in-
ternational agencies, such as the United Nations Commission on Sustainable
Development66 or the Gold Standard.67 Yet, problematic examples remain of
host States without own sustainability criteria or no references to international
standards.
At a macro level, sustainable development demands the environmental in-
tegrity of the mechanism. CDM as a flexibility mechanism needs to fit within
the ambit of the principles of the Convention. The use of the CDM, albeit
motivated by economic considerations of cost-effective implementation, is
subjected to the overall objective of the climate regime. The environmental
performance of the Kyoto Protocol, therefore, depends also on the environ-
mental integrity of the CDM.
Environmental integrity in the context of the CDM is understood as the
demonstrated ability of a measure to approve projects and to certify emission
reductions that are additional to what would otherwise have occurred, and
contribute to the long-term reduction of greenhouse gas concentrations in the
atmosphere while not causing other detrimental environmental effects. The
Conference of the Parties emphasized that ‘environmental integrity is to be
achieved through sound modalities, rules and guidelines for the mechanisms,
sound and strong principles and rules governing land use, land-use change and
forestry activities, and a strong compliance regime’.68
Certain safeguards have been set up to address concerns with respect to
environmental integrity, e.g. calculation standards for baselines and addi-
tionality, processes for encouraging technical assessments, transparency and
public scrutiny, eligibility and participation, and mechanisms for rejecting
or discounting CERs. Also a set of institutions has been created to oversee
the procedures that apply to the creative mix of relationships between States,
private actors, and international institutions. It has been suggested that a close
partnership between States and private entities that combines the strengths of
an innovative market and a more traditional regulator could be the best way to
safeguard environmental integrity.69
66
See: <http://www.un.org/esa/sustdev>.
67
WWF, The Gold Standard: Quality Standards for CDM and JI Projects, Final Draft
for Consultation and Draft Technical Appendices, December 2002. Now: <http://www.
cdmgoldstandard.org>.
68
FCCC/CP/2001/13/Add.2 and decision –/CMP.1/2005 (Mechanisms) Principles, Nature
and Scope of the Mechanisms Pursuant to Articles 6, 12 and 17 of the Kyoto Protocol.
69
Meijer and Werksman, 2005.
c) In Sum
The use of economic measures, such as emissions trading or project based
mechanisms, is subordinated to the overall goal of complying with the ulti-
mate objective of the Convention and the more specific quantitative reduction
commitments. Thus, the use of the flexibility mechanisms is supposed to sup-
port equity and environmental integrity. All policies and measures adopted
by developed countries are subject to the requirement of consistency with
sustainable development.70 Further, by including sustainable development in
Article 10, all measures to implement existing obligations under the Conven-
tion are likewise subject to the obligation to be consistent with sustainable de-
velopment. Within the framework of sustainable development, cost-effective,
flexible means can be elaborated. The Kyoto Protocol clearly puts sustainable
development above economic development and cost-effectiveness.71 Both are
seen as means to reach the goal of sustainable development based on safe
climatic conditions, not as ends in themselves.
More importantly, the flexibility mechanisms give counter-evidence to the
often proclaimed indeterminacy of the concept of sustainable development
and the feared ‘trend’ that the ecological component of sustainable develop-
ment is reduced to insignificance.
On the whole, the design of the flexibility mechanisms reflects the ‘com-
pound’ of interests that generally characterizes the concept of sustainable
development. Emissions trading and CDM are multilateral, flexible, and
cost-effective instruments to reduce greenhouse gas emissions. In a novel and
unprecedented way are equity, economic efficiency and ecological constraints
inextricably linked in the design of these mechanisms.72 Based on equitable,
differentiated commitments of a high number of participants, emissions
trading and the project mechanisms reduce the total cost of achieving their
commitments and thereby improve efficiency. If care is taken in the further
development of the mechanisms, they have the potential to actually deliver a
positive environmental result while, if not delivering positive, at least mini-
mizing negative equity and economic implications.
Given the overall subordination to the ultimate objective of the Climate
Convention, the flexibility mechanisms crystallize as a prime example of inte-
grating multiple, diverse interests as demanded by sustainable development.
70
Art. 2 KP.
71
See Arts and Gupta, 2004, 550.
72
See C. Carraro, Costs, Structure and Equity of International Regimes for Climate Change
Mitigation, Nota Di Lavoro 6.1.2000, Milan: Fondazione Eni Enrico Mattei.
4.5 Concluding Remarks and Summary
By conclusion, it can be stated that sustainable development and climate

change mitigation are inseparable issues. Any sustainable development path
has to be attuned to the need of establishing safe atmospheric greenhouse gas
concentrations. If the climatic balance is affected by human activities, these
activities – albeit contributing to wider development goals such as enhanc-
ing economic growth, improving living conditions, or alleviating poverty in
the shorter term – cannot be deemed sustainable. Sustainable development
is a multifaceted concept covering integration of economic and social and
environmental concerns, equity and justice between generations and within
the present generation. With regard to climate change, these issues have been
taken out of the rhetorical debate and put into practical action. They are rightly
accorded prominence in the climate regime.
The international community, in striving to find a consensus on how to
mitigate dangerous climate change, is simultaneously setting the scope for
sustainable development. The development of the climate change regime can
be seen as an emerging understanding of the international community’s of
the concept of sustainable development. Sustainable development certainly
demands more than what has been achieved so far and remains a guide to
global change. Still, the design of the climate regime consolidates the general
acceptance of sustainable development.
This linkage will become even more apparent in the design of future cli-
mate treaties. There, the acceptance of stronger emission limitation and reduc-
tion commitments by developed states and quantified commitments by at least
major developing countries will be crucial. The importance of developing
country commitments was made clear by the IPCC as early as in its second
report. ‘[I]t is not possible for the rich countries to control climate change
through the next century by their own actions alone, however drastic. It is this
fact that necessitates global participation in controlling climate change, and
hence, the question of how equitably to distribute efforts to address climate
change on a global basis.’73
The approach adopted by the Kyoto Parties is an affirmation of the in-
ternational community’s attempt to conceptualize sustainable development
in the context of climate change.74 Still, whatever the outcome of future ne-
73
IPCC, Climate Change 1995: Economic and Social Dimension of Climate Change. Con-
tribution of Working Group III to the Second Assessment of the Intergovernmental Panel
on Climate Change (J.P. Bruce et al. (eds.) (Cambridge University Press, 1995b) 97.
74
P. Sands, International Law in the Field of Sustainable Development, BYbIL, 304; French,
2005a, 274.
gotiations, a successor agreement to the Kyoto Protocol will need to deliver

stronger commitments further into the future, requiring a deeper and more
universal understanding of the considerations of justice – including ecological
justice – that lie within the concept of sustainable development and inherent
in the climate change problem.75
75
See X. Wang, ‘Sustainable International Climate Change Law: A Future Legal Research
Agenda’ in Cordonier Segger and Khalfan, 2004, 352–353.
Chapter 5
Sustainable Development in WTO Context
5.1 Introduction to WTO Law
It is now opportune to introduce another important international regime that

attracts an equal amount of global attention. The World Trade Organization
(WTO) has become one of the most interesting, albeit controversial, intergov-
ernmental organizations of our time. The WTO provides a forum for contin-
ued negotiations on the promotion and liberalization of free trade in goods and
services. It also oversees and administers the complex matrix of international
treaty law governing the global trading system, and it operates the busiest and
perhaps most important international dispute settlement systems.
The reason for choosing a discussion of the international trade system is
two-fold. For one, the international trading system also attempts to support
sustainable development, and examining the concept in the light of liberaliza-
tion of international trade should provide some elucidation of its substance.
Second, as part II will explore, there is potential for conflict between the
norms of the international climate and the international trade regimes. One
major point of this thesis is that sustainable development actually provides a
legal tool for dealing with these normative conflicts.
In order to discuss how sustainable development relates to the scheme of
trade regulation, a brief overview will now be given of the coverage and scope
of the WTO and its legal framework, without, of course, intending to give an
exhaustive account of international trade law. Not only is the scope of this
thesis limited, but countless sources exist already that explore international
trade law in great detail and accuracy.1
1
See M. Matsushita, T.J. Schoenbaum and P.C. Mavroidis, The World Trade Organization:
Law, Practice and Policy (Oxford: Oxford University Press, 2003); P. Van den Bossche,
The Law and Policy of the World Trade Organization (Cambridge University Press 2005)
1–75, 598–627; J. H. Jackson, ‘The Changing Fundamentals of International Law and
Ten Years of the WTO’ (2005) Journal of International Economic Law, 3–15; P.T. Stoll
5.1.1 Coverage
After having come into existence in 1995 as the successor to the General
Agreement on Tariffs and Trade (GATT), the WTO has now 151 Members,2
which makes it an important multilateral system. The WTO overlooks the
‘multilateral trade agreements’, generally referred to as the WTO agreements
or the ‘covered agreements’, which are legally binding upon their Members.
The package of agreements consists of various multilateral and plurilateral
trade agreements annexed to a single document, the Marrakesh Agreement
establishing the WTO (WTO Agreement). Among these agreements, the
GATT, newly promulgated as ‘GATT 1994’, is the fundamental trade agree-
ment administered by the WTO. The other agreements include, inter alia, the
Agreement on the Application of Sanitary and Phytosanitary Measures, the
Agreement on Technical Barriers to Trade, The Agreements on Trade Related
Investment Measures, the Agreement on Subsidies and Countervailing Meas-
ures and the General Agreement on Trade in Services.
The international trading regime exists to ‘facilitate the implementation,
administration, and operation as well as to further the objectives’ of the WTO
agreements.3 The system’s primary purpose is to help trade in goods and serv-
ice to flow as freely as possible while avoiding undesirable side effects.4 The
WTO agreements’ purpose of facilitating relations in the field of trade and
economic endeavour is pursued with a view to raising standards of living,
ensuring full employment and a large and steadily growing volume of real
income and effective demand, and expanding the production of and trade in
goods and services.5
5.1.2 Rules and Concepts
The WTO’s ‘mission’ is trade liberalization by reducing barriers to trade and

to market access, such as tariffs, quotas and custom rules, but also internal
regulations, e.g. subsidies and technical barriers to trade. The system of trade
liberalization is guided by non-discrimination principles, which impose both
and F. Schorkopf, WTO – World Economic Order, World Trade Law (Leiden: Martinus
Nijhoff, 2005).
2
As of July 2007, see: <http://www.wto.org>.
3
GATT Art. III:1
4
R. L. Winter, ‘Reconciling the GATT and WTO with Multilateral Environmental Agree-
ments: Can we have our cake and Eat it Too?’ (2000) 11:1 Colo. J. Int’l Envtl. L. & Policy,
227–228.
5
Agreement Establishing the WTO, 1995, Preamble.
Chapter 5 – Sustainable Development in WTO Context 117
relative and absolute standards of treatment of goods and services. These

non-discrimination principles are essential to the full implementation of the
Schedule of Concession, i.e. lowered tariffs, which are binding obligations un-
der GATT Article II. These principles and the respective obligations of WTO
Members are as follows:
a) Most-Favoured-Nation (MFN) Rule

Under the WTO agreements, countries cannot normally discriminate between
their trading partners. On the basis of this relative standard, the WTO Mem-
bers are prohibited from de jure and de facto6 discriminatory treatment of
‘like’ goods, services and service suppliers on the basis of their country of
origin. Article I GATT states that any privilege granted to one Member State
must also be granted to other Member States. The principle is designed to
ensure equality of treatment of ‘like product[s] originating or destined for the
territories of all other contracting parties’. This obligation is unconditional.7
It comprises not only tariffs and custom measures, but also internal taxes,
charges and regulation affecting the sale, distribution, and use of products.
Accordingly, different tariff rates or other kinds of discriminatory regulation
for like products of different WTO Members are prohibited.
MFN is also a priority in the General Agreement on Trade in Services
(GATS) (Article II) and the Agreement on Trade-Related Aspects of Intel-
lectual Property Rights (TRIPS) (Article IV), although in each agreement the
principle is handled slightly differently.
The concept of ‘like products and services’ is a cornerstone of the WTO’s
legal framework.8 The MFN principle prohibits country-based discrimination
with respect to ‘like products and services’. Products and services that are not
like may be treated differently. ‘Likeness’ varies among the agreements and
6
See for a critical discussion L. Ehring, ‘De facto Discrimination in World Trade Law: Na-
tional and Most-Favoured-Nation Treatment – Or Equal Treatment?’ (2002) 36:5 Journal
of World Trade, 921–977.
7
See generally W. J. Davey and J. Pauwelyn, ‘MFN Unconditionality: A Legal Analysis
of the Concept in View of its Evolution in the GATT/WTO Jurisprudence with Particular
Reference to the Issue of “Like Product”’ in T. Cottier and P.C. Mavroidis (eds.) Regula-
tory Barriers and the Principle of Non-discrimination in World Trade Law (Ann Arbor:
University of Michigan Press, 2000) 13–15 also: G.C. Hufbauer, J.S Erb and H.P. Starr,
‘The GATT Codes and the Unconditional Most-Favoured-Nation Principle’ (1980) 12
Law & Pol’y Int’l Bus., 59–93.
8
See, generally, W.M. Choi, ‘Like Products’ in International Trade Law: Towards Consis-
tent GATT/WTO Jurisprudence (Oxford: Oxford University Press, 2003).
the exact meaning and parameters of the concept still remain shrouded with
uncertainty. Metaphorically, the Appellate Body stated,
[t]he concept of ‘likeness’ is a relative one that evokes the image of an accordion. The
accordion of ‘likeness’ stretches and squeezes in different places as different provi-
sions of the WTO Agreement are applied. The width of the accordion in any one of
those places must be determined by the particular provision in which the term ‘like’ is
encountered as well as by the context and the circumstances that prevail in any given
case to which that provision may apply.9
Further, the determination of likeness should be based on a case-by-case

analysis and involves an ‘unavoidable element of individual, discretionary
judgment’.10 Against that general background, several approaches and tests
have emerged. In pre-WTO jurisprudence certain criteria were identified, all
of which are still relevant11 to the determination of ‘likeness’. They include
the product’s tariff classification;12 its end-use, consumer’s tastes and habits,
which can change from country to country, and the product’s properties, nature
and quality.13 In EC–Asbestos, the Appellate Body contemplated but eventu-
ally did not expand this list by adding a criterion based on a product’s health
effects. Rather, it stated, analysis of the health effects of asbestos should be
subsumed under the analysis of the existing criteria. This list, however, is
not exhaustive. Future additions to the list adopted in Japan–Alcoholic Bev-
erages, could include criteria related to health or environmental concerns.14
They would refer, in particular, to the way in which a product is produced and
whether it is legitimate under WTO rules to deem ‘unlike’ two products of
which one was produced in an unsustainable manner while not the other.
The question of ‘like products’ is thus central to the interaction between
international trade law and national environmental measures. Domestic envi-
ronmental measures can differentiate between products that are similar in their
end use but have different environmental or health implications. It generally
depends on the interpretation of WTO provisions whether environmentally
sustainable products or their production methods are different from envi-
ronmentally harmful ones, thereby granting considerable flexibility to WTO
Members enacting national environmental or health measures or, adversely,
9
AB in Japan–Alcoholic Beverages, 1996, section H.1.a., 21–22.
10
Ibid. 21.
11
The equal relevance of all criteria was stressed by the AB in EC–Asbestos, 32–39.
12
Panel in Japan–Alcoholic Beverages, 1987.
13
Border Tax Adjustments: Report of the Working Party adopted on 2 December 1970,
L/3464 (BISD 18S/97).
14
See N. Bernasconi-Osterwalder et al., Environment and Trade: A Guide to WTO Jurispru-
dence (London: Earthscan, 2006) 13.
significantly constraining national discretion. As we will see in part II, the pre-
cise definition of ‘likeness’ remains unclear, creating a considerable ‘political
chill’ which may prevent States from implementing stronger environmental
measures, for example, under the Kyoto Protocol.
b) National Treatment (NT) Rule

National treatment is the second market access rule. It imposes an obligation
of like treatment and non-discrimination on imported and domestic products.
Article III GATT requires foreign goods, once imported into a Member State,
to be treated in the same manner as goods (products and ‘like products’) pro-
duced domestically in that State. National treatment is also a feature of the
GATS.
Article III GATT sets forth that no law, regulation, or taxation pattern may
adversely modify the conditions of competition between like imported and
domestic products in the domestic market. Similarly, also de facto discrimina-
tion violates Article III.15 Also in the context of the National Treatment rule,
the determination of ‘like product’ and ‘like services’ is a crucial element.16
c) Further Obligations
The WTO ‘absolute standards’ (e.g. Article XI GATT) prohibit quantitative
restrictions on imports or exports, such as bans or quotas on imports from a
particular country or measures whose direct or indirect effect is to prevent
or limit such imports (e.g. quotas, import licenses). Tariff obligations require
Member States to ‘bind’ or fix tariff levels, to progressively reduce tariff levels
and to refrain from raising tariffs above the bound level (Art II GATT). Under
certain transparency obligations, Member States are also required to regularly
publish their trade laws in a transparent manner and regularly notify the Secre-
tariat of WTO of actions taken inconsistently with the mentioned obligations
(Article X GATT).
Another Uruguay Round Agreement – Agreement on Subsidies and Coun-
tervailing Measures – in addition to a separate set of GATT Articles prohibits
the imposition of governmental subsidies except in narrowly limited circum-
stances.
15
GATT Panel in Japan–Alcoholic Beverages, 1987. For a critique of the rather restrictive
approach by the WTO to de facto discrimination by employing an ‘aim and effects test’
under GATT and GATS, see R.E. Hudec, ‘GATT/WTO Constraints on National Regula-
tion: Requiem for an “Aim and Effects” Test’ (1998) 32:3 Int’l Law. 633.
16
See Mavroidis et al., 2003, 158–162.
5.2 Trade and Environment
The relation between trade liberalization and the protection of non-economic

issues, such as the protection of human rights and the environment, has been
subject to a long and continuing debate.17 It is often claimed that the WTO
deals only with trade, not the protection of the environment or any other soci-
etal concerns.18 In part II we will see that this general statement is not correct
any longer as the WTO’s own claim it that it is developing into a regime
whose overall aim is to facilitate sustainable development. In this respect, the
protection of the environment is indeed part and parcel of the WTO’s legal
framework.
The link between international trade and the protection of the environment
bears explanation. Some environmentalists condemn liberalized international
trade as essentially bad for the environment on factual, ideological and po-
litical grounds. Criticism is directed on the effects of trade liberalization on
local populations, in particular in weaker economies, and the accelerated
exploitation of natural resources due to increased transportation, production,
consumption and waste generation.19
From a legal perspective, critique focuses on more specific issues. Here,
contra-trade arguments express the concern that WTO rules prevent Member
States from adopting national measures to protect their domestic environ-
ment, such as setting higher levels of protection than international standards
would prescribe.20 Other concerns relate to (i) the obstruction by WTO rules
of a Member State effort to compel other Members to adopt high environ-
mental standards necessary to prevent transboundary pollution, remove com-
petitive advantages, or to conserve natural resources; and (ii) the frustration
17
It is impossible to detail the vast literature on the subject. Among others see the contribu-
tions by Matsushita, Schoenbaum and Mavroidis, 2003, 439–484; O. Perez, Ecological
Sensitivity and Global Legal Pluralism: Rethinking the Trade and Environment Conflict
(Oxford, Portland, Oregon: Hart Publishing, 2004), 31–47; Sands, 2003, 940–1019; P.T.
Stoll, ‘How to Overcome the Dichotomy between WTO Rules and MEAs’ (2003) 63:2
ZaöRV 439–458; G. Winter, ‘The GATT and Environmental Protection: Problems of Con-
struction’ (2003) 15:2 Journal of Environmental Law 113–140; T. Schoenbaum, ‘Interna-
tional Trade and Environmental Protection’, in Birnie and Boyle, 2002, 698–750. O.K.
Fauchald, Environmental Taxes and Trade Discrimination (Kluwer Law Tax Publishers,
1998).
18
See M. Mavroidis et al., 2003, 441.
19
See J. Mander and E. Goldsmith (eds.) The Case Against the Global Economy and for a
Turn Toward the Local (San Francisco: Sierra Club Books, 1996).
20
See T. Schoenbaum, ‘International Trade and Environmental Protection’ in Birnie and
Boyle, 2002, 714–721.
of attempts to protect natural resource and the environment in areas beyond

national jurisdiction.
One of the most important and most contentious legal issues in this spectrum
is the question how WTO rules relate to the implementation of Multilateral En-
vironmental Agreements (MEAs) that employ or allow trade restrictive meas-
ures in pursuing their objective.21 No general exception exists in the structure
of WTO rules for measures that are based on an international environmental
agreement. In order to justify environmental measures, whether unilateral or
multilateral, they have to pass the bottle-neck of narrowly framed environmen-
tal exception clauses entailed in the WTO agreements.
While it is clear that the relationship between trade norms and environmen-
tal measures represents a systemic dilemma, no WTO or GATT panel had yet
to directly address the conformity of a MEA-based trade measure with rules
of the WTO. The validity of some MEA measures, however, remains doubtful,
in particular where those relate to process and production methods (PPMs),
discrimination between Parties and Non-Parties, extraterritorial application, or
contain protectionist elements by aiming at offsetting competitive disadvan-
tages of the implementing country. As part II will show, all of these elements
are relevant in the context of climate measures and WTO rules.
It is difficult to predict how a WTO panel or the Appellate Body would rule
on particular MEA-based measures. Not only that practice exists exclusively
with regard to unilateral measures, but existing practice only offers vague
pointers for future decisions. No rule of precedent exists and power and interest
differences in the panels or the Appellate Body could easily produce divergent
outcomes.
The uncertainty prevailing in this regard leads to what is sometimes re-
ferred to as a ‘chill factor’ to negotiation, implementation and enforcement of
MEAs.22 In this respect, vulnerability to a WTO challenge is having a deterring
21
See for a general discussion: G.P. Sampson, The WTO and Sustainable Development (To-
kyo: United Nations University Press, 2005) 113–143; D. Brack, ‘Environmental Treaties
and Trade: Multilateral Environmental Agreements and the Multilateral Trading System’,
in G.P. Sampson and W. B. Chambers (eds.) Trade, Environment, and the Millennium,
2nd ed., (Tokyo/New York: United Nations University Press, 2002) 321–352; and R.G.
Tarasofsky, Ensuring Compatibility Between Multilateral Environmental Agreements and
the GATT/WTO (1996) 7 YbIEL 52–74. For a useful description of the relevant measures
in MEAs, see WTO, Matrix on Trade Measures Pursuant to Selected MEAs: Note by the
Secretariat, Geneva: WTO, WT/CTE/W/160, 19 September 2000.
22
See, for example, WWF International, Trade Measures and Multilateral Environmental
Agreements: resolving Uncertainty and Removing the WTO Chill Factor, Discussion
Paper (Gland, Switzerland, WWF) November 1999, 1–22. Also: K. Conca, The WTO and
the Undermining of Global Environmental Governance (2000) 7:3 Review of Interna-
tional Political Economy, 484.
effect on ongoing multilateral environmental negotiations, which are becoming

increasingly self-censoring in terms of trade restrictiveness.23 Moreover, it has
given rise to conservative implementation of trade restrictive obligations in
existing MEAs to avoid the threat of a legal claim.
Therefore, there is an urgent need to clarify this relationship and to de-
velop mechanisms and legal methodologies to deal with the situation where a
national measure based on an MEA conflicts with rules of international trade
law. This thesis aims at providing one legal mechanism by suggesting that
sustainable development as a principle of integration has the potential to ac-
commodate different concerns. This argument will be further developed in
part III.
5.3 WTO Exception Clauses
In brief we will now look at treaty-based ways of accommodating environ-

mental concerns in WTO law. Many WTO agreements contain conditional
exceptions for environmental measures.24 GATT Article XX (b) and (g) are
among the most important environmental provisions. They read as follows:
Subject to the requirement that such measures are not applied in a manner which would
constitute a means of arbitrary or unjustifiable discrimination between countries where
the same conditions prevail, or a disguised restriction on international trade, nothing
in this Agreement shall be construed to prevent the adoption or enforcement by any
contracting party of measures:
…
(b) necessary to protect human, animal or plant life or health;
…
(g) relating to the conservation of exhaustible natural resources if such measures
are made effective in conjunction with restrictions on domestic production or
consumption.
23
See ibid., 488. Debate over compatibility with WTO rules has surfaced in the negations of
the Kyoto Protocol (see discussion in part III) and disrupted negotiations of the Cartagena
Biosafety Protocol as well as the negotiations of the 2001 Stockholm Convention on
Persistent Organic Pollutants (POPs).
24
See, for example, GATT 1994 Art. XX, GATS Art. XIV(b), the Agreement on Trade-
Related Aspects of Intellectual Property Rights (TRIPS), Art. 27.2, the Agreement on
Subsidies and Countervailing Measures Art. 8.2(c), the Agreement on Technical Barriers
to Trade (TBT Agreement) Art. 2.2, and the Agreement of Sanitary and Phytosanitary
Measures which refers to GATT Art. XX(b).
Legal scholars claim that a consistent theory of their interpretation has devel-
oped in WTO jurisprudence25 which has caused some to conclude that Article
XX GATT 1994 has been transformed ‘into an adequate tool for a balanced
approach to the trade and environment controversy’.26
Again, such general remarks appear to be somewhat precipitant taking into
account the rather sparse amount of environmental cases.
So far, a number of suggestions have been made to improve the relation-
ship between a MEA and a trade agreement.27 They can be divided into two
main groups: one aiming at altering the normative (textual) legal content of
the agreements and the second attempting the adoption of an ‘authoritative’
interpretation. Both alternatives have significant shortcomings and therefore
seem unsatisfactory.
The first group entails three suggestions that aim at avoiding conflict,
such as (i) waiver of obligations under ‘exceptional circumstances’ by us-
ing Article IX:3 GATT, (ii) the inclusion of a special norm in the respec-
tive WTO agreement providing that certain MEAs take precedence over
WTO obligations,28 or (iii) the amendment or Article XX GATT by adding
an explicit provision for excepting MEAs, similar to Article XX(h) which
creates an exception for trade measures imposed pursuant to obligations in
international commodity agreements that otherwise are illegal under WTO
rules.29 The major disadvantage of all three alternatives is the necessity of
25
Jurisprudence developed, in particular by the reports of the Appellate Body in United
States–Reformulated Gasoline and United States–Shrimp for Art XX(g) and EC–Asbestos
for Art. XX(b).
26
Matsushita et al, 2003, 456. See also: J. Wiers, Trade and Environment in the EC and
WTO. A Legal Analysis (Groningen: Europa Law Publishing, 2002) 419; J. Scott, ‘On Kith
and Kine (and Crustaceans): Trade and Environment in the EU and WTO’ in J.H.H. Weiler
(ed.) The EU, the WTO, and the NAFTA: Towards a Common Law on International Trade
(Oxford: Oxford University Press, 2000) 166–167, although envisioning an additional
process-based approach for balancing trade-environment conflicts in the WTO.
27
See, for example, A. González-Calatayud and G. Marceau, ‘The Relationship between the
Dispute-Settlement Mechanisms of MEAs and those of the WTO’ (2002) 11:3 RECIEL
280–286; WTO, Resolving the Relationship between WTO Rules and Multilateral Envi-
ronmental Agreements, Submission by the European Union, Geneva, WTO Secretariat,
WT/CTE/W/170, 19 October 2000; and WTO, The Relationship between Provisions of
the Multilateral Trading System and Trade Measures for Environmental Purposes Includ-
ing those Pursuant to Multilateral Environment Agreements, Communication from New
Zealand, Geneva, WTO Secretariat, WT/CTE/W/162, 10 October 2000.
28
This suggestion is modelled upon the North Atlantic Free Trade Agreement (NAFTA, 17
December 1992, 32 I.L.M. 289, 296 and 605), which contains such a ‘conflict clause’ in
Art. 103.
29
See for a discussion of this idea: V. Rege, ‘GATT Law and Environment-Related Is-
sues Affecting the Trade of Developing Countries’ (1994) 28:3 Journal of World Trade,
124–128.
negotiation and of a, at least, three-fourth majority for the desired change.

Furthermore, waivers are subject to annual review, after which they may be
extended, modified or terminated. The status of a MEA would therefore be
pending from year to year. Moreover, the test of ‘exceptional circumstances’
is unduly vague, thus leaving the status of the MEA doubtful until it receives
the ex post blessing of a waiver. Approval under the waiver provisions would
be a merely political decision rather than one of the substance of the case or
the MEA in question.30
While all three ways are open and possible routes, none have been taken as
yet and as the political decisions have not yet been made they do not represent
binding law.
The second option is to adopt an authoritative interpretation of Article XX
GATT or other exception clauses in WTO agreements that would validate
existing MEAs. Again, the process is rather difficult: only the Ministerial
Conference and the General Council have the power to adopt interpretations
of the WTO agreements by a three-fourths majority of the Members.31 The
validation would then be ex post, leaving the Member States in an uncertain
situation until the adoption of an interpretation. Although an authoritative
interpretation could set out certain criteria for MEAs to be fulfilled for receiv-
ing approval, this would in effect mean the subordination of MEAs to WTO
prerogatives and further complication of MEA negotiations.
Finally, there are two alternative ways of validating MEAs without re-
sorting to decision making procedures for waivers, official interpretations or
amendments. First, the treaty texts of the WTO can be interpreted by refer-
ence to rules and principles ‘out-side’ the WTO. Article 31.3 of the Vienna
Convention on the Law of Treaties, which indirectly applies to the interpreta-
tion of WTO agreements and requires that, in the interpretation of a treaty (i)
any subsequent agreement between the parties, (ii) any subsequent practice;
and (iii) and relevant rules of international law ‘shall be taken into account’.
This possibility is further discussed below. However, given certain inherent
limitations of interpretation, a second alternative is suggested, promoting the
application of the principle of sustainable development and thereby applying
non-WTO law in the context of the WTO where the outside law directly ac-
cords to sustainable development.
30
See Mavroidis et al., 2003, 458.
31
WTO Agreement Art. IX:2.
5.4 Sustainable Development and Trade Law
The reconciliation of globalization and liberalization of trade on one side and

environmental and social protection on the other is expressed in the concept of
sustainable development. Chapter 2 of Agenda 21 promotes sustainable devel-
opment through trade and the mutual supportiveness of trade and environment
policies by suggesting
[a]n open, equitable, secure, non-discriminatory and predictable multilateral trading

system that is consistent with the goals of sustainable development and leads to the
optimal distribution of global production in accordance with comparative advantage
is of benefit to all trading partners. Moreover, improved market access for develop-
ing countries’ export in conjunction with sound macroeconomic and environmental
policies would have a positive environmental impact and therefore make an important
contribution toward sustainable development.32
Similarly, the Rio Declaration sets out the commitment to ‘reduce and eliminate
unsustainable patterns of production and consumption’ in order to ‘achieve
sustainable development and a higher quality of life for all people’.33 Within
the context of development the Declaration identified international trade as a
means to promote development that would be environmentally sustainable.
Principle 12 suggests that
States should cooperate to promote a supportive and open international economic sys-
tem that would lead to economic growth and sustainable development in all countries,
to better address the problem of environmental degradation’.34
This broad statement stimulated rather than resolved the debate. Nevertheless,
as French reminds us, ‘if sustainable development is to become a meaningful
concept in its own right, it must also have a substantial role in the politics and
institutions of wider legal and political systems, with particular regard to the
functioning and operation of the international economy’.35
Akin to the reciprocal relationship of climate change law and sustainable
development, also trade liberalization and sustainable development have to
be seen as mutually supportive and complementary. Again, French notes,
‘[t]he extent to which sustainable development can permeate this system [the
international economic system] will tell us a lot, not only about the fate of that
32
Agenda 21, Report of the UNCED, I (1992); UN Doc. A/ CONF.151/26/Rev.1, (1992) 31
ILM 874, para. 2.5.
33
Rio Declaration, Principle 4.
34
Rio Declaration, Principle 12.
35
French, 2005, 168.
particular concept, but also the future direction of the international economic
system more generally.’36
Again, this is what distinguishes sustainable development from a purely
environmental concept. While environmental concerns as such remain semi-
secluded and separate areas of global regulation, sustainable development is
a concept common to and integrated into all aspects of the international soci-
ety. By incorporating sustainable development within all regulatory regimes,
including the international trade regime, environmental concerns become an
integral part of those regimes. Such integration is clearly not an easy task.
Sustainable development might face its severest test when confronted with the
much more defined, rule-based framework of international trade law. How-
ever, this test would ultimately determine whether sustainable development is
a valuable concept with a permanent and positive effect on the lives of billions
of people or just a comet on the legal sky.
Trade is surely not an end in itself. International trade is a means to estab-
lishing lasting conditions for human wellbeing.37 This end can only be achieved
by developing sustainably. In this context, Brown-Weiss noted that ‘there are
legitimate constraints on trading patterns and practices that are necessary to
ensure that the ‘instrument of trade’ leads to environmentally sustainable de-
velopment. Measures needed to protect the environment cannot be forsworn
simply because they may adversely affect free trading relationships’.38
Sustainable development is the framework in which trade, environmental
and social concerns need to be considered. That means that issues of environ-
mental protection and conservation, development interests, trade, investment
and other economic considerations, human rights issues, all have to accord
with the end of sustainable development.39 In this context it has been suggested
that sustainable development therefore is a central element of international
economic law in general and international trade law in particular40 or even that
36
French, 2005, 169.
37
Preamble to the WTO Agreement.
38
E. Brown Weiss, ‘Environment and Trade as Partners in Sustainable Development: A
Commentary’ (1992) 86:4 AJIL 728–735.
39
Brown Weiss, ibid. at 731, adds that “[e]nvironmentally sustainable development offers
the appropriate framework in which to view issues of environment and trade, or trade and
environment”.
40
For an overview see: Sampson, 2005; M.W. Gehring and M.C Cordonier-Segger (eds.)
Sustainable Development in World Trade Law (The Hague: Kluwer Law International,
2005). See also French, 2005, 168 et seq.; E. Denters, ‘Free Riders, Claims and Counter-
measures in Combating Climate Change’ in Schrijver and Weiss (eds.) 2004, 231–250;
M. Gehring, ’Sustainable International Trade, Investment and Competition Law’ in
Cordonier-Segger and Khalfan (eds.) 2004, 281–293; S.E. Gaines, ‘International Trade,
Environmental Protection and Development as a Sustainable Development Triangle’
the WTO is, de facto and de jure, gravitating toward becoming a World Trade
and Sustainable Development Organization.41
For the precise normative framework and specificity of the international
trade system this suggestion entails challenge and change. The necessity of
such change lies in the fact, that sustainable development already is part and
parcel of international trade law. Therefore, sustainable development needs to
inform all decisions and developments within international trade law. Accord-
ingly, sustainable development exhorts ‘internal pull’ on trade law. Moreover,
sustainable development as part of general international law also provides
‘external push’. International trade law is part of public international law with
the consequence that as long as general international law has not explicitly
been ‘contracted out’ of WTO agreements, it remains applicable.42 Therefore,
the relevance sustainable development enjoys in public international law is
important for its permeation of WTO law. Both aspects will be examined more
thoroughly in this work. The ‘internal pull’ of sustainable development in
WTO law will be assessed in this chapter, while the ‘external relevance’ of its
status in public international law to WTO law will be more closely examined
in part III below.
5.5 References to Sustainable Development in WTO Law
5.5.1 WTO Agreement
The 1994 Marrakesh Agreement establishing the WTO explicitly places the
relations in the field of trade and economic endeavours of the Parties within
the broader framework of sustainable development. In its Preamble, the Agree-
ment recognizes that all trade relations
should be conducted with a view to raising standards of living, ensuring full employ-
ment and a large and steadily growing volume of real income and effective demand,
and expanding the production of trade in goods and services, while allowing for the
optimal use of the world’s resources in accordance with the objective of sustainable
development, seeking both to protect and preserve the environment and to enhance the
means for doing so in a manner consistent with their respective needs and concerns at
different levels of economic development.43
(2002) 11:3 RECIEL 259–274; S. Shaw and R. Schwartz, ‘Trade and Environment in the
WTO: State of Play’ (2002) 36:1 Journal of World Trade, 129–154.
41
Sampson, 2005, 2.
42
On the question of relevance of norms of general public international law for WTO law,
see Pauwelyn, 2003.
43
1994 Marrakesh Agreement, Preamble, para. 1 (my emphases).
The legal significance of this reference was subject of two High Level
Symposia on Trade and Environment and Trade and Development in 1999.
Despite the focus on sustainable development the institutional separation of
these interlinked issues led to much discussion but limited actual progress.
This institutional separation ‘reflected a more permanent partition within the
WTO’,44 indicative of intellectual incoherence. If sustainable development
is supposed to inform the entire body of the WTO-covered agreements, its
components and their complex linkages need to be considered together.
The reference to sustainable development in the Preamble is not reflected
in any other part of the WTO agreements.45 Thus the reference needs first to
be assessed in light of this preambular language alone.
The acknowledgment of sustainable development in relation to ‘the opti-
mal use of the world’s resources’ could be understood as putting a constraint
on (otherwise maximal) resources use. Optimal resources use according to
sustainable development implies environmental and social adjustments.
While negative feed back loops from environmental or social implications
of resources use are to be avoided, optimal use also implies that important
ecological functions are not to be disturbed. The textual link of sustainable
development to ‘protect and preserve of environment’ supports such argu-
mentation.
Moreover, tribute is made to ‘respective needs and concerns at different
levels of economic development’. This reference links developmental consid-
erations to environmental protection, thus completing the concept of sustain-
able development in this preambular phrase as including and integrating both
developmental and environmental aspects.46
Following this argument, the division between ‘trade and environment’ on
one side and ‘trade and development’ on the other not only appears artificial,
it also hampers the implementation of sustainable development within inter-
national trade law.
According to Principle 4 of the Rio Declaration, which states that ‘[i]n
order to achieve sustainable development, environmental protection shall con-
stitute an integral part of the developmental process and cannot be considered
44
French, 2005, 202.
45
This is in particular due to the interest of the majority of parties to postpone the discussion
of environmental issues to a later point of time, with some contention that it was done in
the hope to remove this point entirely from the agenda. See W. Benedek, ‘Implications of
the Principle of Sustainable Development, Human Rights and Good Governance for the
GATT/WTO’, in W. Benedek, H. Isak, and R. Kicker (eds.) Development and Developing
International and European Law: Essays in Honour of Konrad Ginther on the Occasion
of his 65th Birthday (Frankfurt am Main: Peter Lang, 1999) 276.
46
Similarly, French, 2005, 202.
in isolation from it’, sustainable development is a concept of integration as ex-

plored in chapter 1. In this regard it demands the simultaneous consideration
of developmental and environmental components. Since international trade
and foreign investment are major components of the development process for
most countries, the injunction to consider environmental issues as an integral
part of development necessary implies the integration of environmental issues
in trade policy.47
Such integration can have various implications. Gaines identifies three lev-
els at which integration should take place. First decision-making procedures
should provide for the participation of State officials with responsibility for
environmental matters to engage in the determination of trade policy. Sec-
ond, institutional structures need to be of such kind as to make the integra-
tion of environmental and developmental aspects into trade policy a routine.
Third, economic, environmental and developmental considerations should be
substantively integrated into trade policy and laws. It is at this level the real
challenge of substantive integration lies. With Gaines’ words, ‘what matters
for sustainable development is … policies and actions based on integrated
thinking and analysis’.48
It has become apparent that such issues as environmental protection, la-
bour standards and human rights cannot be confined to their respective ‘legal
folds’. Sustainable development, by its very nature, requires inter-linking these
issues. Hence, the compartmentalisation of various ‘trade and …’ topics is
anathematic to this concept. Sustainable development provides the framework
in which to elaborate the links between WTO law and other non-economic
issues simultaneously. Viewed in the integrating context of sustainable devel-
opment, durable solutions need to be sought that protect those ecological con-
ditions that are essential for human welfare and development before defining
in more detail the harmonization of other, e.g. social and economic, interests
above this ‘ecological bottom-line’. It needs to be accepted that above this
non-derogable, minimal, but fundamental, requirement of protecting essential
ecological functions, free trade rules, wider environmental protection and
conservation, and the protection of social interests are all merely means of
reaching the common end of sustainable development.
While the policies of sustainable development and of deregulation of inter-
national commerce need not necessarily be contradictory, certain constraints on
regulation are necessary in order to ensure that the market-driven international
economy governed by the WTO is reminded of its objective of enhancing
human welfare in accordance with the objective of sustainable development.
47
See Gaines, 2002, 268.
48
Ibid., 269.
If not, the acceleration of global trade will cease to achieve durable well-being
for people and turn into an end in itself.
This was strongly emphasized by current WTO Director General, Pascal
Lamy, in a number of recent speeches.49 The perhaps most direct reference
was quoted in the beginning of this chapter. Lamy sees the WTO acting at
the heart of global governance. Global governance, in his view, depicts the
system that helps societies and individuals achieve their common purpose in a
sustainable manner. But, in his words ‘we need to “reform globalization” with
a clear view to enhancing the development of social, economic and ecological
aspects of humanity’.50 This requires that WTO law to be re-examined, under-
stood and enacted in conjunction with other laws, social norms and values and
other mechanisms for framing human behaviour as coherently as possible so
as to ensure collective, effective sustainable development.
The WTO Preamble demands trade liberalization to be pursued only when
it contributes to the objective of sustainable development. Where other ways
of conducting sustainable development are found more suitable, vulnerability
to a WTO challenge should be minimal. In other words, policies that pose
obstacles to the conduct of trade relations among WTO Members should be
assessed against the objective of sustainable development. Where they are in
line with the objective they ought to be exempted from the purview of WTO
rules.51 In this light, Gaines adds, ‘[a] sustainable development trade policy
needs to allow appropriate deviations from core principles of “free” trade and
non-discrimination’.52
5.5.2 Institutional Developments
Aware of the difficulties in establishing and securing coherence between trade

and other issues, Trade Ministers adopted a Decision on Trade and the En-
vironment to co-ordinate policies in the fields of trade and the environment
within the competences of the WTO.53 This decision also called for the estab-
49
See, for example, transcripts of the following speeches: Trade can be a Friend, and not
a Foe of Conservation, Geneva, 10. October 2005, and Humanising Globalization, San-
tiago de Chile, 30. January 2006, available at <http://www.wto.org>. See also P. Lamy,
‘Foreword’ in Sampson, 2005, vii–xi, where he states that ‘the achievement of sustainable
development is a formal goal of the WTO’, viii.
50
DG P. Lamy, speech: ‘Humanising Globalization’, Santiago de Chile, 30. January 2006.
51
Brown-Weiss, 1992a 731, for a similar suggestion.
52
S. Gaines, 2002, 260; also D.M. Driesen, ‘What is Free Trade?: The Real Issue Lurking
Behind the Trade and Environment Debate’ (2001) 41:2 Va. J. Int’l L. 279–368.
53
GATT Doc. L/3622/Rev.1 and C/M/74.
lishment of a Committee on Trade and Environment (CTE).54 The decision to

establish this permanent committee was premised upon the WTO Agreement’s
Preamble, the 1992 Rio Declaration and Agenda 21. Of particular significance
is the injunction in its terms of reference ‘to identify the relationship between
trade measures and environmental measures, in order to promote sustainable
development’ and ‘to make appropriate recommendations on whether any
modifications of the provisions of the multilateral trading system are required,
compatible with the open, equitable and non-discriminatory nature of the sys-
tem as regards, in particular: the need for rules to enhance positive interaction
between trade and environmental measures, for the promotion of sustainable
development, with special consideration to the needs of developing countries,
in particular those of the least developed among them’.55
Its expressed purpose is to ‘address’ a number of items, listed in its work
programme. These include the relationship between (i) the provisions of the
multilateral trading system and trade measures for environmental purposes, in-
cluding those pursuant to multilateral environmental agreements, and between
(ii) their dispute settlement mechanisms. Also the following items fall under
the mandate of the CTE: (i) the relationship between environmental policies
relevant to trade and environmental measures with significant trade effects and
the provisions of the multilateral trading system; (ii) the relationship between
the provisions of the multilateral trading system; and (a) charges and taxes for
environmental purposes; (b) requirements for environmental purposes relating
to products, including standards and technical regulations, packaging, label-
ling and recycling; (iii) the provisions of the multilateral trading system with
respect to the transparency of trade measures used for environmental purposes
and environmental measures and requirements which have significant trade
effects; (iv) the effect of environmental measures on market access, especially
in relation to developing countries, in particular to the least developed among
them, and (v) environmental benefits of removing trade restrictions and distor-
tions and the issue of exports of domestically prohibited goods.56
These items are to be addressed on the premise that ‘there should not be,
nor need be, any policy contradiction between upholding and safeguarding
an open, non-discriminatory and equitable multilateral trading system on the
one hand, and acting for the protection of the environment, and the promotion
54
Decision of April 14 1994 (MTN/TNC/45 (MIN)), 33 ILM 1994.
55
Trade Negotiations Committee (TNC) decision of 15 December 1993, reference in De-
cision on Trade and Environment, adopted at the Uruguay Round Trade Negotiations
Committee in Marrakesh on 14 April 1994.
56
CTE Work Programme. See also: WTO Secretariat, Background Document on Trade and
Environment, January 2002 (<http://www.wto.org>).
of sustainable development on the other’ and ‘to make appropriate recom-

mendations on whether any modifications of the provisions of the multilateral
trading system are required, compatible with the open, equitable and non-
discriminatory nature of the system’.57
Despite, or perhaps because of, the ambitious agenda of the Committee,
actual progress in ‘addressing’ these issues has been limited.58 So far, the Com-
mittee has only compiled the existing debates on trade and environmental is-
sues. Birnie and Boyle criticize the work of the Committee for providing ‘very
little analysis and evaluation and virtually no recommendations for specific
actions’.59 In a way it has become obvious that ‘[t]here remain deep divisions
between the most economically developed members, such as the EC and the
USA, which support introducing environmental values more explicitly into
trade agreements, and the majority of developing Member States, who see this
as a cover for discrimination against their products.’60
The same difficulties were experienced in another Committee, the Commit-
tee on Trade and Development (CTD), mandated to act as a forum to identify
and debate trade externalities in order to help achieve the objective of sustain-
able development. The Preamble to the WTO Agreement states that there is
‘a need for positive efforts to ensure that developing countries … secure a
share in the growth in international trade commensurate with the needs of
their economic development. The establishment of this Committee is an ef-
fort to provide for special and differential treatment provisions for developing
country Members to facilitate their integration into the world trading system
and to promote their economic development.61
According to its 1995 Programme of work the CTD is mandated to re-
view the impact of the results of the Uruguay Round on developing country
Members, in particular on the least-developed country Members; to review of
the participation of developing country Members in the multilateral trading
system, to provide guidelines for WTO technical cooperation activities as they
relate to developing country Members and to consider measures and initiatives
to assist in the expansion of trade and investment opportunities (including
57
1994 Mandate of the CTE.
58
Sands, 2003, 952; S. Charnovitz, ‘A Critical Guide to the WTO’s Report on Trade and
Environment’ (1997) 14:2 Ariz. J. Int’l & Comp. L. 341–379.
59
60
Birnie and Boyle, 2002, 703, with reference to the CTE Report 1999, WT/CTE/4, and
WTO Special Studies, Trade and Environment, Geneva 1999.
61
P. van den Bossche, The Law and Policy of the World Trade Organization (Cambridge:
Cambridge University Press, 2005) 676.
support for measures of trade liberalization) of developing country Members,

in particular the least-developed country Members.62
The Committee on Trade and Development serves as a focal point for
consideration and coordination of technical assistance work on development
in the WTO and its relationship to development-related activities in other
multilateral agencies. The delivery of WTO technical assistance is designed
to assist developing, least-developed and low-income countries in transition
to adjust to WTO rules and disciplines, implement obligations and exercise
the rights of membership, including drawing on the benefits of an open, rules-
based multilateral trading system.63
Despite the undoubted importance of the work of this committee it remains
questionable whether the separation of the work of the CTE and the CTD
according to their respective mandates is effective or rather a hindrance to
conducting international trade relations in accordance with the preambular
objective of sustainable development.
Given the complexity of this objective, its achievement could arguably
become more likely if issues such as technical assistance and special and
differential treatment were dealt with in one framework of integration of de-
velopmental and environmental aspects. Environment and development are
intimately connected, especially in the lives and livelihoods of the people liv-
ing in developing and least-developed countries who directly depend on their
local ecological capital for their economic well-being.64
Institutional separation in this context is an indication of intellectual inco-
herence. Sustainable development as an integration principle is incapable of
being discussed adequately and implemented in trade policies as long as its
components are dealt with separately. An integrated discussion in one single
forum might demand complex thinking and strain intellectual capacity to
comprehend certain fundamental ecological processes that need to be pro-
tected to claim sustainability of trade policies and actions. Still, in my view,
it is a necessity in order to truly understand the importance and extent of the
62
WT/COMTD/W/2/Rev.1
63
See <http://www.wto.org/english/tratop_e/devel_e/teccop_e/tct_e.htm>.
64
See The International Bank for Reconstruction and Development/ The World Bank,
Where is the Wealth of Nations? Measuring Capital for the XXI Century, 2005, noting that
‘the large share of natural resources in total wealth and the composition of these resources
make a strong argument for the role of environmental resources in reducing poverty,
fighting hunger, and lowering child mortality. For a similar result, see the recent ‘happy
planet index’ 2006 by the New Economic Foundation, UK (<http://www.neweconomics.
org>).
5.5.3 WTO 2001–2006 Doha Development Agenda
The Doha Trade Round was expected to give a more positive sign of integrat-
ing sustainable development into the wider policies of the WTO. The Doha
Declaration refers explicitly to the objective of sustainable development.
There the WTO Members state:
We strongly reaffirm our commitment to the objective of sustainable development, as

stated in the Preamble to the Marrakesh Agreement. We are convinced that the aims
of upholding and safeguarding an open and non-discriminatory multilateral trading
system, and acting for the protection of the environment and the promotion of sustain-
able development can and must be mutually supportive.65
In its decisions of 1 August 2004, the General Council called on all Members
‘to redouble their efforts toward the conclusion of a balanced overall outcome
of the Doha development Agenda’ and agreed to continue negotiations be-
yond 1 January 2005, the time limit originally set by the Doha Declaration.
The negotiations made clear that the Member States were still ‘determined …
to maintain the process of reform and liberalization of trade policies’. This
process of reform also included taking a more pro-active step to integrate
sustainable development into the work of the WTO. According to Paragraph
51 therefore,
[t]he Committee on Trade and Development and the Committee on Trade and Environ-
ment shall, within their respective mandates, each act as a forum to identify and debate
developmental and environmental aspects of the negotiations, in order to help achieve
the objective of having sustainable development appropriately reflected.66
Though still depending on the separation of the Committees, this paragraph

however promises greater efforts to promote sustainable development. The
work in both Committees could comprehensively address issues of sustainable
development such as clarification of existing WTO rules and the legitimate
interests of developing countries and the need to help build capacity in these
countries so that sustainable development issues arising from trade, devel-
opment and environmental concerns are dealt with in a comprehensive and
coordinated manner by all WTO Members.
65
2001 Doha Ministerial Declaration, WT/MIN(01)/DEC/1, 20 November 2001, Adopted
14 November 2001.
66
2001 Doha Ministerial Declaration, paragraph 51.
In July 2006 the Doha Development Agenda was suspended in all issues
after negotiations collapsed without an agreement.67 Thus the role assigned to
sustainable development in this process has yet to be seen.
Whatever paragraph 51’s potential, it will remain inevitable that ‘[a] bal-
ance must be struck between the three components of sustainable development:
economic development, environmental concerns and social equity. Accord-
ingly, both developed and developing economies should pursue development
strategies that secure non-inflationary growth, while preserving environmental
resources and promoting social equity.’68 Sustainable development undoubt-
edly has the potential to guide future legislative developments in this respect
within the WTO.
Because progress in positive integration has remained slow and marginal,
if not insignificant, it is mainly within the WTO dispute settlement that some
advances have been made in integrating environmental, social and trade con-
cerns under the premise of sustainable development.69
5.5.4 WTO Dispute Settlement
Sustainable development as enshrined in the Preamble of the WTO has been

employed by the WTO dispute settlement system. In the case concerning the
import prohibition imposed by the United States on certain shrimp and shrimp
products from India, Malaysia, Pakistan and Thailand that were harvested in a
manner which adversely affected sea turtles the Appellate Body noted that the
Preamble specifically refers to ‘the objective of sustainable development’ and
characterized it as a concept that has ‘generally been accepted as integrating
economic and social development and environmental protection.’70
In this case, the WTO panel concluded that the US import ban was not
consistent with Article X:1 of GATT 1994 and that it could not be justified
under Article XX GATT.71 The Appellate Body, however, employed a three-
67
WTO News – DDA June/July 2006 Modalities: Summary 24 July 2006 ‘Talks Suspended’,
‘Today there are only Losers’. No date for resumption has been set. (<http://www.wto.
org>). By December 2007, no new deadlines nor any date for resumption of activity in the
Negotiating Groups have been proposed or are likely to be proposed.
68
Towards Sustainable Trade. A Multilateral Approach: Advancing the Doha Development
Agenda, March 2005, available at <http://europa.eu.int/comm/trade/icentre/infopack_
en.htm>.
69
See G. Winter, ‘The GATT and Environmental Protection: Problems of Construction’
(2003) 15:2 Journal of Environmental Law, 115. Winter refers to the ‘embedding’ of free
trade principles into environmental concerns as a matter of ‘negative integration’, 138.
70
AB in US–Shrimp, para. 129.
71
WT/DS58/R, 15 May 1998.
step analysis, where it first asked whether the approach taken by the Panel to
the interpretation of Article XX was appropriate. Here it found that the Panel’s
reasoning was flawed and ‘abhorrent to the principles of interpretation we are
bound to apply’.72
Moreover, the Appellate Body asked whether the ban was ‘provisionally
justified’ under Article XX(g). In this context the Appellate Body invoked
the concept of ‘sustainable development’ as recognized in the Preamble of
the WTO Agreement for introducing the legitimacy and importance of envi-
ronmental protection. It found the justification was based on the decision that
the ban is a measure concerned with the conservation of ‘exhaustible natural
resources’. Here, the Appellate Body ruled that the words ‘exhaustible natural
resources must be read by a treaty interpreter in the light of contemporary
concerns of the community of nations about the protection and conservation
of the environment. … [T]he Preamble attached to the WTO Agreements
shows that the signatories to that Agreement were, in 1994, fully aware of the
importance and legitimacy of environmental protection as a goal of national
and international policy.’73 By reference to ‘the objective of sustainable devel-
opment’ entailed in the Preamble of the WTO Agreement an interpretation of
‘exhaustible natural resources’ was applied that included exhaustible natural
resources, both living and non-living.
By encompassing sustainable development as an interpretative guide the
Appellate Body made clear that it informs all covered agreements and has
to be ‘read into’ all WTO treaty law to which the Preamble applies. For that
reason the reference to the Preamble alone was sufficient to interpret ‘natural
resources’ in a non-static, evolutionary and effective way, thereby allowing
other international conventions and declarations such as 1982 UNCLOS, 1992
CBD, Agenda 21 and the Resolution on Assistance to Developing Countries
adopted in conjunction with the Conservation of Migratory Species and Wild
Animals (CITES) to support this interpretation of the term ‘exhaustible natural
resource’ within the meaning of Article XX(g).74
Finally, it investigated the requirements of the chapeau of Article XX and
found the application of the import ban to be in a manner which constituted
‘unjustifiable discrimination’ and ‘arbitrary discrimination’. In the two last
steps the Appellate Body again invoked the concept of sustainable develop-
ment as an ‘interpretative guide’. By referring to the objective of sustainable
development it stated ‘[a]s this preambular language reflects the intentions of
negotiators of the WTO Agreement, we believe it must add colour, texture and
72
AB in US–Shrimp, paras. 112–124.
73
Ibid., para. 129.
74
Ibid., paras. 129–131.
shading to our interpretations of the agreements annexed to the WTO Agree-

ment, in this case GATT 1994.’75
Notwithstanding the importance of this finding, the relevance of the con-
cept of sustainable development when determining what constitutes arbitrary
or unjustifiable discrimination remains somewhat unclear. It does appear
however that the reference to it together with the reference to the Decision
of Ministers at Marrakesh to establish a Permanent Committee on Trade and
Environment are meant to include the notion of balance and to introduce an
equilibrium. In line with the terms of reference of the CTE in the Ministerial
Decision including references to Principles 3 and 4 of the Rio Declaration
on Environment and Development and Agenda 21, this balance requirement
opens for the consideration ‘that there should not be … any policy contradic-
tion between upholding and safeguarding an open, non-discriminatory and
equitable multilateral trading system on the one hand, and acting for the pro-
tection of the environment, and the promotion of sustainable development on
the other’76 in the course of interpreting the chapeau of Article XX.
Both aspects, i.e. balance and equilibrium, are linked to the doctrines of
bona fide and prohibition of abusive exercise of States’ rights. The task of
appropriately reading the chapeau of Article XX GATT 1994 in the light of the
concept of sustainable development therefore involves ‘locating and marking
out a line of equilibrium between the right of a Member to invoke an excep-
tion under Article XX and the rights of the other Members under varying
substantive provisions … of the GATT 1994, so that neither of the competing
rights will cancel out the other and thereby distort and nullify or impair the
balance of rights and obligations constructed by the Members themselves in
that Agreement’.77 Furthermore, ‘a balance needs to be struck between the
right of a Member to invoke an exception under Article XX and the duty of
that same Member to respect the treaty rights of the other Members.’78 The
demarcation of this line in the present case went along such criteria as (i)
‘intended and actual coercive effect’ of the US measure that required all other
members to adopt essentially the same regulatory programme and the absence
of the following: (ii) consideration of different conditions in different Mem-
ber States, (iii) engagement in serious, concerted and cooperative efforts to
finding a multilateral solution, (iv) flexibility, transparency and (v) principles
75
Ibid., para. 153. The question of interpretational scope under Article 3.1 of the Dispute
Settlement Understanding (DSU) and the possibility to report to other sources of law is
discussed supra in Part III.
76
Preamble of the Decision on Trade and Environment.
77
78
Ibid., 156.
of due process and basic fairness, i.e. notification, hearings, procedures for
review or appeal.79
This balance, however, needs to be determined on a case-by-case basis.
The concept of sustainable development appears to have been invoked to give
a clearer understanding (“colour, texture and shading”) of the rights and obli-
gations of Member States under the chapeau of Article XX GATT 1994. The
application of the concept allowed the Appellate Body to include non-trade
interests and instruments to ascertain what constitutes a reasonable and bona
fide exercise of the right to invoke an exception. These ‘minimum standards’
were found to be met when the Appellate Body had to deal again with the
Revised Guidelines to Section 609, issued by the US government following
the Appellate Body’s recommendation. The guidelines allowed for the certifi-
cation of exporting countries that could prove to have implemented and were
enforcing a ‘comparably effective regulatory program’ to protect sea turtles.
In addition, the Appellate Body found that the US had made serious, good
faith efforts to negotiate a multilateral agreement for the protection of sea
turtles. Thus, in the ‘second’ Shrimp-Turtle report, the Appellate Body found
the environmental measure employed by the US to be justified under Article
XX (g) GATT 1994. Here, the balance required by the concept of sustainable
development which is read into the chapeau of Article XX GATT 1994 was
ensured by the flexibility of the measure and serious recourse to diplomacy.
In this way, sustainable development has been employed by the dispute settle-
ment system as having both a substantive and a procedural element.80
A more recent case concerned Brazil’s ban on imports of retreaded tyres
from the EU.81 The ban was based on health and environmental grounds, the
tyres providing ideal breeding grounds for mosquitoes carrying dangerous
diseases (malaria, dengue) and tyre fires generating dangerous toxins. Fol-
lowing the challenge by the EU, Brazil attempted to justify its actions in
the Committee on Trade and Environment: “Moreover, in order to achieve
the cited objectives, and in harmony with the widely accepted principle of
sustainable development – included in the preamble of the WTO Agreement
– Brazil banned imports of used and retreated tyres.”82 The choice of words is
79
Ibid., 180.
80
See P. Sands, ‘International Courts and the Concept of “Sustainable Development”’
(1999) 3 Max Planck UNYB, 403.
81
Brazil: Measures affecting Imports of Retreaded Tyres – Panel Report (12 June 2007)
WT/DS332/R.
82
Committee on Trade and Environment, Trade in used and retreaded Tyres – Submission
by Brazil (12 July 2005) WT/CTE/W/241; see also Committee on Trade and Environ-
ment, Report of the Meeting held on 6 July 2005 (2 September 2005) WT/CTE/M/40
[82].
worth noting. No only that it was for the first time, that a developing country
invoked Art. XX GATT to defend a trade restrictive policy, but only devel-
oped countries had sought to invoke a legally binding principle of sustainable
development.83
Both, the Appellate Body and the panel rejected the EU’s argument of miss-
ing ‘necessity’ of the import ban. The Appellate Body accepted the panel’s
‘weighing and balancing’ of factors and did not find any of the alternatives
proposed by the EU to be suitable and readily available to Brazil. Both there-
fore found the ban provisionally justified under Article XX (b). The panel did
so by citing the US–Shrimp Appellate Body decision and the overall import-
ance of the goal of sustainable development and interpreted Brazil’s reference
to environmental protection as meaning the protection of human, animal or
plant life or health (Art. XX (b) GATT).
The two bodies, however, disagreed with respect to the chapeau of Article
XX. The panel found the ban to constitute ‘unjustifiable discrimination’ and
‘disguised restriction’ on quantitative grounds. Import exceptions were made
for imports from MERCOSUR countries and from other countries due to a
number of court injunctions. The panel found especially the latter to gener-
ate sufficiently significant actual imports of retreaded tyres to counteract the
purpose of the ban.
The Appellate Body rejected this quantitative caveat and found the ban to
be a ‘arbitrary or injustifiable’ discrimination, because neither of the excep-
tions had a basis in the rationale of the ban itself – defining this as the only
criterion that mattered. It added:
We recognize that certain complex public health or environmental problems may be

tackled only with a comprehensive policy comprising a multiplicity of interacting
measures. In the short-term, it may prove difficult to isolate the contribution to public
health or environmental objectives of one specific measure from those attributable
to the other measures that are part of the same comprehensive policy. Moreover, the
results obtained from certain actions – for instance, measures adopted in order to at-
tenuate global warming and climate change, or certain preventive actions to reduce
the incidence of diseases that may manifest themselves only after a certain period of
time – can only be evaluated with the benefit of time. In order to justify an import ban
under Article XX(b), a panel must be satisfied that it brings about a material contribu-
tion to the achievement of its objective. Such a demonstration can of course be made by
resorting to evidence or data, pertaining to the past or the present, that establish that the
83
Also Cuba also emphasized the importance of the principle of sustainable development
and environment preservation policies, and recalled that waste tyre management presents
a challenge in particular for developing countries, given the significant environmental
and economic costs it involves. Brazil: Measures affecting Imports of Retreaded Tyres –
Report of the Appellate Body (3 December 2007) WT/DS332/AB/R [85].
import ban at issue makes a material contribution to the protection of public health or
environmental objectives pursued. This is not, however, the only type of demonstration
that could establish such a contribution. Thus, a panel might conclude that an import
ban is necessary on the basis of a demonstration that the import ban at issue is apt to
produce a material contribution to the achievement of its objective. This demonstration
could consist of quantitative projections in the future, or qualitative reasoning based on
a set of hypotheses that are tested and supported by sufficient evidence.84
Here the Appellate Body underscored the long-term sustainability of a meas-

ure adopted by the parties and lowered the burden of proof of ‘necessity’ in
environmental cases. There is no obligation to provide costly and difficult
in-depth analyses, in particular quantitative economic projections and the like,
when establishing ‘necessity’. Qualitative, inductive and logical reasoning
based on available science and other information will normally be quite suf-
ficient to provide cover.85 This might be of special importance to developing
country governments with limited resources at their disposal.
In analysing these cases we find that sustainable development has been
embraced by the WTO dispute settlement body to provide and support legal
arguments. In this context Gehring agrees that ‘[t]he reasoning of the WTO
dispute settlement body […], taken together, demonstrates that the objective
of sustainable development has become an integral part of the world trad-
ing system. Legal arguments encompassing an integrated developmental and
environmental approach have been made by the parties and accepted by the
relevant dispute settlement organs.’86
5.5.5 Invocation of Sustainable Development in WTO Law: Procedural

and Substantive Requirements
Let us now have a closer look at the procedural and substantive requirements
of the invocation of sustainable development.
As for (i) procedural elements, there is a particular need of exhaustion of
appropriate diplomatic means, namely negotiations, before unilateral meas-
ures may be taken. Whether this requirement derives directly from the concept
of sustainable development or from the principle of peaceful settlement of
84
Brazil: Measures affecting Imports of Retreaded Tyres – Report of the Appellate Body (3
December 2007) WT/DS332/AB/R [151] (my emphases).
85
See also commentary by H. Schloemann, ‘Brazil Tyres: Policy Space Confirmed under
GATT Article XX’, 1 ICTSD Bridges, 2008, 13–14.
86
M. Gehring, ‘Sustainable Development in World Trade Law – a Short History’, in H.C.
Bugge and C. Voigt (eds.) Sustainable Development in International and National Law
(2008).
disputes (Article 2.3 UN Charter), which as a minimum requirement seeks to

base solutions to disputes on the consent of the involved States, is not clear.
Negotiation as a means of solving dispute is seen by some as an internationally
recognized component of this principle. Its nexus to sustainable development,
however, not only remains blurred, but also seems to potentially dilute the
concept of sustainable development by submitting aspects under the concept’s
scope that are already appropriately addressed.
Other procedural requirements and suggestions thereof encompass, inter
alia, more transparent and participatory policy-making processes,87 a sus-
tainability impact assessment (SIA),88 the attempt to negotiate subsidiarity
clauses89 or a ‘savings clause’ for environmental agreements, a reversal of the
burden of proof in disputed cases,90 waivers,91 international cooperation,92 and
the integration of the precautionary principle in WTO law.93 While all these
suggestions are important and certainly relevant to meeting the objective of
sustainable development within the international trade regime, many of them
87
T. Santarius et al., Balancing Trade and Environment: An Ecological Reform of the
WTO as a Challenge in Sustainable Global Governance. What Kind of Globalisation
is Sustainable?, No. 133 Wuppertal Paper, (Wuppertal: Wuppertal Institute for Climate,
Environment, Energy, 2004)
88
See C. George, and C. Kirkpatrick, ‘Trade and Development: Assessing the Impact of
Trade Liberalisation on Sustainable Development’ (2004) 38:3 Journal of World Trade,
441–469. The authors elaborate on the potentialities of a sustainable impact assessment
(SIA) as an ex ante method of integrated appraisal of trade policies. This assessment is
supposed to accord the same level of consideration to economic, social and environmen-
tal impacts of proposed trade measures on sustainable development. See also C. George,
and C. Kirkpatrick, ‘Putting the Doha Principles into Practice: The Role of Sustainability
Impact Assessment’ in H. Katrak and R. Strange (eds.) The WTO and Developing Coun-
tries (Basingstoke: Palgrave Macmillan, 2004) 315–338; and D. Wilkinson, M. Ferguson
and P. ten Brink, Sustainability Impact Assessment: Background Paper (London: Institute
for European Environmental Policy, 2002).
89
K.W. Steininger, ‘International Trade Regulation and Sustainable Development: An
Outlook’ (1996) 31:6 Intereconomics, 295. See also: C. Helm, Sind Freihandel und
Umweltschutz vereinbar? Ökologischeer Reformbedarf des GATT/WTO Regimes (Berlin:
Edition Sigma, 1995); F. Biermann, Internationale Umweltverträge im Welthandelsrecht,
WZB Discussion Paper FSII 99–403 (Berlin: Wissenschaftszentrum Berlin, 1999). For
an overview of reform proposals regarding the expansion of environmental exception
clauses see: Santarius et al., 2004, 11–12.
90
WTO, Committee on Trade and Environment, Special Session: Compilation of Submis-
sions under Paragraph 31(i) of the Doha Declaration, 31. January 2003, TN/TE/S/3.
91
See the discussion on J. Pauwelyn, ‘WTO Compassion or Superiority Complex?: What
to Make of the WTO Waiver for “Conflict Diamonds”’ (2003b) 24:4 Michigan Journal of
International Law, 1177–1207.
92
Steininger, 1996, 298
93
De Sadeleer, 2004, 352; G. Marceau, ‘A Call for Coherence in International Law’ (1999)
33:5 Journal of World Trade Law, 87–152.
remain, however, reform proposals. Unlike many of the authors contributing

to this issue, my approach is not to focus on the question of lex ferenda or
institutional reform. Rather, my aim is to provide a doctrinal construction on
the integration of the pillars of sustainable development within international
trade law. Here, the law as it is already existent within the WTO-covered
agreements and within the body of general public international is supposed
to provide the framework for decision making and the settlement of disputes
based on the objective of sustainable development. As one writer notes, such
an effort ‘is not l’art pour l’art … the precise construction of freedoms and
restrictions has major implications for the margin States possess to introduce
environmental protection measures.’94
As for the (ii) substantive part of sustainable development, it can be argued
that the concept exerts a legal pull both by aiming at integrating and balancing
various contradicting interests, and by extending the legal scope of Article
XX GATT by means of interpretation.95 Accordingly, Sands concludes that
sustainable development ‘has a significant substantive element’,96 at least in
the course of interpretation.
The importance of the application of the concept of sustainable develop-
ment by the Appellate Body in US–Shrimp lies not so much in an ‘evolutionary
interpretation’ of the phrase ‘exhaustible natural resources’ or the influence on
interpreting the chapeau of Article XX GATT 1994. More importantly, it is the
systematic inclusion of the concept within WTO DSB jurisprudence, which
indicates a significant change, not only for the dispute settlement system, but
for the WTO in general. The reference to sustainable development and the
inclusion of concerns entailed by other multilateral agreements, illustrate the
94
Winter, 2003, 115.
95
The extension of the jurisdictional scope can be drawn from the finding that between the
migratory and endangered sea turtles and the United States a nexus existed, sufficient
enough to extend the geographical scope of Article XX(g) to territories outside US juris-
diction. Although the Appellate Body did not explicitly refer to the concept of sustainable
development in order to justify the semi-extra-territorial application of the protection
measure, it derives from its previous reference to the concept that the protection of en-
dangered species that traverse or migrate through US territory are encompassed by its
scope. Sands notes that “the concept [of sustainable development] appears to inform that
conclusion, apparently establishing the necessary link between the interests of the United
States in the proper conservation of a distant natural resource located from time to time
outside its jurisdiction, and the finding that Section 609 is “provisionally justified” under
At. XX(g).” (Sands, ibid., 400) Another question, which was not addressed, is whether
the findings of the Appellate Body would have been different had the turtles never crossed
into US waters. Here the scope of the protection measures would have been entirely extra-
territorial.
96
Sands, 1999, 400.
extent to which the judicial function (at least within the WTO context) has
departed from formal positivism.
The Appellate Body expressly confirmed its acceptance of sustainable
development as a concept that seeks to integrate economic and social de-
velopment and environmental protection. The acceptance of this integrative
function of the concept of sustainable development indicates its substantive
legal force.
The Appellate Body has invoked the ‘concept’ as part of its legal analysis
to justify a legal conclusion, though without indicating its status. Yet, it has
been used as a significant guide in order to reach a decision that has been
described as ‘fairly radical’.97 Further, it has been used by reference to its
inclusion in the WTO Agreements Preamble, thereby informing – as an objec-
tive – all WTO-covered agreements.
Which conclusions can be drawn from this reference? ‘Informing’ means
‘to give knowledge’, while an objective refers to the point at which operations
are directed. The Preamble indicates the direction and substance according to
which the covered agreements are to be implemented and interpreted. Sustain-
able development as an objective is thus the goal – the direction – of this
implementation and interpretation.
5.6 Summary
Both the legal texts and jurisprudence of the Dispute Settlement System show
how far sustainable development has been incorporated as a guiding objective
of the international trade system. Sustainable development as enshrined in
WTO law requires the interpretation of trade law in the light of concerted bilat-
eral or multilateral action to protect other interests than solely trade interests.
Those actions which protect certain collective interests that are considered of
great importance, if not fundamental, become – via the preambular reference
to sustainable development – part of the corpus of trade law.
Sustainable development is the framework under which a balance between
rights of WTO Member States under the WTO agreements and the right of a
Member to invoke an exception to trade rules for measures pursuing non-trade
objectives needs to be established. Liberalization of trade therefore is no end in
itself but is subjected to the objective of sustainable development. Ultimately,
the application of sustainable development in a trade context subordinates
all trade relations to the requirement of not endangering essential ecological
functions that support life on earth. In other words, where the protection of
97
Ibid., 403.
such environmental or ecological functions is better taken care of by measures

that conflict with trade rules, these measures may be justified despite their
trade-restrictive nature. Eventually, the inclusion of sustainable development
as an objective of international trade law might justify appropriate deviations
and exceptions from core principles of free trade and non-discrimination.
This last point led some scholars to suppose that sustainable development
calls for an independent balancing test.98 Rather than – and in addition to –
only being part and parcel of international trade law, the question raised here is
whether sustainable development has a legal status of its own in international
law and can therefore be applied independently of the respective provisions
in various international legal regimes. The independent application may have
the advantage of assessing various, apparently conflicting interests at the same
legal footing without viewing the conflict through an exclusive ‘trade lens’.99
This question is substantially different to the purpose of this chapter and
will therefore be examined in the next chapter.
98
Brown-Weiss, 1992a.
99
Ibid.
Chapter 6
Sustainable Development as a General Principle of Law
6.1 Introduction
In this chapter, we shall examine the legal status of sustainable development in

international law as a principle of integration. It is assumed that if sustainable
development gains legal recognition as a general principle in international
law, it can be applied in various ways in the settlement of disputes. It could
be applied as ‘relevant international law’ in the course of treaty interpretation.
It could also be applied as a general ‘balancing principle’, which ultimately
would allow it to be used independently of specific treaty formulations, such
as exception clauses for non-trade objectives within WTO law. As such, the
principle of integration could provide a solution to normative conflicts.
Determining the legal status of any norm in international law is not an easy
task. However, it is an important one. Much criticism has been levelled at at-
tempts to subsume norms under the rather narrow legal focus of the catalogue
of sources listed in Article 38.1 of the Statute of the International Court of
Justice.1 At the same time, radical advocacy of certain preferred norms of in-
ternational law, regardless of their acceptance by the international community,
has fuelled scepticism and caution in discussions about the legal relevance of
new or developing norms.
International law as a normative system is not static. It evolves and grows
in response to modern challenges. One of the areas where international law is
developing is in the extension of its ambit to individuals, regional communi-
ties and the wider civil society. Another area is the international community’s
concern for sustainable development. The repetitious references to sustain-
able development throughout a multitude of international and domestic laws,
regulations, conventions and non-binding documents is evidence of its general
1
R. Higgins, Problems and Process: International Law and How We Use It (Oxford:
Clarendon Press,1994 reprinted in 2003) 17.
acceptance as a normative concept. The significance of sustainable develop-

ment in a legal context seems apparent. However, having legal bearing is one
thing, determining the ‘legal fold’ to which sustainable development belongs
is quite another.
As one prominent legal scholar phrased it, ‘[p]erhaps it is inevitable that
content and contours of an integrative concept such as that of sustainable de-
velopment which was endorsed as such by the world community as a whole,
lacks the kind of clarity of articulation of concepts one might be accustomed
to in a more limited, homogeneous group of States.’2 If there is conceptual
uncertainty about the legal status of sustainable development, then it is only
reflective of the uncertainty about how to identify norms in general, that, in
Judge Higgins words, lies at the heart of the international legal system.3 Still,
the list provided by Article 38 of the Statute of the International Court of
Justice is indicative of what the actors believe has normative force in their
relations with each other. While norms may have other provenances, if it can
be shown that a norm can be fitted within the catalogue of Article 38, its legal
significance is no longer debatable
For this reason I consider it important to analyze whether sustainable de-
velopment has reached a stage where it warrants a place under one of the
categories of this list.
Recalling what has been said in the previous chapters, it is evident that
sustainable development constitutes an important element of international
treaty law. Treaties, bi- or multilateral conventions are principally a source
of obligation between the contracting parties.4 In those cases where States
make explicit reference to sustainable development in treaty texts, this could
be taken as meaning that they principally committed themselves to sustainable
development. As we have seen, in the context of climate and international trade
law, the references to sustainable development in the treaty texts incorporate
sustainable development into the normative design of the respective obliga-
tions. The exact commitment depends, of course, on the precise formulation
and context of the reference.
2
Simma, 2004, vi.
3
Higgins, 2003, 17.
4
J. Cameron, ‘The Status of the Precautionary Principle in International Law’ in T.
O’Riordan, T. and J. Cameron (eds.) Interpreting the Precautionary Principle (London:
Cameron May, 1994) 278; G.G. Fitzmaurice, ‘Some Problems Regarding the Formal
Sources of International Law’ in F.M. van Asbeck et al. (eds.) Symbolae Verzijl: Présentées
au Prof. J.H.W. Verzijl á l’occasion de son LXX-ieme anniversaire (The Hague: Nijhoff,
1958) 158 et seq.
Chapter 6 – Sustainable Development as a General Principle of Law 147
6.2 Limitation of Scope
From the sources listed in the ICJ Statute, it is in particular customary law
and general principles of law that seem most likely to capture the normative
significance of sustainable development. I shall, however, limit my focus to
the legal relevance of sustainable development as a general principle.
The reason for such limitation lies in the fact that the determination of the
emergence of a new customary law norm demands reliable empirical evidence
of almost universal State practice.5 Needless to say, attempting to induce the
principles of customary law directly from State practice would not only be a
Herculean task,6 but legal methodology may not be sufficiently equipped to
carry out this task.7 For this reason we are not bound to attempt to prove the
customary status of sustainable development. Despite the urgency of research
on this matter, it would far exceed the frame of this study to perform a thor-
ough assessment of State practice.8
The intention of this chapter is therefore to investigate the legal nature
of sustainable development as a principle of integration in situations where
different interests conflict. In other words, it is the capability of the principle
to function as a tool of legal reasoning that is important in this context. State
practice of sustainable development as an integrative principle in this judicial
understanding might, thus, be difficult – if not impossible – to assess.
Resulting from its widespread acceptance in international law, sustainable
development has frequently been titled as one of the ‘general principles of in-
ternational environmental law’.9 Generality in this sense refers to its possible
applicability to all members of the international community, across the whole
range of human activities. It is the principle-based significance of sustainable
development in a judicial context we shall explore in what follows.
5
See D. Bodansky, ‘Customary (And Not So Customary) International Environmental
Law’ (1995) 3:1 Ind. J. Global Legal Stud., 108–109.
6
Ibid., 113.
7
Bodansky suggests that anthropologists and historians are more likely to do a better job
in systematically surveying state behaviour than lawyers. Bodansky, 1995, 113.
8
The task of undertaking a survey of State and organizational practice has recently been
taken on by the International Law Association’s Committee on International Law on
Sustainable Development. The Committee suggested the following steps: (i) preparation
and dissemination of questionnaire (autumn/winter 2006); (ii) analysis and initial evalu-
ation of questionnaire findings (spring/summer 2007); (iii) seminar to discuss findings
and other known examples of State/organizational practice (autumn 2007). ILA, Toronto
Conference Report 2006, Committee International Law on Sustainable Development,
22.
9
Sands, 2003, 252–266; Kiss and Shelton, 2004, 216–218.
First, however, we consider it necessary to explore in more detail general

principles as an ambiguous source of law.
6.3 General Principles in International Law
6.3.1 An Ambiguous Source of Law
General principles are recognized as a distinct source of international law.10

Article 38.1(c) of the Statute of the International Court of Justice refers to
general principles of law recognized by civilized nations.
The wording of Article 38(1)(c) of the ICJ Statute reveals however a funda-
mental controversy in public international law. The Committee that prepared
the Statute could not find a definite consensus on the role and significance of
general principles. This situation is indicative of the division in international
law between the concepts of natural law and positive law. Descamps, the Pres-
ident of the Committee, had supposedly a natural law concept in mind when
suggesting ‘rules of international law as recognized by the legal conscience
of civilized nations’ as one of the (four) rules11 to be applied by the judge
in the solution of international disputes.12 These rules, he stated, constitute
‘objective justice’ by being ‘the rules necessary for the system of international
relations’.13
On the other hand, Root, another member of the Commission, took a rather
positivistic stance in expressing the concern of whether ‘a Government would
agree to allow itself to be arraigned before a Court who bases its sentences on
10
See H. Thirlway, ‘The Sources of International Law’ in M.D. Evans, International Law
(Oxford: Oxford University Press, 2003) 132; I. Brownlie, Principles of Public Interna-
tional Law, 6th ed. (Oxford: Oxford University Press, 2003) 15; M. Bogdan, ‘General
Principles of Law and the Problem of Lacunae in the Law of Nations’ (1977) 46 NJIL
42 B. Cheng, General Principles of Law (London: Stevens & Sons, 1953); P. Hulsroj,
‘Three Sources – No River: A Hard Look At the Sources of Public International Law with
Particular Emphasis on Custom and “General Principles of Law”’ (1999) 54 ZöR 244;
B. Simma and P. Alston, ‘The Sources of Human Rights Law: Custom, Jus Cogens and
General Principles’ (1991) 12 AYbIL, 102; M. Bos, ‘The Recognized Manifestation of
International Law’ (1977) 20 GYIL, 33.
11
The other three rules were 1) conventional international law, whether general or special,
being rules expressly adopted by the States; 2) international custom, being practice be-
tween nations accepted by them as law; and 3) international jurisprudence as a means
for the application and development of law, Permanent Court of International Justice,
Advisory Committee of Jurists, Procès-Verbaux of the Proceedings of the Committee,
June 16 – July 24, with Annexes, 1920, 306.
12
Ibid., 306.
13
Ibid., 323.
its subjective conception of the principles of justice’.14 Descamps countered

the argument by clarifying that ‘the fundamental law of justice and injustice is
deeply engraved on the heart of every human being and is given its highest and
most authoritative expression in the legal conscience of civilized nations.’15
Despite the various views, the Committee was able to prepare a text in-
tended to give the Court a certain power to develop and refine the principles of
international jurisprudence.16 This text, suggesting ‘the general principles of
law recognized by civilized nations’ as one of the sources of international law,
was finally transposed into Article 38.1 of the Statute of the ICJ.
6.3.2 Custom and General Principles
Before assessing the status of sustainable development as a general legal

principle, it seems appropriate to offer a few remarks on the nature of general
principles. In this context the confusion-prone relationship of customary prin-
ciples and general principles of law calls for some elucidation.
The most distinct difference to customary norms is that states become bound
by general principles after actively having participated in the development of
the norm. Thus, State practice is generally not required for the establishment
of a general principle. General principles extend ‘the concept of the sources of
international law beyond the limit of legal positivism, according to which the
States are bound only by their own will’.17
Simma and Alston plead in favour of keeping the two notions separate.
They base their argument ‘on the ground … that the concept of a “recognized”
general principle seems to conform more closely than the concept of custom
to the situation where a norm invested with strong inherent authority is widely
accepted even though widely violated’.18 Similarly, Cheng regarded the prac-
tice element to be unnecessary in the context of general principle when he
stated: ‘In the definition of the third source of international law, there is also
an element of recognition on the part of civilised peoples but the requirement
of a general practice is absent.’19
14
Ibid., 309.
15
Ibid., 310–311.
16
See Brownlie, 2003, 16.
17
Dissenting opinion, Judge Tanaka, South West African cases (Second Phase) ICJ Reports
1966, 298.
18
Simma and Alston, 1992, 102. See also G. Herczegh, General Principles of International
Law and the International Legal Order (Budapest: Akadémiai Kiadó, 1969) 11–33.
19
Cheng, 1953, 24. See also: M. Bos, ‘The Identification of Custom in International Law’
(1982) 25 GYIL 11. According to Bos, ‘[w]ith a general principle of law … there is no
In the absence of general principles international law would be nothing but

the law of the consent and auto-limitation of States. In this case, de Laparelle
warned during the preparation of Article 38 of the ICJ Statute, ‘the tasks of
the Court would be limited to registering the acts of the powerful’.20 The be-
haviour and consent of States are thus not a prerequisite to the recognition of
general principles.21
6.3.3 The Function of General Principles and the Objection of

Indeterminacy
The normative role of principles is another contentious area of legal scholar-

ship.22 Some principles have been seen as means of describing and organizing
the system of individual (positive) norms, but are deprived of any normative
content.23 As descriptive statements they are more or less factual reconstruc-
tions of the law by academic scholars. These principles are considered mere
generalizations, or, in other words, a kind of summary of other positive norms.
They bring together certain ‘sets of individual norms or statements about such
norms’.24 Their validity is dependent on the validity of other norms, and is not
therefore seen as having normative meaning by and of itself.
While such a view of general principles usually finds support among posi-
tivistic lawyers, it is not shared here in its entirety as the author considers some
general principles of law as being of normative nature in their own right.25
Where legal doctrine recognizes normative substance, the ascribed role of
general principles is to ensure a coherent legal order. From this point of view,
practice to be taken into account – at least not in the sense attributed to the term in the
context of custom’.
20
See PCIJ, Advisory Committee of Jurists, Proces-Verbaux, of the Proceedings of the
Committee, 1920, 319–320.
21
Dissenting Opinion by Judge Tanaka, in South West African Cases, ICJ Report 1966,
298.
22
See for an excellent, albeit critical, overview of the normative theory on principles: M.
Koskenniemi, ‘General Principles: Reflections on Constructivist Thinking in International
Law’ in M. Koskenniemi (ed.) Sources of International Law (Aldershot: Ashgate, 2000)
129–141.
23
See Koskenniemi, 1985, 367. For a attempt to categorize principles of legal theory see
e.g. A. Peczenik, ‘Principles of Law: The Search for Legal Theory’ (1971) 2 Rechtstheo-
rie 17–36; H. Mosler, ‘General Principles of Law’ in R. Bernhard (ed.) Encyclopedia of
Public International Law, vol. 7 (Amsterdam: North-Holland, 1984) 90.
24
Koskenniemi, 1985, 143
25
See C. Voigt, ‘The Role of General Principles in International Law and their Relationship
to Treaty Law’, Retfærd, forthcoming in 2008.
general principles are considered essential to the international legal system

in that ‘they ensure systematic unity of the law amid the disorder of posi-
tive rules’.26 Arguing that the need for coherence is inherent in the rationality
of modern law, MacCormick defended the legitimacy of recourse to general
principles. ‘Working out the principles of a legal system to which one is com-
mitted involves an attempt to give it coherence in terms of a set of general
norms which express justifying and explanatory values of the system’.27
General principles of law furthermore provide a necessary means by which
Courts and Tribunals can construe the law in a dynamic fashion that is respon-
sive to today’s problems. Jenks stated already in this context:
Neither agreement nor practice, even in the widest sense, can, however, provide
sufficiently vigorous seeds of growth to enable the law to cope with new problems
pressing for solution as the result of the activities of the international organisations.
Legal principles therefore have an indispensable part to play in the development of the
proper law of international organisations and its assimilation into the general body of
international law.28
These principles are ‘an authoritative recognition of a dynamic element on

international law, and of the creative function of the courts which may admin-
ister it.’29 Law is a continuing process and general principles thus provide for
a ‘welcome possibility for growth’,30 in which capacity they also contribute to
the development of international law.
One of the objections to letting general principles of law play such a sig-
nificant role is the indeterminacy of their scope. It has been critizised that
general principles give too wide a margin of appreciation to the judge as they
dictate no particular solution but supply relevant arguments in support of one
or another solution.31
26
M. van de Kwerchove and F. Ost, Legal System Between Order and Disorder, translated
by I. Stewart (Oxford: Oxford University Press, 1994) 82.
27
N. MacCormick, Legal Reasoning and Legal Theory (Oxford: Clarendon Press, 1978)
177.
28
C.W. Jenks, The Proper Law of International Organisations (London: Stevens, 1962)
259–160.
29
Brierly, The Law of Nations, 1963, 63.
30
See Bos, 1977, 42.
31
T. Eckhoff and N. K. Sundby, Rettsystemer: Systemteoretisk Innføring i Rettsfilosofien
(Oslo: Tanum-Norli, 1976) 129. See also M. Koskenniemi, ‘General Principles: Reflec-
tions on Constructivist Thinking in International Law’ (1985) Oikeustiede Jurisprudentia
(Yearbook of the Finnish Law Society) 117–163 who contends with regard to general
principles that ‘it is not seldom that even conflicting practices are legitimized by the
discursive use of one widely formulated principle.’, 159.
General principles, however, must necessarily comprise of such quality.

They are inherently broad and open-textured, leaving room for specification by
other norms of international law. As such, they are never ‘finished products’.
It is a ‘continuing process’ from their identification to the final determination
of the principles’ content in a particular context.32 And yet, it is precisely this
‘unfinished nature’ of general principles that makes them appropriate for ‘fill-
ing the gaps’ left open by treaty and custom.33
The international legal system is not sufficiently developed, and is constant-
ly facing new and unprecedented challenges. With regard to legal responses
to global environmental threats, not least, the function of general principles
should not to be underestimated. Given the increasingly fragmented structure
of international law, with hundreds of treaties dealing with separate issues,
coherent solutions are urgently needed where gaps and overlaps occur.
For international law to fully address the problem of fragmentation and
regulatory overlap or gaps in a dynamic and flexible but still coherent fashion,
the technique of applying general principles needs to be retained – or, per-
haps, revived. Against this background, general principles ‘constitute both the
backbone of the body of law governing international dealings and the potent
cement that binds together the various and often disparate cogs and wheels of
the normative framework of the international community.’34 In this sense, they
could fulfil the important role of go-between and converging factor’ among
the laws of a particular field or international organization and the wider corpus
of public international law.35
In general, those to whom principles have a distinctly normative function,
acknowledge them as guiding the behaviour of States and underlying adjudi-
cative reasoning. And as norms, they can play a significant role in a normative
conflict36 and in the settlement of disputes by international tribunals.37
The ‘gap filling’ function of general principles is, however, only one of
several normative functions. In the context of our examination, another im-
portant purpose of principles is that they allow courts to weigh and reconcile
highly divergent interests.38
The technique of weighing objectives and interests is crucial in the resolu-
tion of conflicts. Consequently, general principles that aim at balancing and
32
Bos, 1977, 42.
33
Pauwelyn, 2003, 128.
34
Cassese, 2005, 188; A. Cassese, International Law (Oxford: Oxford University Press,
2001) 151.
35
36
37
Cheng, 1953, 1, Lauterpacht, 1927, 216
38
De Sadeleer, 2002, 250.
resolving a diverse set of interests play a pivotal role in the resolution of nor-
mative conflicts that are the focus of our investigation. Directing principles
‘are needed to introduce a degree of rationality in a world that has become
Kafkaesque through the production of an excessive number of rules and a high
degree of instability … These principles serve to reassemble dispersed rules
into a coherent whole.’39
The fair balance of interests has been perceived as a state of justice. Thus,
the application of general principles aims at providing a just solution in situa-
tions where conflicting positive rules are not able to do so.
General principles can be a source of arguments for judges in situations
where other sources fail. Arguably they may not dispense set answers to every
abstract question. The legal notions expressed in general principles are neither
overly prescriptive nor particularly measurable, but a reasonably clear juris-
prudence of what they do and do not permit might or has already evolved.40
Thus, when put into practice and applied by the judge, they provide a practical
means of finding an answer to a legal question.41
While general principles, like the principle of equity or the principle of pro-
portionality, help balance competing interests, it is another question whether
the process of weighing interests has to adhere to some substantial require-
ments, some hierarchy of values that determines the outcome. In other words,
do they entail an obligation of process or an obligation of result? Principles
of equity and proportionality probably encompass both. In a similar way, as
will be suggested below, current and future development of jurisprudence will
establish what sustainable development does and does not require.42
6.3.4 Provenance of Principles
Despite inclusion in the Statute of the International Court of Justice, uncer-

tainty also remains as to the origin of general principles. Some writers view
39
De Sadeleer, 2002.
40
R.Y. Jennings, ‘What is International Law and How do We Tell it when We See it?’ (1981)
37 Schweizerisches Jahrbuch für Internationales Recht 59
41
See R. Dworkin, Taking Rights Seriously (Cambridge, Massachusetts: Harvard Univer-
sity Press, 1977) 105–130. R. Dworkin argues that judges are generally bound by general
principles which they have to identify and to apply in cases where no other (positive)
law exists. Opposing positivist theories he contends that judges are not intended to create
law themselves. The right answers are ‘in the law’ that consist of positive legal rules and
general principles.
42
ILA 2006 Report, 20–1.
general principles as obtaining from municipal law only.43 They have been
described as mere principles of legal logic or general jurisprudence common
to most legal systems.44 This rather minimalist view is misleading. Not only
have general principles of substantive nature been applied in the practice of
international tribunals.45 They also have been resorted to without reflecting
domestic derivatives. Others therefore suggest they primarily – or even ex-
clusively – are principles of international law.46 Excluding the possibility of
domestic origin, Verzjil, for example, warns the international lawyer in the
following way:
the nature of inter-state relationships differs so radically from that of relationships be-
tween individuals (private law) or between the Government or State and their subjects
(public and penal law) that there is a very strong presumption against the possibility
of applying the general principles accepted in municipal orders for the latter groups
of relationships without reservations or qualifications to the former group of interstate
relations.47
Brownlie goes so far as to suggest that ‘domestic law analogies have caused
more harm than good in this sphere’.48 In fact, the reference to domestic law
might give uncertain results as the models of identification differ. Where prin-
ciples were applied as being represented in domestic systems, the principles
themselves were not identified by way a detailed investigation of the respec-
tive national legal systems.
Still another group of writers maintain the formulation is intended to refer
exclusively to principles of private law.49
43
Verdross and Simma, 1984, 386–387; A. Verdross, Die Quellen des universellen Völker-
rechts: Eine Einführung (Freiburg: Rombach, 1973) 127–128.
44
Examples are the principle nemo judex in re sua, PCIJ Mosul Boundary Case, 32, the duty
of reparation for international wrongs, PCIJ Chorzow Factory (Merits) 29, the principle
that one cannot take advantage of one’s own misconduct, PCIJ Chorzow Factory (Merits)
31, the principle of estoppel or acquiescence, PCIJ Eastern Greenland Case, 1933, Ser.
A/B. no. 53, 52., 62, 69.
45
Examples include decisions on the acquisition of territory or on the question of respon-
sibility of the State for the acts of its agents, Fabiani Case, 1896, La Fontaine, 344,
RIXX83.
46
D. Anzilotti, Cours de Droit international (Paris: Recueil Sirey, 1929) 117; F. Castberg,
‘La méthodologie du droit international public’ (1933) 43 Recueil des cours 313.
47
J. H. W. Verzijl, International Law in Historical Perspective, Vol. I (Leiden: Sijthoff,
1968) 62–63.
48
Brownlie, 2003, 16.
49
See, for example, Lauterpacht, 1927, 71: “Those general principles of law are for most
practical purposes identical with general principles of private law.” For more references
see Cheng, 1953, 3, fn. 8.
However, it is far from established that general principles exclusively de-

rive either from acceptance in foro domestico or from international law. Look-
ing back on the work of the Advisory Committee of Jurists no clear perception
is apparent. Root and Phillimore regarded general principles as domestic law
principles accepted by all civilized States; while Descamps’ terminology
seemed to include not only principles applied in municipal jurisprudence but
also principles encompassed by a normative concept of law as applied in in-
ternational relations.50 The answer, it is suggested, lies somewhere in between,
apparently encompassing both, domestic and international elements. Brownlie
seems to argue for an accumulation of legal reasoning borrowed from both el-
ements of State’s concern (domestic and international). In his statement that
[i]t would be incorrect to assume that tribunals have in practice adopted a mechanical
system of borrowing from domestic law after a census of domestic systems. What has
happened is that international tribunals have employed elements of legal reasoning
and private law analogies in order to make the law of nations a viable system for
application in a judicial process … An international tribunal chooses, edits, and adapts
elements from better developed systems: the result is a new element of international
law the content of which is influenced historically and logically by domestic law51
he suggests the application in foro domestico is part of the ‘source’ of a prin-

ciple, but that it receives a certain degree of modification in the process of its
application by an international tribunal.
Thus, contrary to what is often argued, general principles were not only
obtained from foro domestico, but often accepted as ‘general tenets capable
of being induced from the rules of international law or deduced from legal
logic’.52 Besides, some principles may not be able to be traced back to mu-
nicipal jurisprudence. Arguably, the principles of non-intervention, of non-
interference in the internal affairs of other States, of sovereign right to exploit
natural resources, of prohibition of use of force and even the principle of self-
determination of people have rather minimal, if any, foothold in foro domestico
of States. The narrow focus on general principles as common to all major legal
systems of the members of the community of nations is therefore misleading.
They can as well be found in international law. Birnie and Boyle point out
that ‘it has to be recognized that the most frequent use of general principles
50
Bos, 1977, 37
51
Brownlie, 2003, 16, with references to G.I. Tunkin, ‘Co-existence And International Law’
(1958) 95:3 Hague Recueil des Cours 23–26; C. de Visscher, Theory and Reality in Pub-
lic International Law (Princeton, N.J.: Princeton University Press, 1957) 356–358; and
A. McNair, Status of South-West Africa, Separate Opinion, ICJ Reports 1950, 148–150,
149.
52
Cassese, 2005, 192.
derives from the drawing of analogies with domestic law concerning rules of
procedure, evidence, and jurisdiction’.53 ‘Most frequent use’, in this context,
indicates other possible fields of provenance in addition to induction from
domestic law. As Cassese mentions, principles are ‘hidden in the interstices
of the normative network’, and identifying them might demand recourse to a
wider array of methods, i.e. deduction from international legal logic.
General principles therefore not only encompass principles induced from
foro domestico but a wider variety of sources.54 Judge Tanaka in the South
West African case (second phase) stated accordingly,
general principles of law are not qualified, the law must be understood to embrace all
branches of law, including municipal law, public law, constitutional and administrative
law, private law, commercial law, substantive and procedural law.55
Discussing how principles are identified, Cheng contends an element of rec-

ognition is required, but the requirement of a general practice is absent.56 The
object of recognition is thus no longer the legal character of the rule implied
in an international usage, but the existence of certain principles intrinsically
legal in nature. General principles are therefore principles that are recognized
by a kind of common sense of nations.
In can thus be said that general principles are norms adopted by the in-
ternational community, whether the norm is derived from municipal law or
not.57 They are norms ‘of general validity which is manifested not in a single
statutory provision, but by a group of mutually interdependent legal rules or
their system.’58
The fact that general principles cannot always be traced to treaty texts or
consistent State practice is an indication of their abstract and open-textured na-
53
P. Birnie and A. Boyle, International Law and the Environment (Oxford: Oxford Univer-
sity Press, 1992) 24.
54
Categorization or classification of principles remains a fascinating exercise among in-
ternational legal scholars. Various attempts include the following categories: ‘necessary
principles’ as opposed to ‘complementary principles’ (Bos, 1977, 38) ‘metanorms’ (Ko-
skenniemi, 1985, 133), ‘subsidiary principles’ (Lauterpacht, 1927, 69), ‘superconstitutional
principles’ (G. Scelle, Manuel de Droit international public (Paris: Domat-Montchrestien,
1948) 580) principles of international law (Cassesse, 2005, and A. Cassesse, ‘General
Round-Up’ in A. Cassesse and J.H.H Weiler (eds.) Change and Stability in International
Law-Making (Berlin: De Gruyter, 1988) 170.
55
ICJ Reports 1966, 294, diss.
56
Cheng, 1953, 24.
57
Hulsroj, 1999, 245. B. Simma and P. Alston, ‘The Sources of Human Rights Law: Cus-
tom, Jus Cogens and General Principles’ (1991) 12 Australian Yearbook of International
Law, 102, fn 85.
58
Herczegh, 1969, 36.
ture. Despite the need for specification in a particular setting, there is a shared
understanding in the international community of their existence and their im-
plications. Such a view is based on a ‘common legal conscience’; an opinio
juris communis.59 If a normative statement can be shown to be part of the
‘common legal conscience’ it becomes a legal norm as a general principle.
6.3.5 Common Legal Conscience
The questions that arise in this context are, first, when can a norm be said to be
deriving from a legal conscience, and, second, whose conscience is relevant
in this respect.
If it can be assumed that the concept of ‘common legal conscience’ is cru-
cial to the origin of general principles, one needs to determine what is meant
by this term. Cheng suggests that the initial phrases suggested by Descamps
‘manifestation la conscience juridique des peuples civilizes’60 may be trans-
lated into English as ‘the sense common to all civilized peoples of what is ju-
ridically right or wrong’61 or simply as ‘the opinio juris communis of civilized
mankind’.62 Others refer to it as ‘Rechtsbewußtsein der Menschheit’.63
How then can it be established that a given legal norm is part of the com-
mon legal conscience? If the view is adopted that only principles applied in
foro domestico are relevant, then the exercise of determining their existence
is one of comparative analysis of municipal legal systems and induction from
domestic practice.
Here, however, it is suggested that in addition to domestic principles,
general principles can also be found in the international relationships among
States. This brings up a similar problem as to the evidence of opinio juris
in the establishment of custom.64 Also in customary law, opinio juris is an
expression of legal conscience. Already Grotius suggested a tacitus consensus
populorum as necessary for any norm based on custom.65 The classical judi-
59
Ibid.
60
A. Favre, Principes du Droit des Gens, Fribourg, 1974, 275.
61
Cheng, 1953, 9.
62
Ibid. There is a general recognition today that the term ‘civilized’ applies to all States.
63
See J.C. Bluntschli, Das moderne Völkerrecht der civilisirten Staaten: als Rechtsbuch
dargestellt, 1878, 65. He sees this Rechtsbewußtsein as the all-embracing concept for all
non-written international law.
64
Hulsroij, 1999, 249. See also: D’Amato, 1971; H. Lauterpacht, The Development of
International Law by the International Court (London: Stevens, 1958a); and M. Bos, A
Methodology of International Law (Amsterdam: Elsevier, 1984) 62 et seq.
65
See for an account of the historical development of customary law: P. Guggenheim and
D. Kappeler, Traité de Droit International Public; Avec mention de la practique interna-
cial locus classicus on this point is the North Sea Continental Shelf Judgment
by the ICJ:
Not only must the acts concerned amount to a settled practice, but they must also be
such, or to be carried out in such a way, as to be evidence of a belief that this practice
is rendered obligatory by the existence of a rule of law requiring it. The need for such
a belief, i.e., the existence of a subjective element, is implicit in the very notion of the
opinio jure sive necessitatis.66
Whose legal conscience is relevant in this regard? There is evident difficulty

attributing conscience to an entity like a State. With regard to custom, it is
acknowledged that the legal ‘state of mind’ has to be deduced from State
conduct, that is, pronouncements, statements, actions by foreign ministers,
civil servants, judges etc. The ongoing debate with regard to development of
customary law is whether these elements constitute the ‘practice’ element of
custom or are two-sided in a way that practice is generally indicative of a legal
conscience, except in circumstances where legal conscience is attributed to a
motive other than such conscience.67 While custom to a certain extent is based
on consent to what States believe is obligatory to their conduct, general princi-
ples include normative requirements not necessarily directed at State conduct
but which introduce a sense of what is right and what is wrong into judicial
reasoning. One source of ‘legal conscience’ is thus clearly to be detected in the
jurisprudence of domestic and international courts.
However, general principles also appear to derive from a wider acceptance
than just that of States. While for customary law the ‘state of mind’ and behav-
iour of States is the exclusive criterion, the establishment of general principles
includes an opinio juris communis which not only embraces a ‘state of mind’
of State actors but a ‘legal animus’ supported by a wider spectrum of actors.
Hulsroj contends in this context
[t]hat every actor on the international law scene is relevant – and that the need for
broad consensus means that it will be the attitude of a mix of categories of actors that
will be formative of a ‘general principle’.68
tionale et suisse, Vol. I, 2nd ed. (Geneve: Librairie de l’Université, 1967) 94–103.
66
ICJ Reports 1969, p. 3, para. 177.
67
See Thirlway, 2003, 126. The ICJ in The North Sea Continental Shelf case contended
that the States Parties to the 1958 Geneva Convention on the Continental Shelf had in
some instances acted in the application of the Convention when delimiting maritime
boundaries. Because of the motive of the parties to apply the Convention the Court found
that ‘from their actions no interference could be drawn as to the existence of a rule of
customary law’ (ICJ Reports 1969, p. 3, para. 76).
68
Hulsroj, 1999, 246.
He does, however, not explain to the interested reader which other categories
of actors to include. Given Descamps proposal mentioned above that ‘the
sense common to all civilized peoples’ can be exchanged with the ‘opinio
juris communis of civilized mankind’, a suggestion can be made that includes
actors at sub-national levels, e.g. indigenous peoples, communities, national
NGO’s or cross-national levels, e.g. international NGOs, other international
organizations, such as WTO, IMF, WB etc. The expression ‘civilized nations’
or ‘ nations civilisées’ that are now to be found in the text of Article 38(1)(c) of
the Statute of the International Court of Justice originate from an amendment
made by Root. The original text of the proposal referred to ‘peuples civilisées’,
i.e. ‘civilized peoples’ or ‘civilized mankind’. In the sound of the tone of the
original proposal, the ‘word “nation” in Article 38(1)(c) should be understood
not in its politico-legal sense, as it is used in “League of Nations”, “United
Nations” or “International Law” but in its more general sense of a people, as
for instance, the Scottish nation, the French nation, the Maori nation etc.’69
What can be concluded here is that general principles generally depend on
the recognition by States. In addition, however, their recognition is based on
an opinio juris communis, a general global consensus, about what is just and
what is unjust. This common legal conscience is inferred from the ‘opinion
universelle’ about justice. The universality thus applies not only horizontally –
all States – but exhibits a vertical dimension as well – general opinion shared
by a larger variety of actors.
While the repercussions of this conclusion will be discussed below in the
context of sustainable development, it can be concluded here that finding how
and where to look for general principles is partly overlapping with finding
how to detect opinio juris of States.70 The search will also have to cover a
wider variety of texts, ideas and facts than those accepted by States. State-
ments of NGOs, indigenous peoples, local governments, for example, may be
indicative of a general legal conscience, given it is widely enough expressed.
6.3.6 In Sum
We can briefly summarize this chapter as follows:

General principles of law play a significant role in resolving normative
conflicts. For this reason, they are relevant to our investigation of the relation-
ship between norms of the multilateral trading system and climate measures.
69
Cheng, 1953, 9, fn. 35.
70
Whether these general principles then would also be binding on a sub-State level is a
different question, see for a discussion: Hulsroj, 1999, 248.
General principles as a source of international law gain legitimacy by rec-

ognition of the international community (opinio communis juris). The trou-
blesome customary law element of universal State practice is not required.
General principles are of such fundamental character that they are to be found
in most of the major legal systems of the world, and can, thus, be induced
from principles used in foro domestico. At the same time, they can equally be
deduced from international general logic. General principles are normative
statements of law applicable to both spheres at a time, but require no mere
copying of domestic principles into international law.
General principles are based on an opinio juris communis. The sources
for such opinio extend further than States, embracing the general sources of
opinio juris (declarations, statements etc.) along with a wider spectrum of
expressions of a ‘legal animus’, such as declarations, soft-law and statements
of NGOs and international organizations.
General principles do not necessarily reflect natural law but have a ‘natural
law component’ embedded in the notion of legal conscience or opinio juris
communis.
Principles are characterized by a certain degree of indeterminacy: principles
are never ‘finished articles’, law is a continuing process, principles can evolve
into conventional rules, but principles are always ‘unfinished’. As such, they
allow international law to grow.
6.4 Sustainable Development as a General Principle
Given its wide scope and abstract nature, the question arises whether sustain-
able development may be classified as an emerging legal principle. This is
an important question because if sustainable development can be classified
as a legal principle – whether general or customary – its legal relevance is
independent of the specific treaty formulation. Treaty references, while adding
a contextual shade to the principle, would leave its core meaning unaltered.71
71
One specific example can be found in the 2002 (Antigua) Convention for the Protection
and Sustainable Development of the Marine and Coastal Environment of the North East
Pacific. Art. 3(1)(a) reads: “For the purposes of this Convention, sustainable develop-
ment means the progressive change in the quality of human beings, which places it as
the central and primordial subject of development, by means of economic growth and
social equity and the transformation of methods of production and consumption patterns,
and which is sustained in the ecological balance and vital support of the region. The
process implies respect for national, regional and local ethnic and cultural diversity, and
full participation of people in peaceful coexistence and harmony with nature, without
prejudice to and ensuring the quality of life of future generations.” This definition gives
Further, if the principle of sustainable development is part of general public

international law, it would as such not be contingent upon State consent or
coherent practice in order to be relevant to courts and tribunals.
Despite the burgeoning literature on sustainable development, scholarly
debate still offers little insight into the legal nature of sustainable develop-
ment.72 Perceptions vary widely among legal scholars, covering all levels of a
normative hierarchy, from being a concept below the law73 to standing ‘above’
it.74
At one end of the spectrum, scholars consider sustainable development as
pure aspiration.75 Others define it as a ‘legitimate expectation’.76 Some construe
the concept of sustainable development as – at best – a soft law principle. A
small, but growing community of scholars, however, contends that sustainable
development does have normative value. Again, among them, the perception
of what counts as the substantive issue varies. Some note that despite the
principle’s normative content it is unlikely that sustainable development has
become a (customary) norm of international law, in itself.
The claim at the opposite extreme of the scale sees sustainable develop-
ment as evolving into a binding principle of customary law expressed by Judge
Weeramantry in his separate opinion in the Case Concerning the Gabčikovo-
Nagymaros Dam project.77 For reasons mentioned above, the claim of custom
is neither challenged nor supported by this thesis.
While it certainly does not seem accurate to describe sustainable develop-
ment as void of normative value, none of these options, however, serve to
precisely characterize sustainable development. Rather, as has been suggested
by Cordonier Segger and Khalfan, sustainable development in international
specific shape to the principle of sustainable development in the context of the protection
of the marine and coastal environment. However, it is too comprehensive to represent
general international law. It is interesting to note that a number of human rights norms
which form part of general international law are connected to the principle of sustainable
development as seemingly constituting some of its parts.
72
For the newer publications see B. Richardson, Environmental Law for Sustainability: A
Critical Reader, 2005; L. M. Warren, Sustainability and Law (Aldershot: Ashgate, 2005);
Cordonier-Segger and Khalfan, 2004; Cordonier-Segger and Weeramantry (eds.) 2004;
Schrijver and Weiss (eds.) 2004.
73
74
V. Lowe, ‘The Politics of Law-Making: Are the Method and Character of Norm Crea-
tion Changing?’ in M. Byers (ed.) The Role of Law in International Politics: Essays in
International Relations and International Law (Oxford: Oxford University Press, 2000)
217.
75
Brownlie, 2003, 276–277; Cassese, 2001, 384.
76
Marong, 2003, 45.
77
Judge Weeramantry, Separate Opinion; Sands, 2003, 254.
law can be understood as a combination of two complimentary approaches.

First, they suggest, sustainable development can be seen as a substantive area
of the law in a very real sense,78 approaching the concept as a ‘corpus of
international legal principles and treaties which address areas of intersection
between international economic law, international environmental law and
international social law aiming toward development that can last’.79
Second, sustainable development may also serve as a different type of
norm in its own right.80 This approach acknowledges the normative potential
of sustainable development to facilitate and require a balance and reconcili-
ation between conflicting legal norms relating to environmental protection,
social justice and economic development. As a principle of reconciliation,
sustainable development may be invoked by a court or tribunal to modify the
application of other norms.81
If the argument can be supported that sustainable development is a legal
principle, it becomes a tool with great power. In this respect, Lowe exemplifies
the principle in the following way:
[a] tribunal might one day assert, on the basis of the principle of sustainable devel-
opment, a power to modify not only the application of primary norms of customary
law but also treaty obligations. It might rewrite, rather than strike down, a bargain
struck by the parties that is shown to lead to unsustainable development and serious
environmental harm.82
If sustainable development as a legal principle can be shown to have inde-

pendent status it could offer an appropriate framework in which to view issues
of overlap and conflict between norms of economic, social, human rights and
environmental law.
6.4.1 The Normative Force of Sustainable Development and the Critique of

Indeterminacy
Before we now set out to examine the extent to which sustainable develop-
ment has become a part of the legal conscience of nations that transforms
78
So J.C. Weeramantry, ‘Foreword’ Cordonier-Segger and Khalfan, 2004, ix. Also Lowe,
1999, who sums sustainable development up as a “convenient umbrella term to label a
group of congruent norms”, 32.
79
Cordonier-Segger and Khalfan, 2004, 46.
80
Lowe, 2000, 214–215.
81
Lowe, 1999, 34.
82
V. Lowe, ‘Sustainable Development and Unsustainable Arguments’ in Boyle and Free-
stone (eds.) 1999, 37.
ideals83 and ‘collective hopes’84 into general principles and thus into binding
international law, we shall briefly recollect our findings in chapter 2.
We stated that the need to protect and enhance fundamental, natural life-
supporting systems is a core premise of sustainable development. Integration
therefore means the simultaneous consideration of economic, environmental,
and social factors in decision making by respecting the prerogative of these
essential ecological needs. Thus, when ‘balancing’ the components of sustain-
able development, priority must be given to protecting fundamental, natural
life-supporting systems in principle and in practice. This aspect of sustainable
development is the most fundamental – the one without which the concept
becomes indeterminate and meaningless.
How might these findings be translated into a legal context?
It becomes clear that sustainable development can only be expressed in a
principled way, rather than as a fixed set of rules. The manifold and diverse
approaches to legally defining sustainable development should, however, not
be taken as indicating that the concept is plagued by semantic indeterminacy,
rendering its normative core indecipherable. Rather than dismissing the prin-
ciple because of its proclaimed vagueness, as some scholars are wont to do,85
the challenge and reward lies in ‘operationalizing’ it or ‘putting it in action’.
The breadth of sustainable development – as of all principles – needs to be
recognized as an advantage; indeed as a necessary requirement for fulfilling
the task of a legal principle as we identified above. Rejecting (or ignoring) its
ability to empower international law to meet the challenges facing contempo-
rary and future societies represents a ‘safe track’, hardly a contribution to the
development of international law in a changing global order.
Embracing the concept, however, as a normative principle might still be
considered a novel, innovative step. But faced with international law aiming
at regulating qualitatively unprecedented challenges – global climate change
being chief among them – legal thinking has already abandoned a number of
ineffective and inadequate traditional perceptions.
83
See Verschuuren, 2003, 25.
84
Pallemaerts, 2003, 275.
85
See for example: M. McCloskey: ‘At best it is a concept and a hope. But its reach is so
broad and its hope is so great that it disintegrates when examined closely.’, ‘The Emperor
has no Clothes: The Conundrum of Sustainable Development’ (1999) 9:2 Duke Envtl. L.
& Pol’y F 154; H. Shue, ‘Ethics, the Environment and the Changing International Order’
(1995) 71:3 International Affairs, 460: ‘The worst ‘fudge’ at the moment, I believe, is
the notion of sustainable development. Everyone claims to be in favour of this supposed
perfect harmony of environmental protection and economic development, but no one
explains concretely how it works’.
In this context, the conventional dichotomy of lex lata and lex ferenda
might slow the development of new collective solutions to global challenges,
as it proceeds to ‘safeguard’ the ‘rule of law’. As we explored above, legal
principles are ‘correctives’ to the written law.86 They help bridge the gap be-
tween the ‘law as it is’ to the ‘law as it ought to be’ by introducing a communal
sense of justice and dynamism where it is lacking in the respective norms.
As we saw in chapter 2, we can divide sustainable development into a
number of core parameters. It is important to show that these core parameters
also establish an emerging ‘nucleus’ of a concise understanding of the princi-
ple in a legal sense.87
A precise legal definition, however, is neither possible nor desirable, nor
is it necessary. It is exactly the remaining ‘penumbra of uncertainty’ around
the nucleus of well-established meaning, to borrow once again Hart’s famous
metaphor,88 that invites consideration of the concept as a legal principle. Nev-
ertheless, despite its obvious importance, its understanding and integration is
one of the ‘least developed topics in international law, legal jurisprudence and
scholarship’.89 Rather than despondency and disillusion, however, the situa-
tion provides ground for hope and progress.
In a judicial context the question is whether the concept of sustainable
development has evolved into a principle, i.e. a norm, of international law
which can be applied by courts and tribunals.
86
See in this context T. Franck, ‘Non-Treaty Law-Making: When, Where and How?’ in R.
Wolfrum and V. Röben (eds.) Developments of International Law in Treaty Making (Ber-
lin: Springer, 2005) 417–435, noting: “Where a matter is referred to an international tri-
bunal with jurisdiction to decide cases in accordance not only with treaty law and custom
but also with ‘general principles of law’ the option to enrich the law by ascertaining and
employing general principles affords an opportunity for keeping the law from becoming
unduly rigid. This is particularly important because the international law-making system
as yet offers only a few, and usually cumbersome, processes for rectification’ (435).
87
The WCED report made several early proposals for legal change with regard to sustain-
able development patterns. Legal changes were suggested to
– recognize and respect the reciprocal rights and responsibilities of individuals and
states regarding sustainable development;
– establish and apply new norms for state and interstate behaviour to achieve sustain-
able development;
– strengthen and extend the application of existing laws and international agreements
in support of sustainable development;
– to reinforce existing methods and develop new procedures for avoiding and resolving
environmental disputes.
WCED Report, infra, 330. The report took special pains to enumerate the responsibility
of States towards their own citizens and other States to maintain ecosystems and related
ecological processes essential for the functioning of the biosphere.’ (ibid).
88
H.L.A Hart, The Concept of Law (Oxford: Clarendon Press, 1961) 120.
89
Weeramantry, 2004, Foreword, ix.
At this point, it is important to maintain the distinction between a legal rule

and a principle. To classify sustainable development as a rule of law would
require the definition of a complete and precise content. Classification as a
principle, on the other hand, necessarily presupposes a certain degree of in-
determinacy.
In general, the semantic scope of principles is large, allowing considerable
leeway for the discretion of the judge.90 Therefore one should not expect the
principle of sustainable development to be defined in practical terms. Like
justice or democracy, sustainable development may never be a ‘finished prod-
uct’. The determination of its substance will likely be a ‘continuing process’,
where a final definition is always beyond reach.
What can be expected in due time, however, is a stronger normative con-
tent.91 The principle may take more tangible form through a series of gradual
modifications. In both a horizontal and vertical context, the use and applica-
tion of the principle implies a crystallization and practical consolidation of its
content. As for horizontal determination, the use of the principle in various ar-
eas of law, e.g. environmental protection, international trade and competition
law and social development agreements, would enable us to grasp its content
from different angles. This is important for safeguarding the principle against
exclusiveness, i.e. relating to one particular area of law only, and against bias,
i.e. protecting one particular interest only. At the same time, it is of utmost
importance to pronounce the principle’s fundamental ecoogical core, against
which those different approaches can be calibrated.
The vertical determination approach increases the principle’s specificity.
Starting with its general manifestation in framework legislation (e.g. Articles
2 and 3.3 UNFCCC), specificity grows through its incorporation in successive
instruments and decisions (e.g. in the context of the Kyoto Protocol or domes-
tic climate measures). The generality of the principle of sustainable develop-
ment implies that subsequent use determines its specific content, eventually
to the point of generating precise legal rules. Again, it remains of the greatest
90
A. Ross and O.S. Andresen, Lærebog i Folkeret: Introduktion til den Almindelige Folkeret
i Fredstid, 5th revised ed. (Copenhagen: Nyt Nordisk Forlag, 1976) 107.
91
See H.C. Bugge, Miljøforvaltningsrett (2006a), 65, noting that the status of sustainable
development in international law gives it a relevance and weight to be a source of law in
national [in this case Norwegian] legal systems even outside the written law. ‘It has direct
effect in legal areas which are regulated by acts containing references to the principle but
also further through the importance the principle is about to gain as a general principle
of public international law.’ … But it remains to be seen which requirements courts are
going to set up to set aside an environmentally damaging measure by mere reference to
sustainable development as a legal principle. (translation by the author).
importance to set this process of vertical determination against the principle’s

basic meaning.
The distinction between principles and rules primarily rests on the specifi-
city and determinacy of the legal consequences of their application.92 While,
according to Dworkin, the application of a rule to specific facts leads to a
precise consequence, the application of a principle can be seen as a ‘legal
proposal’ without necessarily leading to a definite outcome. Rather, a prin-
ciple provides a general orientation and direction to which positive law must
conform.93 De Sadeleer sees principles as ‘flexible instruments of action’, able
to be ‘adapted and manipulated to suit the specific situations to which they are
being applied, while rules are a great deal more rigid.’94
With regard to the task of determining the legal nature of sustainable de-
velopment this classification needs to be kept in mind.95 The flexible and guid-
ing character of sustainable development let suppose its principled character
rather than a rule.
Before a principle can be accepted as law, it must, however, be shown to
have a ‘fundamentally norm creating character’.96 Does sustainable develop-
ment exhibit such a character? Some believe it does not.97 ‘Normativity,’ Lowe
says ‘by definition, must express itself in normative terms: it must be possible
to phrase a norm in normative language. But it is by no means clear that the
components of sustainable development can so be phrased’.98 According to
his view, the principle’s indeterminacy therefore precludes an ‘adding up’ to
a norm of international law.99 Although he recognises the normative status of
the principle and attributes a normative function to it, he denies the principle’s
92
See for a standard definition of a ’legal rule’: Hart, 1961, 8–12, 27–32, 97 et seq.
93
See Dworkin, 1999, 24, 26
94
De Sadeleer, 2002, 307.
95
The distinction is rather theoretical and has been subjected to strong criticism. Raz, for
example, found it impossible to draw a sharp distinction between rules and principles.
The differentiation between principle and rules depends on the degree of abstraction,
Raz believes, making the distinction between rules and principles less sharp. See: J. Raz,
‘Legal Principle and the Limits of Law’ (1972) 81:5 Yale L.J. 823–854.
96
See ICJ in North Sea Continental Shelf cases. The Court had in one of these cases to de-
cide whether the equi-distance principle had evolved into a rule of customary law despite
its original formulation in a treaty. The ICJ ruled that in order for a conventional rule to
make the transition into customary law, ‘it would in the first place be necessary that the
provision concerned should, at all events potentially be of a fundamentally norm-creating
character such as could be regarded as forming the basis of a general rule of law’ (ICJ
Reports1969, 74).
97
Lowe, 1999, 24.
98
Ibid., 26.
99
According to Lowe, “‘sustainable development’ looks like a convenient umbrella term to
label a group of congruent norms … Whatever the label might be, it is in itself not a norm;
capability of generating a norm in its own right (customary norm for that
matter).100
Such a view, respectable as it is, embraces too narrow a perception of
international law. First, international law is exclusively envisaged from a tra-
ditional perspective where the ‘positive’ sources are confined to conventional
and customary law rules. General principles of law are not considered. Yet,
Lowe continues to attribute normative substance to sustainable development
where it exercises a kind of interstitial normativity, ‘pushing and pulling the
boundaries of true primary norms when they threaten to overlap or conflict
with each other’.101 But such utilization as a ‘metaprinciple’, as Lowe refers
to it, is an inherent part of the nature of general principles of law. There is
no necessity to create a new ‘species of normativity’102 since such normative
function can readily be attributed to the category of general principles of law.
Second, general principles not only entertain traditional State actors but are
open to a wider forum of norm creators. The narrow view on State conduct
and State perception thus needs to be extended to ascertain an opinio juris
communis necessary for the evolution of a general principle as elaborated ear-
lier in this chapter. It is becoming a trite proposition that whereas States con-
tinue to be principal international actors, a multiplicity of international actors
influence international governance in general and international legislation in
particular.103 As mentioned in the previous section, the emergence of a general
principle needs the support of the general conscience of the international com-
munity. One aspect here is the ‘conscious promotion’ of specific issues, like
sustainable development, by non-State actors and epistemic communities.104
This broad support for sustainable development is neglected by too a narrow
focus on State conduct.
Third, in Lowe’s view, the concept’s vagueness and indeterminacy tell
against its norm-creating function. Also in this regard it must be contended
it can be no more than a name for a set of norms. Indeed, it might not even be that” (ibid.,
26).
100
Ibid., 30.
101
Ibid., 31.
102
Ibid., 21.
103
See Marong, 2003, 53.
104
See for example: S.J. Toope, ‘Redefining Norms for the 21st Century’ in Y. Le Bouthillier,
D. M. McRae and D. Pharand (eds.) Selected Papers in International Law: Contribution
of the Canadian Council on International Law (The Hague: Kluwer International, 1999)
197. With regard to epistemic communities see: P. M. Haas, ‘Banning Chlorofluoro-
carbons: Epistemic Community Effort to Protect the Stratospheric Ozone’ (1992) 46:1
International Organizations, 187–224; P. M. Haas, ‘Do Regimes Matter? Epistemic
Communities and Mediterranean Pollution Control’ (1989) 43:4 International Organiza-
tions, 377–403.
that despite the ongoing evolution of the principle’s concise meaning in a va-
riety of circumstances, there is a nucleus of determined scope that allows for
sufficient, identifiable normativity, capable of being phrased in a normative
language. As mentioned above, sustainable development demands the integra-
tion of its various components within the frame set by protecting the resilience
of essential ecosystem functions.
Lowe’s comments were aimed at Weeramantry for whom sustainable
development has normative value. He agrees with Weeramantry on the nor-
mative role of the principle, albeit at a somewhat lower or different level.
The difference, however, appears to be one of semantics more than anything
else. If sustainable development has a normative value and exerts a normative
force, it seems implausible to deny it a norm-creating character in this sense.
What then is the normative value of the principle of sustainable develop-
ment?
A principle can exert normative force in different respects. It can direct
State conduct or it can become relevant in the settlement of disputes, thus, in
a judicial sense. In other words, the normative value could be viewed from
a ‘legal producer’ or a ‘legal consumer’ perspective. The former would in-
quire into the principle’s role in national or international legislative processes.
Here, the principle is mainly to provide a policy goal for legislative initiatives
and changes. In this context sustainable development has been described as
a ‘public legitimate expectation that inevitably influences state’s conduct’.105
The question whether it creates specific rights and duties in this regard (‘to
develop sustainably’) could arguably answered in the affirmative, but will not
be discussed here.
The latter perspective of normativity regards the role the principle plays in
the application and enforcement of international law that is in the solution of
international legal disputes. General principles play a normative role not only
with regard to determining State conduct or the design of a policy measure,
guiding legislative or regulatory action. Principles also have a normative func-
tion if they are perceived as influencing directly or indirectly the outcome of
judicial decisions.106
According to a number of scholars, including both Lowe and Weeramantry,
the normative force of sustainable development can be exercised in a dis-
105
Marong, 2003, 43–44.
106
Koskenniemi recognizes a normative role of principles even in their indirect effect on the
substance of the decisions through a Court’s background theory, i.e. “when they provide
knowledge of the values and goals of the legal order. Hereby they set limiting conditions
for the construction of the background theory. They characterize the legal order in a very
general fashion allowing the Court to perceive it in a meaningful way.” Koskenniemi,
1985, 381.
pute settlement context. In this respect there is agreement that in the hands
of judges, the principle ‘could operate as some sort of ‘intervening principle’
mediating between the interstices of potentially legal principles’.107 In this
sense sustainable development can be understood as ‘a metaprinciple, acting
upon other legal rules and principles.’108
In a situation of conflicting primary norms, modifying norms, such as sus-
tainable development, establish the relationship between these norms. Lowe
describes it as ‘colouring the understanding of the norms that it modifies’.109
Such modifying norms do not seek to direct the conduct of legal persons –
they do not even address these persons. But they can be employed by judges
without having to determine their legal status beforehand. In this sense the
principle of sustainable development has a normative force. It is a judicial
principle, ‘created by judges and under their control’.110 As a modifying norm,
sustainable development can be announced by judges in the course of ex-
ercising their inherent judicial powers and as part of the reasoning in their
judgments’.111
Normative value lies thus in its potential to provide for reconciliation
where the application of norms fails to solve a conflict between different pri-
orities, for example the needs of development and the necessity to protect the
environment. Weeramantry recognizes that both, the law of development and
the law of the environment, are vital and developing areas of law. However,
they require the existence of a principle which harmonizes both needs. Such a
principle is the principle of sustainable development.
6.4.2 Substantial Function: Integration as Process or Result?
The more specific question remains as to the utility and functionality of sus-
tainable development as a judicial principle. In other words, does sustainable
development provide a substantial methodology or a mere procedural frame-
work for integration in the settlement of disputes involving conflicting norms?
Few scholars have pondered this question, and some of those that have did
so with some caution. Lowe, for example, argues that
as a goal or policy it [sustainable development] is perfectly adequate to offer some

guidance to judges in their approach to establishing priorities and accommodations
107
See Marong, 2003, 45.
108
Lowe, 1999, 31.
109
Ibid., 34.
110
Ibid., 35.
111
Ibid., 33.
between conflicting primary norms … In Gabčikovo, the Court could have managed
without it; but it chose instead to refer to the concept and, by doing so, to open the
possibility of the development of the concept as a framework for the reconciliation of
conflicts between development and environmental protection when they come before
it.112
Yet, it remains somewhat obscure how a mere concept or policy goal could
possibly determine priority of primary norms without, in his view, having
normative force.
Other scholars have therefore attempted to elucidate with greater precision
the mandate of sustainable development as a judicial reasoning tool, where
it can be defined as ‘the procedural and substantive requirements to accom-
modate, reconcile, or integrate economic growth, human rights and environ-
mental protection, for participatory, equitable improvement in our collective
quality of life that can last over the long term’.113
Sustainable development can be seen as introducing its normative elements
in the process of judicial reasoning, both in a procedural and a substantive
sense. The principle of sustainable development thus attempts a ‘holistic ap-
proach’ to the resolution of disputes, allowing parties to a dispute to address
the issues at stake in a wider context and requiring tribunals before deciding
the case to examine its reasoning in that broader context rather than isolating
a narrow legal issue from the mass of other concerns.
The normative force that Weeramantry refers to resides in the principle’s in-
herent substantive capacity to reconcile conflicting norms. This, as mentioned
above, in fact is the same kind of normativity that also Lowe recognises:
a concept such as sustainable development can be used by a tribunal to modify the

application of other norms. It acquires a kind of normativity within the process of ju-
dicial decision-making. Here in the context of judicial dispute settlement, the concept
can plainly affect the outcome of cases. And where the decisions of the tribunal are
regarded as having persuasive authority as statements of law … the application of the
concept will inevitably influence the further development of the law … It is in these
senses that the concept of sustainable development has real normative force.114
The substantive component of Lowe’s ‘interstitial norm’ is the requirement of

reconciliation. Thus, as supposed above, what separates these two prominent
scholars is merely a matter of semantics. Despite their different approaches,
112
Lowe, 1999, 34–35.
113
Cordonier-Segger, ’Governing and Reconciling Economic, Social and Environmental
Regimes’ in Cordonier-Segger and Weeramantry (eds.) 2005, 590.
114
Lowe, 1999, 34.
their underlying ideas about legal normativity of sustainable development

seem essentially the same.115
From a doctrinal perspective, it can be concluded that sustainable develop-
ment does have a normative pull and that it is its integrative character which
exerts this force. As elaborated above, the normative force aims at the integra-
tion of various norms and respective interests while ensuring the functioning
of essential natural processes. These are the core parameters of the principle’s
normative substance.
6.4.3 International Jurisprudential Practice
The theoretical acknowledgement of the normative force as a principle of

integration finds practical support by international courts and tribunals.
Sustainable development as a principle of integration had been subject to in-
ternational judicial consideration in cases involving apparently incompatible
economic, social and environmental priorities. It has explicitly been invoked
by the International Court of Justice116 and the Appellate Body of the World
Trade Organization.117 It has been raised in cases dealt with by the International
Tribunal for the Law of the Sea (ITLOS),118 in arbitrations at the Permanent
Court of Justice (PCA)119 and may be on its way to inform the awards of the
International Centre for Settlement of Investment Disputes (ICSID).120
115
Marong, 2003, 44.
116
Case Concerning the Gabčikovo-Ngymaros Project (Hungary v. Slovakia) 1997, ICJ Rep.
7.
117
AB in US–Shrimp.
118
See e.g. Southern Bluefin Tuna Cases (New Zealand v. Japan and Australia v. Japan),
International Tribunal for the Law of the Sea, Order of August 27, 1999, Request for
Provisional Measures, <http://www.un.org/Depts/los/ITLOS/Order-tuna34.htm>; the
MOX Plant Case (Ireland v. United Kingdom) Provisional Measures (2001), Case 10;
and the Case Concerning the Conservation and Sustainable Exploitation of Swordfish
Stocks in the South-Eastern Pacific Ocean (Chile v. European Community) The ITLOS
Special Chamber in this case suspended proceedings until 1 January 2004, ITLOS, Case
No. 7 – ITLOS Order 2001/1 of 15 March 2001, and Order 2003/2. See: <http://www.
un.org/Depts/los>.
119
Arbitration Regarding the Iron Rhine (‘IJzeren Rijn’) Railway between the Kingdom of
Belgium and the Kingdom of the Netherlands, Arbitral Tribunal of the PCA, The Hague,
24 May 2005.
120
See International Centre for the Settlement of Investment Disputes, online: ICSID <http://
www.worldbank.org/icsid/>. See UNEP, FI and Freshfields, A Legal Framework for the
Integration of Environmental, Social and Governance Issues into Institutional Invest-
ment, 2005.
I shall for reasons of space only review some of these references. It is,
however, important to note that in a number of cases which required the rec-
onciliation of competing social, economic, and environmental priorities by
international courts or tribunals, a principle-based approach to integration was
sought without explicit reference to sustainable development.121 The implicit
references, however, are equally indicative of the long-standing acceptance by
international courts and tribunals of the normative reconciliatory force now
entailed in the principle of sustainable development.
In those cases where reference to sustainable development was explicit,
sustainable development as a principle of integration was used to substantively
determine the outcome of the disputes. In addition to the examination of the
US–Shrimp and the Brazil–Retreaded Tyres cases included in our assessment
in chapter 5, two further cases shall now be examined in more detail.
a) ICJ Case Concerning the Gabčikovo-Nagymaros Project (Hungary v.

Slovakia) 1997
This case gave sustainable development for the first time explicit recognition
in international judicial considerations. Much has been written on the impact
121
Examples include the ICJ Advisory Opinion on the Legality of the Threat or Use of
Nuclear Weapons, July 8 1996, ICJ Rep. 1996, 226; the Case Concerning Nuclear Tests
(New Zealand/Australia v. France) ICJ Rep. 1974, 457/253; the Case Concerning Certain
Phosphate Lands on Nauru (Nauru v. Australia), ICJ Rep. 1989, 240; the Case Concern-
ing Fisheries Jurisdiction (Spain v. Canada), ICJ Rep. 1998, 432; and still contentious
is the Paper Mill on the River Uruguay Case, 2006, which will directly deal with recon-
ciliation of protection of an ecological river system, human rights concerns and develop-
mental interests. See for more information: <http://www.cedha.org.ag>. Other relevant
cases include the following WTO disputes: US–Gasoline (AB Report 1996); EC–Biotech
(Panel, Interim Report 2006); EC–Hormones (AB Report 1998); and EC–Asbestos (AB
report 2001) which will be analyzed in more detail below in Part II of this thesis. Cases
before the UN Human Rights Committee (UNHRC) relate to issues of cultural rights of
indigenous peoples regarding the protection of the ‘ecology of the land’ (Ominayak and
the Lubicon Lake Band v. Canada [1984], UNHRC, Communication No. 167, reported
in 3 IRLR, 26–61); and ‘ecological balance’ (Länsman [Jouni] et al. v. Finland [1995],
UNHRC, Communication No. 671, reported in 3 IELR, 115–133). The European Court
of Human Rights (ECHR) in Hatton and Others v. United Kingdom (2003) 37 EHRR
28 (Application 36022/97) recognized the necessity of a balance between a human right
to a healthy environment and other social and economic rights. For more examples and
detailed discussion see A. Boyle, ‘Between Process and Substance: Sustainable Develop-
ment in the Jurisprudence of International Courts and Tribunals’, in H.C. Bugge and C.
Voigt (eds.), Sustainable Development in International and National Law, Europa Law
Publishing (2008).
of the Court’s finding.122 The focus of this brief analysis is therefore con-
fined to the impact of sustainable development as a principle of international
law.
The case concerned a dispute on the construction of a number of dams
on the Danube River. Hungary and Czechoslovakia had in 1977, by treaty,
agreed to build and to jointly operate these dams. The project would involve
diverting river waters, a matter on which both parties agreed. After an initial
construction period, Hungary suspended work on the project in 1989, citing
the likelihood of significant environmental harm to the ecological river system
and its biological diversity and to the water supply of Budapest. Czechoslo-
vakia, after 1993 Slovakia, proceeded unilaterally with constructing one of
the dams (the Gabčikovo power plant) which required the diversion of c. 80
per cent of the shared water into a bypass canal on Slovak territory. In 1992
Hungary purported to terminate the 1977 treaty. When Slovakia disagreed the
matter was referred to the ICJ in 1993.
In its finding the Court invoked the concept of sustainable development in
various ways. First, the Court left the 1977 treaty intact but made reference to
sustainable development when deciding on the legal requirements of the 1997
treaty for the future conduct of the Parties. The factual situation had developed
since the conclusion of the treaty and environmental protection had emerged
as an important consideration. The Court recognized this:
Throughout the ages, mankind has, for economic and other reasons, constantly inter-
fered with nature. In the past, this was often done without consideration of the effects
upon the environment. Owing to new scientific insights and to the growing aware-
ness of the risk for mankind, – for present and future generations – of pursuit of such
interventions at an unconsidered and unabated pace, new norms and standards have
been developed, set forth in a great number of instruments during the last two decades.
Such new norms have to be taken into consideration, and such new standards given
proper weight, not only when States contemplate new activities but also when continu-
ing with activities begun in the past. This need to reconcile economic development
with protection of the environment is aptly expressed in the concept of sustainable
development.123
The Court, attempting to integrate development and environmental protec-

tion, concluded that
[f]or the purpose of the present case, this means that the Parties together should look
afresh at the effects on the environment of the operation of the Gabčikovo power plant.
122
See, for an overview by Sands, 1999, 389.
123
Para. 140.
In particular they must find a satisfactory solution for the volume of water to be released
into the old bed of the Danube and into the side-arms on both sides of the river.124
For the future, the legal effects of the 1977 Treaty would require steps to make
the existing lock at Gabčikovo conform to environmental requirements, while
abandoning the development of further dams. In its finding, the Court in effect
suggested re-writing the initial treaty, which had envisaged a system of locks.
Thus, the application of sustainable development not only allowed the con-
sideration of the project’s environmental impact but the substantive impact of
these considerations on the treaty-based rights and obligations of the Parties,
which resulted in significantly limiting the treaty rights of Slovakia.
The Court acknowledged the legal force and function of sustainable de-
velopment not only in a procedural manner to ‘achieve an accommodation
of views and values’ but also in a substantive way.125 Requiring a satisfactory
volume of water be released from the channel into the main river clearly indi-
cated the substantive impact of sustainable development.
The Court itself did not elaborate on the legal status of sustainable devel-
opment. It consequently referred to sustainable development as a concept. In
effect, however, it applied and accepted the concept as having direct normative
force, which could be indicative of the status as a principle. The only indica-
tion of what the Court might have had in mind could be read from the Separate
Opinion of Judge Weeramantry, discussed above. According to Weeramantry,
the principle of sustainable development is ‘a part of modern international
law by reason not only of its inescapable logical necessity, but also by reason
of its wide and general acceptance by the global community’.126 For him, it
is obvious that the principle exerts a harmonising and reconciling function,
requiring the balancing of development and environment in order to avoid ‘a
state of normative anarchy’.127
Weeramantry recognized that the principle has ‘a significant role to play in
the resolution of environmentally related disputes’. Sustainable development,
he states, ‘offers an important principle for the resolution of tensions between
two established rights’.128
In precisely this sense the principle has been applied in the Gabčikovo case.
It demands the judicial function to balance competing interests and to bridge
over conflicting rights. The outcome was a compromise that subordinated
developmental plans to the ecological requirements of the river and riparian
124
Ibid.
125
See, for example, Sands, 1999, 394.
126
ICJ Reports 1997, 95.
127
Ibid., 90.
128
Ibid., 95.
ecosystem. While the healthiest solution as far as the ecosystem was concerned
would have been no dam at all, in the attempt to reconciling developmental
considerations with reducing the ecological impact the Court suggested the
preservation of the status quo – one dam, not two – and to significantly reduce
the volume of deviated water as an appropriate solution in accordance with
While at the time of the finding Weeramantry’s view might still have been
somewhat novel and unconventional, he certainly contributed to the consoli-
dation of sustainable development’s legal status and its rising in the normative
hierarchy that has taken place in the decade after the decision. His separate
opinion gave an important impetus not only to countless doctrinal elabora-
tions but it also had repercussions in other judicial findings, both by domestic
courts as well as by international tribunals, of which the next case gives an
example.
b) Arbitration regarding the Iron Rhine (‘IJzeren Rhine’) Railway (Belgium

v. Netherlands) 2005
The dispute concerned the reactivation of the historical ‘Iron Rhine’ railway
between Belgium and Germany, crossing the territory of the Netherlands.
Transit rights were conferred to Belgium in Article XII of the 1839 Treaty of
Separation. Since 1991 the line was basically out of use and during the 1990s
the Netherlands designated a number of nature reserves in areas on either
side of the railway route. Following an Environmental Impact Assessment
in 2001, Belgium intended the temporary use of the line with prospect of
full reactivation. The parties, however, disagreed on such use and the alloca-
tion of costs necessary for meeting environmental requirements set by the
Netherlands. Belgium considered the environmental measures imposed by the
Netherlands on the reactivation ‘highly expensive’, rendering the exercise of
its rights ‘unreasonably difficult’.
The Tribunal, recalling the various principles of treaty interpretation, ac-
knowledged integration as promoted by sustainable development to be part of
the relevant rules of international law applicable in the relations between the
parties, premised on Article 31.3(c) of the Vienna Convention on the Law of
Treaties. ‘Today,’ the Tribunal noted,
both international and EC law require the integration of appropriate environmental

measures in the design and implementation of economic development activities …
Importantly, these emerging principles now integrate environmental protection into
the development process. Environmental law and the law on development stand not
as alternatives but as mutually reinforcing, integral concepts, which require that where
development may cause significant harm to the environment, there is a duty to prevent,
or at least mitigate, such harm.129
By referring to the findings of the ICJ in the Gabčikovo-Nagymaros case –

‘[this] need to reconcile economic development with the protection of the
environment is aptly expressed in the concept of sustainable development’
– the Tribunal recognized that
[t]his duty, in the opinion of the Tribunal has now become a principle of general in-
ternational law. This principle applies not only in autonomous activities but also in
activities undertaken in the implementation of specific treaties between the Parties.130
In this sense, the Tribunal applied the notions of reconciliation and integration
as expressed in the principle of sustainable development to the allocation of
costs. The principle demands ‘economic development … to be reconciled with
the protection of the environment,’ and in doing so, ‘new norms have to be
taken into consideration, including when activities begun in the past are now
expanded and upgraded.’131 Accordingly, the Tribunal found that ‘Belgium’s
right of transit and the Netherlands’ legitimate environmental concerns are to
be, as far as possible, reconciled’.132 ‘Major adaptation and modernisation of
an existing railway must today’ the Tribunal stressed, ‘include necessary envi-
ronmental protection measures as an integral component of such project’.133
In applying the principle of sustainable development the Tribunal made
environmental requirements part and parcel of the project. Integration in this
context was seen as ‘internalizing’ the environmental costs in the overall costs
(and financial risks) of the reactivation project. It made clear that
[t]he exercise of Belgium’s right of transit … thus may well necessitate measures by
the Netherlands to protect the environment to which Belgium will have to contribute
as an integral element of its request. The reactivation of the Iron Rhine railway cannot
be viewed in isolation from the environmental protection measures necessitated by
the intended use of the railway line. These measures are to be fully integrated into the
project and costs.134
129
Para. 59, with particular reference to Principle 4 of the Rio Declaration: environmental
protection shall constitute an integral part of the development process and cannot be con-
sidered in isolation from it.
130
Para. 59, emphasis added.
131
Para. 221.
132
Para. 221.
133
Para. 220.
134
Para. 223.
Therefore, ‘[t]he Belgium obligation to fund the environmental element of

the overall costs of the reactivation is integral to its exercise of its right of
transit.’135
Although the Treaty of 1839 did not deal with environmental issues at all,
the Tribunal, in applying the principle of sustainable development, ‘read into’
the initial treaty text the allocation of environmental costs of the project. The
Tribunal recognized that environmental protection is now defining not only
the scope of the project but also the treaty-based rights of the Parties and the
sovereign rights of the Netherlands. To demand environmental protection was
recognized as a sovereign right of the Netherlands and to bear the costs of
environmental protection measures a treaty obligation of Belgium, or, in other
words, an integral part of its treaty-based transit right. Sustainable develop-
ment as a legal principle not only demanded therefore the reconciliation of
environmental and developmental interests, it also – and most importantly
– required the integration of necessary environmental protection, including its
costs, into the development project. It thus set up a substantive requirement to
carry out such integration.
6.4.4 In Sum
These case examples show the use of sustainable development as a legal tool
on a principled basis requiring different strands of international law – and
different values – to be treated in an integrated manner. The normative force of
sustainable development has led to rendering decisions that challenge previ-
ous judicial practice or rewrite written treaty provisions. In this context, these
cases indicate that ‘sustainable development’ has gained substantive legal
weight.
6.5 Legitimacy of Sustainable Development
As indicated above, general principles can be legitimized in two ways: by

being induced from national legal system or deduced from international legal
conscience and logic. In the case of sustainable development as a general legal
principle no clear distinction can be made between these two possibilities. It
is rather their combination that provides the basis of the principle’s normative
force and legitimacy.
135
Para. 226.
6.5.1 Foro Domestico
In chapter 1 we have already given numerous examples of the inclusion of

sustainable development in domestic acts, regulations and even national con-
stitutional provisions.
Here we now attempt to show that sustainable development has also be-
come a judicial tool applied in various national courts. Whether as a norm
embodied in the domestic legislation or as an independent principle, sustain-
able development is invoked when deciding how best to reconcile conflicting
interests.
While space does not permit a wide-spread and detailed examination, I
would like to review briefly a few representative cases from India, New Zea-
land and Sri Lanka.
In 2000, the Supreme Court of India in Narmada Bachao Andolan v. Union
of India when examining the socio-environmental impacts of the Sardar Saro-
var Dam on the Narmada River, observed that
Sustainable development means what type or extent of development can take place,
which can be sustained by nature/ecology with or without mitigation.136
Here, development was associated mainly with material or economic progress.

Indian courts have attempted to provide a balanced view of priorities in cases
involving environmental matters. As India still is a developing country, certain
(minor) ecological sacrifices were deemed necessary, while keeping in mind
the common nature of the environment and its criticality to the community.
It was recognized that also future generations may benefit from policies and
laws that further environmental as well as developmental goals. This ethical
mix was termed sustainable development and had also previously been recog-
nized by the Supreme Court in the Taj Trapezium case.137
Previously, the Supreme Court had already recognized the principle of sus-
tainable development in Vallore Citizens Welfare Forum v. Union of India &
136
2000 (10) SCC 664 at 727.
137
M.C. Mehta v. Union of India (Taj Trapezium Case) AIR 1997 SC 734, 30.12.1996. The
case concerned the preservation of the historical Taj Mahal against massive industrial
pollution according to sustainable development. The Court stated: ‘The old concept that
development and ecology cannot go together is no longer acceptable. Sustainable devel-
opment is the answer. The development of industry is essential for the economy of the
country, but at the same time the environment and the ecosystems have to be protected.
The pollution created as a consequence of development must be commensurate with the
carrying capacity of our ecosystems’.
Others.138 In this case which concerned the environmental and health impacts
of pollution caused by tannery effluents, the Court had ‘no hesitation in hold-
ing that ‘Sustainable Development’ as a balancing concept between ecology
and development has been accepted as part of Customary International Law
though its salient features have yet to be finalised by the International Law
Jurists’.139
In State of Himachal Pradesh v. Ganesh Wood Products140 the Supreme
Court held a government department’s approval to establish forest-based
industry to be invalid because ‘it is contrary to public interest involved in
preserving forest wealth, maintenance of environment and ecology and con-
siderations of sustainable growth and inter-generational equity’. In Indian
Council for Enviro-Legal Action v. Union of India (CRZ Notification case)141
the Court noted that the principle of sustainable development would be vio-
lated if the industrial activity had a substantial adverse ecological effect. In
case of such effect, the Court saw remedying a damaged environment as part
of the process of ‘Sustainable Development’ and as such [the] polluter is liable
to pay the cost to the individual [who] suffers as well as the cost of reversing
the damaged ecology.
Another example is a growing body of jurisprudence on ‘sustainable
management’ in New Zealand. New Zealand was one of the first countries to
take steps to incorporate sustainability into an enforceable domestic environ-
mental and resource management regime. The 1991 Resource Management
Act sets out the promotion of sustainable management as its central purpose
in Section 5.
(1) The purpose of this Act is to promote the sustainable management of natural and
physical resources.
(2) In this Act, “sustainable management” means managing the use, development, and
protection of natural and physical resources in a way, or at a rate, which enables people
and communities to provide for their social, economic, and cultural well-being and for
their health and safety while
(a) Sustaining the potential of natural and physical resources (excluding minerals) to
meet the reasonably foreseeable needs of future generations;
138
Vallore Citizens Welfare Forum v. Union of India & Others, Supreme Court of India, JT
1996(7) SC, 375–95.
139
Ibid., para. 10. The Supreme Court saw ‘The Precautionary Principle’ and ‘The Polluter
Pay Principle’ as essential features of sustainable development and used it to argue for the
inclusion of these two principles into Indian law.
140
AIR 1996 SC 149.
141
AIR 1996, 5 SCC 281.
(b) Safeguarding the life-supporting capacity of air, water, soil, and ecosystems;
and
(c) Avoiding, remedying or mitigating any adverse effects of activities on the envi-
ronment.
‘Sustainable management’ instead of ‘development’ was deliberately adopted

in order to narrow the issues to be integrated. In so doing, issues like social
inequities and redistribution of wealth were excluded.142 The definition of
sustainable management contemplates communities managing resources to
provide their socio-economic and cultural well-being, health and safety, while
preserving the ecological integrity of the environment.143 The management
function is thus qualified by a strong ecological requirement, incorporating
a responsibility to sustain the potential resources to meet the needs of future
generations; to safeguard the present life-supporting capacity of the biosphere;
and to avoid, remedy, or mitigate adverse effects on the environment.144 The
qualification of an ‘ecological bottom line’ in s 5(2) that can override manage-
ment matters within the process of integrated environmental management has
been recognized in a number of decisions of the New Zealand Environment
Court.145
142
Report of the Review Group on the Resource Management Bill (1991), 6, para. 3.3, refer-
ring inter alia to the WCED.
143
Cases include Aqua Marine Limited v. Southland Regional Council; C-126/97, recently
endorsed in; North Shore City Council v. Auckland Regional Council (1997) NZRMA
59, 93; and the High Court in NZ Rail Limited v. Marlborough District Council (1994)
NZRMA 70 HC.
144
D. Grinlinton, ‘Contemporary Environmental Law in New Zealand’ in Bosselmann and
Grinlinton (eds.) 2002, 27.
145
NZ Rail Limited v. Marlborough District Council (1993) 2 NZRMA 470; Marlborough
District Council v. Southern Ocean Seafood Ltd (1995) NZRMA 227; Independent News
v. Manukau City Council, Environment Court Decision A103/2003 and Ngati Rangi
Trust v. Manuwatu-Wanganui Regional Council, Environment Court Decision A67/2004;
Genesis Power Limited v. Franklin District Council, Environment Court Decision No.
A148/2005. In this case, the Court applied sustainable management as entailed in sec. 5
of the NZ RMA to balance the interests in supplying renewable energy (primarily based
on climate change concerns) by developing a wind park against landscape and amenity
values to the benefit of the former. The court noted ‘[S]ection 5 concerns are to ensure
present people and communities do not, in pursuit of their wellbeing, destroy existing
stock of natural and physical resources so as to improperly deprive future generations
of the ability to meet their needs. Climate change is a silent but insidious threat that
scientists tell us threatens to improperly deprive future generations of their ability to meet
their needs.’, para. 227.
A further example is provided by Sri Lankan jurisprudence. The Supreme

Court in the Eppawala Phosphate Mining case146 made specific reference to
the principle of sustainable development and Sri Lanka’s environmental obli-
gations under international law. This case involved a proposal to contract out
the phosphate mine in Eppawala to a foreign (US) company. The petitioners
alleged that the terms of the agreement with the company were not conducive
to Sri Lanka and that the project would cause significant environmental dam-
age (no EIA had been prepared). In a scholarly judgment, Justice Amerasinghe
held that the proposed agreement to exploit the Eppawala mine should be
considered in light of the principles embodied in the Stockholm Declaration
on the Human Environment of 1972 and the Rio Declaration on Environment
and Development of 1992 (103).
Justice Amerasinghe was of the view that authorities must pay due regard
to the general principle encapsulated in the phrase sustainable development,
and that human development and utilization of natural resources must take
place in a sustainable manner. Referring to the definition of sustainable de-
velopment put forward by the WCED, Justice Amerasinghe pointed out that
some of the elements encompassed by the principle of sustainable develop-
ment were of special significance to this case:
[f]irst, the conservation of natural resources for the benefit of future generations – the
principle of inter-generational equity; second, the exploration of natural resources in
a manner which is ‘sustainable’, or ‘prudent’ – the principle of sustainable use; the
integration of environmental considerations into economic and other development
plans, programmes and projects – the principle of integration of environment and
development needs.
Accordingly, the Court ordered that no contract could be entered into by the
respondents to exploit the Eppawala deposit without a comprehensive explo-
ration and study and the public disclosure of the results of such exploration
and study. The project proponent was also directed to obtain approval from the
Central Environmental Authority in accordance with domestic law.
In an earlier case Justice Amerasinghe had stated accordingly, ‘[i]n my
view, the human development paradigm needs to be placed within the context
of our finite environment, so as to ensure the future sustainability of the mineral
146
Bulankulama v. Ministry of Indus. Dev., Sup. Ct. Application No 884/99 (FR) (Sri Lanka
2000), available at <http://www.elaw.org/custom/custompages/resourceDetail.asp?profile
_ID=163>.
resources and of the water and soil conservation ecosystems of the Eppawala
region, and of the North Central Province and Sri Lanka in general.’147
Commenting on this case, Atapattu, a renowned legal scholar, describes
the practical impact of the Court’s finding.
Thus, at least as far as Sri Lanka is concerned, sustainable development has attained
legal status as a result of its endorsement by the Supreme Court. As such, development
projects and activities undertaken contrary to the principle of sustainable development
will run the risk of being struck down by the Court as illegal.148
These few examples support Nanda and Prings’s statement that: ‘In the ab-
sence of clear cut legal standards to decide an international case, the trend is
for national courts to step in and apply international “soft law”, provided it has
sufficient state backing.’149 However, the case to be decided does not necessar-
ily have to be an ‘international’ case. Domestic cases call for the application
of international norms via certain general clausula as well.
Moreover, if the use by national courts of a general principle like sustain-
able development that is transnational in scope is based on a deduction of this
principle from international recognition, the same principle when applied by
an international court or tribunal would not need to be induced again from
those domestic systems.
Thus, transnational general principles present us with a kind of ‘chicken
or egg’150 dilemma. To either induce them from domestic law or deduce them
from international legal standards would be unsatisfactory because it might
be difficult for both systems to comprehend fully the nature of the principle.
147
M.M. Ariyaratna and five others v. M.K. Sashidaran, 1(4) S. Asian Envt’L L. Rep., 151
(1994).
148
S. Atapattu, ‘Sustainable Development, Myth or Reality?: A Survey of Sustainable
Development under International Law and Sri Lankan Law’ (2002) 14:2 Georgt. Int’l
Environm. L. Rev., 296.
149
P. Nanda and G. Pring, International Environmental Law & Policy for the 21st Century,
(Ardsley, N.Y.: Transnational Publishers, 2003) 15 with further reference to G. Pring, J.
Otto and K. Natio, ‘Trends in International Environmental Law Affecting the Minerals
Industry (Part II)’ (1999) 17:2 J. Energy Nat. Resources L., 163.
150
The dilemma of causality commonly posed as, “Which came first, the chicken or the
egg?” is found earliest in Plutarch’s Moralia, in the book entitled “Table Talk,” a series
of arguments based on questions posed to various people drinking around a table. Under
the section entitled, “Whether the hen or the egg came first,” the discussion is introduced
in such a way as to suggest that the origin of the dilemma was even older: “the problem
about the egg and the hen, which of them came first, was dragged into our talk, a difficult
problem which gives investigators much trouble. And Sulla my comrade said that with a
small problem, as with a tool, we were rocking loose a great and heavy one, that of the
creation of the world.”
Nor would it be correct to require an order of succession. The development

of transnational principles often happens in ascending and descending, but
parallel, directions. Deriving arguments from both directions might be more
accurate if less concordant with traditional methodology.
The principle of sustainable development is neither fully international, nor
is it based on domestic law only. It is both.
6.5.2 International Legal Conscience
Further, the reflection of sustainable development in the legal conscience of

the international community is an important indicator for its evolution into a
general principle of law.
It must suffice here to refer to chapter 1 where we observed that the objec-
tive of sustainable development is part and parcel, sometimes even purpose, of
a large number of binding and non-binding international texts and documents.
In uncountable ways, States, IGOs, NGOs, business associations, even multi-
national corporations have made reference to sustainable development. Global
education programmes, e.g. the UN Decade, and the Earth Charter, national
legislation, political declarations and administrative guidelines incorporate
the objective of sustainable development. Global Summits have elaborated
on sustainable development. Sustainable development as an integrationist
principle has been endorsed by nearly all areas of society: politics, law, ethics,
economics, corporate responsibility, communication, education, agriculture,
architecture etc.
From our observations in chapter 1 it can thus be concluded that the prin-
ciple of sustainable development has become part of the ‘universal public
opinion’, opinio juris communis.
6.6 The Role of the Judiciary in Promoting Sustainable Development
After having provided arguments for the legal relevance of sustainable de-
velopment as a general principle, it is timely to ask what role it plays in the
settlement of a dispute.
The rule of law is pre-eminent to the achievement of global sustainable de-
velopment. Sustainable development needs to be promoted through a variety of
media and channels, i.e. education, political decision making, ethics, research
etc. – but also through law. In this context Weeramantry states that ‘judges
being such an important part of the legal establishment must necessarily be

involved in this – and sensitively involved.’151
The judiciary assumes a particular responsibility to ensure the balanced
hearing of powerful and not so powerful or even voiceless interests, i.e.
where the interests of generations unborn, ecological systems or the poor are
involved. The principle of sustainable development will in these cases be a
working tool for the judiciary. In this sense, sustainable development as a
legal principle awaits the craftsmanship of concerned and serious judges to
shape it into a practical means of balancing conflicting interests in a sustain-
able manner. The practical implications of the principle will depend on the
case in question and develop on a case-by-case basis. But judges can elevate
the standing of the principle ‘by moving it up the hierarchy of legal norms and
principles, thus preventing it from being lightly brushed aside by political,
commercial or other interests that seek to advance “development” whatever
the cost.’152 Weeramantry notes in this context:
Sustainable development is yet an infant concept, at least so far as modern law is con-
cerned. As an infant concept it needs to be fostered and developed. Treaties and legisla-
tion cannot anticipate the nuances of the myriad practical problems that could arise.
When cases involving sustainable development arise the judiciary will find itself called
upon to apply a broad general principle, the detailed implications of which have not yet
been considered … In short the judges are at the cutting edge of the development of
this concept and both domestically and internationally will need to show imagination,
initiative and vision in handling a matter so deeply fraught with implications for the
global future.153
There is still much work to be done on questions of doctrinal construction.

Sustainable development is the conceptual framework that can be applied by
courts and tribunals in situations where various interests intersect. In apply-
ing the principle, the different interests (and respective norms) need to be
seen as equal and integral parts. The reconciliation of interests then needs to
be set against the absolute limit of non-interference with certain fundamental
ecological functions (that need to be protected ‘at all costs’). In this sense,
sustainable development as a legal principle of integration has been and will
be applied by courts and tribunals. Good jurisprudence will be essential to its
more frequent use. The judiciary is a key player in securing the construction
of a mechanism that ensures the reconciliation of various interests under the
framework of sustainability.
151
Weeramantry and Cordonier-Segger (eds.) 2005, 444.
152
Ibid., 445.
153
Ibid.
The application of the principle might take a number of forms, from filling
‘white spots’ in the applicable law, enabling treaty interpretations that take ac-
count of this development in international, national and transnational law to,
as Lowe suggested, ‘rewrit[ing], rather than strik[ing] down, a bargain struck
by the parties that is shown to lead to unsustainable development’154
An overview over the potential use of the concept by judges is found by
Frerichs:
Dennoch sprechen einige Argumente für die rechtliche Verwendung des Konzepts
nachhaltiger Entwicklung, nämlich als Metanorm für den gerichtlichen Gebrauch.
Gemeint sind damit Normen zweiter Ordnung, die den Richtern Argumentations- und
Entscheidungshilfen in solchen Fällen bieten, in denen (gewohnheitsrechtliche und/
oder vertragliche) Normen erster Ordnung konfligieren, also Abwägungsentschei-
dungen zu treffen sind. Auch wo das Leitbild nachhaltiger Entwicklung noch nicht
kodifiziert ist, kann es über die Urteilsbegründungen in die Rechtsprechung einfließen
und normative Kraft und institutionelle Wirkung entfalten.155
It is this function of the principle of sustainable development that makes it

currently one of the most vibrant elements of both international and domestic
law. A coherent, normative theory of sustainable development which com-
bines arguments of sociological, governance, democratic, economic and moral
theories could elicit the role of judges as key figures in the transformation
process of international societies. Judges and arbitrators can – under certain
circumstances – better defend long-term, common and global interests against
the short-sighted sovereign (and often economic) interests often pursued by
States in treaty negotiations. By developing the law the judiciary could carry
out punctual legislative functions and replace ‘non-sustainable’ law.156 Judges
thereby might become guarantors of sustainable development.157
It is therefore important to examine – as we shall endeavour in Part III – the
role the principle can play in the practice of dispute settlement and adjudica-
154
Lowe, 1999, 37.
155
S. Frerichs, Nachhaltige Entwicklung als Forschungsziel – Fragen an die Soziologie der
Wissenschaft (Trier: Zentrums für europäische Studien, Universität Trier, 2002).
156
S. Frerichs, Die rechtliche Dimension einer nachhaltigen Entwicklung in der Europä-
ischen Union (Bamberg: Otto-Friedrich-Universität Bamberg, 2003) 13–14. With regard
to the responsibilities of the European Court of Justice she suggests that ‘[w]enn dem
Gemeinschaftsgesetzgeber … keine generelle Untätigkeit vorgeworfen werden kann, je-
doch eine manglende (sekundärrechtliche) Operationalisierung des Nachhaltigkeitsziels,
könnte der EuGH somit zum regulativen Einschreiten legitimiert sein’ (ibid., 14).
157
See also Decleris, 2000, 9–10, 38–48, 69–79. He notes: ‘But for public law to become
sustainable, as it must, legal methods must become sustainable first. The process will
begin with court decisions, which are a sensitive index of the changes taking place’ (ibid.
9).
tion. In other words, how sustainable development as a legal principle would

affect findings of, for example, those charged with interpreting and applying
treaties on the liberalization of international trade.
6.7 Summary and Concluding Remarks
The discussions of this chapter can be briefly summarized as follows:

Sustainable development is a principle with normative content which is
defined by the integration of present and future economic, social and envi-
ronmental interests within the limits set by certain essential ecological func-
tions. Sustainable development has been recognized both by international and
national legislatures and jurisprudential practice. This general recognition
can be understood as forming an opinio juris communis. The classification
of sustainable development as a general principle of law is legitimized by its
widespread use in many national legal systems and in international law, and
the jurisprudence of international courts and tribunals.
Sustainable development has become a truly transnational principle. Lim-
iting the search for sustainable development as a general principle to domestic
systems would therefore only retrieve fragments of its content. Domestic and
international legal processes have become so intertwined that it is no longer
possible to distinguish certain concepts or principles as local, domestic or
global in nature and scope. ‘[I]s the objective of sustainable development
fundamentally national or international?’ asks the distinguished international
law scholar Harold Koh, and answers in the affirmative in both directions:
the question is not really worth asking any more, the answer is so obviously
‘both’.158
What is sustainable development then? Is it an objective, a concept, a
process, a principle, or all of those things?159 This chapter has argued for its
classification as a general principle of law. Its normative force, broad scope
and support in the international community are indicative of its principled
character and make it difficult to argue otherwise. However, it can be expected
that ‘[a]nswering the question – giving sustainability definition, content, and
limits – will be a major preoccupation of international law, lawmakers, and
institutions deep into the 21st century.’160
158
Ibid.
159
Sands, 1994, 305.
160
Nanda and Pring, 2003, 23.
Part II
Conflicts Between Climate Measures and WTO Law

Introduction
The entering into force of the Kyoto Protocol to the UN Framework Conven-
tion on Climate Change on February 16, 2005 is the most significant develop-
ment so far since the Protocol was adopted in 1997. The Protocols commitment
period started on 1 January 2008 and will run until 31 December 2012. From
the point of novelty alone, it appears particularly opportune to explore the
relationship between international law on climate change and other areas of
international law, such as world trade law. Still, the specific case-example of
the relationship between WTO rules and climate change law is chosen for two
further reasons.
First, both areas of law – as explored in Part I – are directly linked to
sustainable development. An assessment of the interaction of the two regimes
based on this ‘common denominator’ promises new insights into the prin-
ciple’s content as well as into the relationship between two different bodies
of international law. As a consequence, recourse to the principle of sustain-
able development might help to answer the contentious question concerning
the relationship of WTO law to other international agreements, such as the
UNFCCC and the Kyoto Protocol as multilateral environmental agreements
(MEAs).
Second, the potential for conflicts between climate measures and trade
rules is considerable. The measures envisaged under the UNFCCC and the KP
to mitigate climate change will go to the very heart of contemporary human
activity and life styles by, for example, targeting industrial processes based on
fossil fuel combustion, energy intensive production and consumption practices,
deforestation and agricultural practices, and transport and travel modalities.
The Parties included in Annex B of the Protocol have committed themselves
to quantified emissions reduction and limitation targets. They are now poised
to adopt national policies and measures (PAMs) that limit their anthropogenic
emissions of greenhouse gases. The Kyoto Protocol envisages PAMs such as
the enhancement of energy efficiency, development and increased use of new
or renewable forms of energy, CO2 sequestration technologies and advanc-

ing innovative environmentally sound technologies and reforms in relevant
market sectors. (Article 2.1(a) i, iv, vi).
The socio-economic costs of these measures may be significant, compared
to other multilateral environmental agreements. Indeed, ‘no other MEA …
ha[s] the potential to impact so many sectors of the economy, so many eco-
nomic interests and such high volumes of trade in products and services, as
does the climate change regime’.1 In order to limit costs of implementation
and compliance Parties can make use of economic instruments, ranging from
market-based instruments such as taxes to the creation of artificial markets
for tradable emission units. Not surprisingly, such economic measures might
have a considerable impact on trade of both goods and services, presumably
creating a complex and dynamic interaction with trade rules of the WTO and
requiring extensive state intervention in economic decision making.2 They
may also remove the apparent reluctance of WTO Members to challenge trade
measures in MEAs, and increase the likelihood of climate measures based on
the Kyoto Protocol being brought before a WTO dispute settlement panel.
The two areas of concern are thoroughly interconnected. On the factual
side, lowering barriers for trade in products and services and opening markets
will stimulate global industrial activities and economic growth, requiring an
ever expanding international network of traffic and transportation facilities
and thus significantly boosting GHG emissions.3 On the economic side, cli-
mate policies are likely to affect economic competitiveness by raising costs of
energy and energy-intensive goods, industrial production processes, transpor-
tation etc., with likely ramifications for competitiveness.4 In the legal realm,
1
2
See Werksman and Santoro, 1998, 59.
3
See G. P. Peters and E.G. Hertwich, ‘CO2 Embodied in International Trade with Implica-
tions for Global Climate’, Vol. 42, No. 5, Environmental Science & Technology 9 (2008)
1401–1407. This study concludes that international trade embodies approximately twenty
percent of global carbon dioxide emissions.
4
See for more general issues of regime inter-linkages, both conflicting and synergic, be-
tween climate and trade law: H. van Asselt, J. Gupta and F. Biermann, ‘Advancing the
Climate Agenda: Exploring Material and Institutional Linkages to Develop a Menu of
Policy Options’ (2005) 14:3 RECIEL, 255–264; O. Schram Stokke, ‘Trade Measures,
WTO and Climate Compliance: The Interplay of International Regimes’ in O. Schram
Stokke, J. Hovi and G. Ulfstein, Implementing the Climate Regime. International Compli-
ance (London, Sterling V.A., Earthscan, 2005) 147–164; M. Doelle, ‘Climate Change and
the WTO: Opportunities to Motivate State Action on Climate Change through the World
Trade Organization’ (2004) 13:1 RECIEL, 85–102; and A.C. Warnock, Can the WTO
help to Achieve the Goals of the Climate Change Regime?, Master Thesis, University of
Auckland, 2004 (on file with the author).
Part II – Introduction 191
rules adopted under the international climate regime and their implementation
into national regulation may come into conflict with the rules governing inter-
national trade if they entail discriminatory bias and/or the capacity to distort
free trade.
Analysts suggest that climate measures could distort free trade by
(i) providing comparative advantages to national companies by, e.g.,

granting subsidies or border tax exemptions or making other kinds of
adjustments to taxes or grant other kinds of financial contributions,
that are generally prohibited under the Agreement on Subsidies and
Countervailing Measures (SCM);5
(ii) favouring services or goods from specific countries, in particular
those that have commitments under the Kyoto Protocol and are in
compliance, thereby potentially violating the Most-Favoured-Nation
rule of Article I GATT, Art II GATS;6
5
See on the issue of subsidies: M. Lodefalk and M. Storey, Climate Measures and WTO Rules
on Subsidies (2005) 39:1 Journal of World Trade, 23–44. For concerns about taxation and
border adjustments see: G. Goh, ‘The World Trade Organization, Kyoto and Energy Tax
Adjustments at the Border’ (2004) 38:3 Journal of World Trade, 395–423; F Z.X. Zhang,
‘Open Trade with the United States Without Compromising Canada’s Ability to Comply
with its Kyoto Target’ (2004) 38:1, Journal of World Trade, 155–182; F. Biermann and R.
Blohm, Implementing the Kyoto Protocol Without the United States. The Strategic Role
of Energy Tax Adjustments at the Border, Global Governance Working Paper Nr. 5, 2003;
J.A. Hoerner and F. Muller, Carbon Taxes for Climate Protection in a Competitive World,
1996. On the relationship between taxes for environmental purposes and rules of GATT
1994, see: O.K. Fauchald, Environmental Taxes and Trade Discrimination, 1998.
6
For an overview of normative interfaces between climate rules and the WTO see: R. G.
Tarasofsky, The Kyoto Protocol and the WTO, Royal Institute of International Affairs,
2005; A. Green, ‘Climate Change, Regulatory Policy and the WTO: How Constrain-
ing are Trade Rules?’ (2005) 8:1, Journal of International Economic Law, 143–189; J.
Frankel, ‘Climate and Trade: Links between the Kyoto Protocol and the WTO’ (2005)
47:7 Environment 7–20; Z.X. Zhang and L. Assunção, ‘Domestic Climate Policies and
the WTO’ (2004) 27 The World Economy, 359–386; E. Denters, ‘Free Riders, Claims and
Countermeasures in Combating Climate Change’ in F. Weiss and N. Schrijver (eds.), In-
ternational Law and Sustainable Development, 2004, 231–250; National Board of Trade,
Sweden, Climate and Trade Rules – Harmony or Conflict?, Stockholm, 2004; T. Brewer,
The WTO and the Kyoto Protocol: Interaction Issues (2004) 4 Climate Policy, 3–12; D.
Grimeaud, ‘To Design and Implement Climate Change Measures and the Need to Strike
a Balance between Environmental Protection and International Trade Law’ in M. Faure,
J. Gupta and A. Nantjes (eds.) Climate Change and the Kyoto Protocol, 2003; S. Charno-
vitz, Trade and Climate: Potential Conflicts and Synergies, in Beyond Kyoto: Advancing
the International Effort against Climate Change, Pew Center on Global Climate Change,
December 2003; O. Kuik, R.S. Tol and D.-E. Grimeaud, ‘Linkages between the Climate
Change Regime and the International Trade Regime’ in: E.C. van Ierland, J. Gupta and
M.T.J. Kok, Issues in International Climate Policy, Cheltenham, Northampton, Edward
(iii) restricting access to markets by imposing regulations and standards

with respect to the carbon content of a certain product, e.g. natural gas
or oil, or the amount of greenhouse gases emitted during the produc-
tion process, e.g. aluminium, cement or electricity generation based
on burning of fossil fuels or based on renewable energy sources, to
ensure and enhance the development and use of renewable forms of
energy, according to Article 2 I (a) KP);
(iv) imposing conditions and limitations on investment finance which in-
trude on international investment agreements, such as Bilateral Invest-
ment Treaties (BITs) or the investment-related agreements under the
WTO, that is the Agreement on Trade-Related Investment Measures,
(TRIM) and the General Agreement on Trade in Services (GATS);7
Elgar, 2003, 201–222; S. Shin, Kyoto-Protocol, Wettbewerb und WTO-Handelssystem,

HWWA Discussion Paper 215, 2003; T. L. Brewer, International Trade, the WTO and
International Climate Arrangements, Final Report of a Study prepared for Environ-
mental Studies Group, Japan, International Forum for Environmental Issues, Tokyo,
2003; T. Brewer, ‘The Trade Regime and the Climate Regime: Institutional Evolution
and Adaptation’ (2003) 3 Climate Policy, 329–341; S. Murase, WTO/GATT and MEAS:
The Kyoto Protocol and Beyond, 2003, available at <http://www.gets.org/gets/harmony/
projectpapers.html>; H. Loose, ‘Kyoto Protocol: Trade Versus the Environment’ (2001)
12:1 Energy and Environment, 23–28; M. Buck and R. Verheyen, International Trade
Law and Climate Change – A Positive Way Forward, FES-Analyse Ökologische Mark-
twirtschaft, Friedrich-Ebert-Siftung, July 2001; W.B. Chambers, ‘International Trade
Law and the Kyoto Protocol: Potential Incompatibilities’ in W.B. Chambers (ed.), Inter-
Linkages. The Kyoto Protocol and the International Trade and Investment Regimes,
UNU Policy Perspectives Nr. 5, Tokyo, New York, Paris, United Nations University
Press, 2001, 87–118; G.P. Sampson, ‘WTO Rules and Climate Change: The Need for
Policy Coherence?’ in W.B. Chambers (ed.) Inter-Linkages. The Kyoto Protocol and the
International Trade and Investment Regimes, UNU Policy Perspectives Nr. 5, Tokyo,
New York, Paris, United Nations University Press, 2001, 69–86; Brack 2000; T. Voon,
‘Sizing up the WTO: Trade-Environment Conflict and the Kyoto Protocol’ (2000) 10:1 J.
Transnational Law & Policy, 10:1, 71–108; and G. Loibl, ‘Trade and Environment – A
Difficult Relationship. New Approaches and Trends: The Kyoto Protocol and Beyond’ in
G. Hafner et al., Liber Amicorum for Professor Ignaz Seidl-Hohenvelder in Honour of his
80th Birthday, Kluwer International, 1998.
7
See L. Assunção and B. Garcia, Trade and Investment Implications of the Kyoto Protocol,
2003, UNCTAD; J. Werksman, K. Baumert and N. K. Dubash, ‘Will International Invest-
ment Rules Obstruct Climate Protection Policies?’ (2003) 3 International Environmental
Agreements: Politics, Law and Economics, 59–85; M.A. Aslam et al., Greenhouse Gas
Market Perspectives. Trade and Investment Implications of the Climate Change Regime,
United Nations, New York, Geneva, 2001; and J. Werksman and C. Santoro, ‘Investing in
Sustainable Development: The Potential Interaction between the Kyoto Protocol and the
Multilateral Agreement on Investment’ in W.B. Chambers (ed.) Inter-Linkages. The Kyoto
Protocol and the International Trade and Investment Regimes, UNU Policy Perspectives
Nr. 5, Tokyo, New York, Paris, United Nations University Press, 2001, 191–214.
Part II – Introduction 193
(v) limiting access to the artificial market created by flexibility mecha-

nisms (Emission Trading Article 17, Clean Development Mechanism
Article 12 and Joint Implementation Article 6 KP), providing financial
contributions under this market, or affecting the existing trade with
goods, e.g. energy products, or services which might potentially be
conflicting with provisions of the GATS, GATT, SCM Agreement.8
Despite these wide-ranging implications, it could be argued that no actual

conflict exists because no trade dispute has arisen so far. Such a pragmatic
view would, however, err on the side of short-sightedness.
Member States to the Kyoto Protocol with reduction commitments are
only just starting to implement their obligations. The short period since the
Protocol entered into force could be one reason for a – so far – conflict-free
relationship. This situation could change quickly. The first commitment period
just started, discussions about stronger reduction obligations in the second
8
See, for example, J. Reinaud, Industrial Competitiveness under the European Union
Emissions Trading Scheme, IEA Information Paper, February 2005; S. Jinnah, ‘Emissions
Trading under the Kyoto Protocol: NAFTA and WTO Concerns’ (2003) 15 Georgetown
International Environmental Law Review, 709–761; Z. X. Zhang, ‘Greenhouse-Gas Emis-
sions Trading and the World Trading System’ in W.B. Chambers (ed.) Inter-Linkages. The
Kyoto Protocol and the International Trade and Investment Regimes, UNU Policy Per-
spectives No. 5, Tokyo, New York, Paris, United Nations University Press, 2001, 119–152;
J. Werksman, ‘Greenhouse-Gas Emissions Trading and the WTO’ in W.B. Chambers (ed.)
Inter-Linkages. The Kyoto Protocol and the International Trade and Investment Regimes,
UNU Policy Perspectives Nr. 5, Tokyo, New York, Paris, United Nations University Press,
2001, 153–190; A. Petsonk, ‘The Kyoto Protocol and the WTO: Integrating Greenhouse
Gas Emission Allowances in the Global Marketplace’ (1999–2000) 10 Duke Environmen-
tal Law and Policy Forum, 185–220; J.A. Kim, Potential Limits Imposed by the Multilat-
eral Trading System in Implementing Flexibility Mechanisms, CSERGE Working Paper
GEC 2000–19, 2000, U. Springer, ‘GATS and the Kyoto Mechanism: Open Markets for
Climate Change Mitigation Services?’ (2000) 55:1 Außenwirtschaft, 65–84; R. Nordhaus
et al., ‘International Emissions Trading Rules as a Compliance Tool: What is Necessary,
Effective, and Workable?’, 30 ELR 2000, 10837–10855; and A. Petsonk, D. Dudek and J.
Goffman, Market Mechanisms and Global Climate Change. An Analysis of Policy Instru-
ments, Pew Center on Global Climate Change, 1998. With special emphasis on the CDM:
K.A. Baumert, N. Kete, Ch. Figueres, Designing the Clean Development Mechanism to
Meet the Needs of a Broad Range of Interests, Climate Notes, World Resources Institute,
2000, available at <http://www.wri.org/wri>; G. Wiser, ‘Frontiers in Trade: The Clean
Development Mechanism and the General Agreement on Trade in Services’ (2002) 2:3,4
International Journal for Global Environmental Issues, 288–309; J. Werksman and J.
Levefere, ‘WTO Issues Raised by the Design of an EC Emissions Trading System’, Scop-
ing paper Nr. 3, FIELD, 1999, and J. Werksman, ‘Greenhouse Gas Emissions Trading and
the WTO’ (1999) 8:3 RECIEL, 251–64.
commitment period have already commenced,9 and a few major-polluting

countries are strongly resisting cooperation on climate protection based on
quantified emission reduction goals. Given the significant economic implica-
tions of climate measures, the pressure on developed countries to ‘take the
lead’ in climate mitigation and the vast development and density of both cli-
mate and trade law rules, the appearance of (normative) conflicts with trade
law imperatives is likely to be only a matter of time.
It is therefore timely and necessary to consider whether the architecture
of the WTO is adequate to deal with conflicts of this nature. Concerns relate
to how far unresolved issues between the two sets of rules are likely to affect
international climate negotiations and the implementation of climate measures
and produce a ‘political chill’ of WTO incompatibility. This situation unneces-
sarily exacerbates tensions between WTO Members that are also Parties to the
Kyoto Protocol and those that are not.
In this part of the book, I shall investigate some points of interaction be-
tween climate measures and trade rules. My objective is twofold. First, I want
to demonstrate the existence of conflicting overlaps between climate measures
and trade norms. Second, I want to establish a particular scenario of norma-
tive conflict which in part III will be used as a specific case-example of how
the principle of sustainable development can be utilized as a jurisprudential
technique to solve such conflict. My claim is that even where ‘traditional’
WTO law and existing jurisprudence indicate that a climate measure violates
substantive WTO rules, this is not necessarily the end of the legal quest. Fur-
ther legal arguments based on the application of general principles, such as
the principle of sustainable development, are available that provide for an
adequate solution where common interests are at stake.
In the following, I will first introduce theoretical approaches to defining a
conflict of substantive law (chapters 7 and 8), then examining some potential
conflicts between WTO rules and regulation in pursuance of the international
climate regime (chapter 9 – international emissions trading and chapter 10 –
CDM), before pinning down some concluding remarks (chapter 11).
9
See Decision –/CMP1 Consideration of commitments for subsequent periods for Parties
included in Annex I to the Convention under Article 3, paragraph 9, of the Kyoto Proto-
col, and Decision –/CP.11 Dialogue on long-term cooperative action to address climate
change by enhancing implementation of the Convention, at COP11/MOP1, Montreal
2005.
Chapter 7
Fragmentation of International Law: the Origin of

Normative Conflicts
7.1 Introduction
Public international law starts in pieces, usually without the benefit of a final
‘plan’. It consists of numerous separate treaties, customary norms and gen-
eral principles. It is ‘decentralized’ in that it is characterized by not having
a central legislator or a single court. States are the creators of international
law and at the same time the main subjects of international legislation. Gener-
ally, international law is primarily a law of cooperation, not subordination.1
States as creators of international law are considered to be equals, though de
facto power imbalances exist. The creation of primary international law in the
form of treaties depends basically on the consent of States, either explicit or
implicit.2 In general, any treaty law created by any given number of States and
concerning any given object has a priori the same legal value.3 The absence
of any de jure hierarchy of treaty norms (with the exception of jus cogens4
1
C. Rousseau, ‘De la Compatibilité des normes juridiques contradictories dans l’ordre
international’, 39 Revue Générale de Droit International Public 133, 150–151 (1932)
(“Le droit des gens est un droit de coordination et non de subordination. L’accord des
sujets de droit y est la seule source de droit et les norms qui résultent det cet accord de
volontés sont d’égale valeur juridique.”).
2
See Brownlie, 2003, 16.
3
See e.g. M.E. Villiger, Customary International Law and Treaties, 1997, para. 85; A.
McNair, The Law of Treaties; 1961, M. Akehurst, ‘The Hierarchy of the Sources of Inter-
national Law’, 1974–75, Brit. Y.B. Int’l L. 273, 274.
4
Pursuant to Arts. 53, 64 of the Vienna Convention on the Law of Treaties (1155 UNTS
331), rules of jus cogens, which are part of general international law (some fundamental
principles of general international law), are non-derogatory and prevail over all past and
future treaty norms, see Brownlie, 2003, 19, and 488 et seq. For a different opinion see:
P. Weil, ‘Towards Relative Normativity in International Law’ (1983) 77 AJIL 413.
and, arguably, some Human Rights norms5) means that in abstracto any bi-
or multilateral treaty norm concluded to pursue, for example, environmental
protection, has the same legal status as any norm created aiming at achieving
other purposes and objectives.
Different States or groups of States, sometimes gather in some interest-
specific institution such as WTO or World Labour Organization or World
Intellectual Property Organization to pursue particular interests. Treaties
therefore cover an increasing variety of bi- and multilateral matters. As a re-
sult, a number of international regimes exist that claim to be defined only by
their own, special legal norms, principles, rules, decision-making processes,
and means of enforcement; so-called ‘self-contained regimes’.6
On the other hand, proliferation of normative rules and tribunals is a neces-
sary development in international law, reflecting the diverse political agendas
of the nation-states and the rapidly transforming international system. It is
increasingly accepted that ‘political communities have become more hetero-
geneous, their boundaries much more porous, than assumed by the received
images of sovereignty and the international order, and that the norms they
express are fragmentary, [and] discontinuous’.7 The proliferation of tribunals
and fragmented normative structures are recognized as the deliberate effects
of politics and should not be mistaken as failures or side effects.8
Fragmentation is thus in itself not a negative phenomenon. It is to a certain
extent a necessity if all of the different interests and areas dealt with in inter-
national law are to be given due attention; it might even be international law’s
best justification.9
Still, fragmentation remains a contentious issue. The ongoing debate and
results of an earlier feasibility study have led the International Law Commis-
sion (ILC) to include ‘Fragmentation of International Law: Difficulties arising
from the Diversification and Expansion of International Law’ in its long-term
programme.10
5
E. de Wet, ‘The International Constitutional Order’, 55 ICLQ 2006, 57.
6
This definition of ‘regimes’ is based on the definitions by S. Krasner, International Re-
gimes, Ithaca, London, Cornwell University Press, 1983, and O. Young, The Institutional
Dimension of Environmental Change – Fir, Interplay and Scale, Cambridge and London,
MIT Press, 2002. For the purpose of this thesis the terms regime and institution are used
interchangeably.
7
Koskenniemi and Leino, 2002, 557–558.
8
Ibid. 561.
9
Koskenniemi and Leino, 579.
10
Report of the International Law Commission on the work of its fifty-fifth session, A/CN. 4/L.
644), chapter X, 2003. Feasibility Study: G. Hafner, Risks Ensuing from Fragmentation of
International Law”, Official Records of the General Assembly, 55th session No 10 (A/55/10)
annex.
Chapter 7 – Fragmentation of International Law 197
The ILC study group on fragmentation discovered that deviations in inter-

national law do not (always) emerge by accident or through legal-technical
mistakes. Rather, they reflect the diversity of the social world which the law
aims to regulate. Social complexity leads to legal complexity, making it point-
less to insist on unity.11 What needs to be avoided is that fragmentation leads
to self-contained islands of international law, de-linked from other branches of
international law. As special social interests have to relate to the general inter-
est of society as a whole, no legal regime, however special, exists in isolation
from general international law.
Problems arise when the different parts rather than fitting neatly together
either converge on one or several areas or leave gaps unattended to. A crucial
issue, therefore, is the relation of treaty norms in pursuit of conflicting objec-
tives where no specific rules on interaction are at hand. Considerable debate
exists as to whether and when recourse can be taken to general international
law principles on the relation of treaties.
This situation makes it necessary to envisage international law as a whole.
It requires the development of a coherent framework of international law, one
where the making and enforcement of specialized norms can somehow be
conceptualized under a complicated but coordinated set of disciplines. The
problem is how, and by what means, seemingly incoherent rules of interna-
tional law can be melded into a coherent whole. Here, legal mechanisms within
general international law do exist that remedy the negative consequences of
fragmentation.
For its part, the study group suggested reliance on the maxims of lex
specialis, lex posterior and lex superior, addressing thereby the problems of
fragmentation in a formal, open-ended way, as a matter of legal technique,
rather than substantive, legal and/or political preferences. As it readily con-
ceded, ‘the report has, in a way, bought its acceptability by its substantive
emptiness’.12
Certainly, while these maxims are important legal means of addressing
normative conflicts, they do not in all situations lead to workable results.
In some cases the ‘substantive emptiness’ needs to be filled by some sort of
meta-rationality which firstly informs and guides the international community
and secondly shows where the individual pieces belong in the international
legal system.
11
See ‘Study on the “Function and scope of the lex specialis rule and the question of self-
contained regime’’’, Preliminary report by M. Koskenniemi, Chairman of the Study
Group, ILC(LVI)/SG/FIL/CRD.1, 7 May 2004, 9.
12
ILC, Preliminary Report, 2006, 16.
In other words, the diverse parts of special international law must – at least
in theory – be inter-related, connected and considered ‘in unison through the
prism of general international law.’13 The application of certain general princi-
ples of international law, in particular the principle of sustainable development,
could help to create a coherent framework of international law, eventually
leading to a differentiation between various, in principle, equal norms.
According to this principle, such norms which seek to protect fundamental
collective interests like the functioning of essential life-sustaining natural
processes that are a prerequisite for human activity, inclusive economic activ-
ity, would take precedence over other norms. In a case of conflict, not all
norms may or should have the same status. This recognition can offer new
solutions to conflicting norms in international law and introduce a ‘certain
normative order in the often chaotic world resulting from the contractual free-
dom of states’.14
7.2 Conflict of Norms
As explained above, fragmentation creates the challenge of conflicting norms.

When investigating ‘conflicts’ between legal norms of international law an im-
portant distinction has to be made between ‘apparent conflicts’ and ‘genuine’
conflicts’. An apparent conflict is a situation where a conflict of norms exists,
but where the conflicting norms can be harmonized or ‘interpreted away’. A
genuine conflict is what remains after a failure to harmonize treaty norms.
A genuine normative conflict may therefore only be assumed in cases where
an apparent conflict cannot be resolved by interpretation of treaty norms and
exception or conflict clauses.
7.2.1 Definitions
The definition of normative conflict is relevant to the discussion of the rela-

tionship between international climate regulation and WTO provisions.
From a traditional perspective of international law, three conditions must
be satisfied before a conflict can be said to exist. First, two States must be
bound by the same agreement, while at least one of them is also bound by
a different treaty. Second, the treaties must cover the same subject matter.
Third, the provisions must conflict in the sense that they impose mutually
13
Ibid. 915.
14
Pauwelyn, 2003, 22.
exclusive obligations.15 Hence a conflict of norms arises where simultaneous

compliance with the obligations contained in two (or more) different instru-
ments is impossible.16 That is to say, one obligation cannot be fulfilled without
necessarily violating another.17
Not every divergence of norms constitutes a conflict under these conditions.
Collisions and overlaps that lead to the assumption of treaty congestion might
exist without necessarily leading to absolute incompatibility. Consequently,
there are instances of incompatibility of normative content that fall outside the
scope of this narrow definition of conflict.
We therefore apply a broader definition which embraces these wider ‘nor-
mative incompatibilities’. It would cover divergences and inconsistencies
that do not amount to contradictions or absolute obligations, but derive from
norms permitting certain types of conduct prohibited by other norms either
completely or partially.18 Such a perspective accords with the findings of the
ILC Study Group on fragmentation, which in its final report stated:
[t]his report adopts a wide notion of conflict where two rules or principles suggest
different ways of dealing with a problem. Focusing on a mere logical incompatibility
mischaracterizes legal reasoning as logical subsumption. In fact, any decisions will
involve interpretation and choice between alternative rule-formation and meanings
that cannot be pressed within the model of logical reasoning.19
Although, arguably, conflicts in a broader sense could be solved without

abolishing the substantive content of either of the regulations, they may have
the same negative effects as the more narrowly defined conflicts. Normative
inconsistencies and contradictions create uncertainties with regard to the ap-
plication of the respective norm, diminishing the coherence and effectiveness
of international law. For this reason, all divergences, that is, conflicts in the
‘narrower’ and ‘broader’ senses, are included in the following examination. In
this sense, a conflict of norms in the wider sense arises if it is impossible for
a subject bound by two or more norms, deriving from the same or different
sources, to make use of its rights and ‘permissions’ granted under one treaty
15
See Marceau, 2001, 1084.
16
See Encyclopaedia of Public International Law, 1994, 468. See also: W. Jenks, ‘The
Conflict of Law-Making Treaties’ (1953) BYIL, 425.
17
H. Kelsen, General Theory of Norms, 1991, 123.
18
See Wolfrum and Matz, 2003, 6.
19
ILC, 58th session (Geneva, 1 May – 9 June and 3 July – 11 August 2006), Fragmenta-
tion of International Law: Difficulties Arising from the Diversification and Expansion
of International Law, Report of the Study Group of the International Law Commission,
United Nations A/CN.4/L.682, 4 April 2006, 16.
while complying with its obligations.20 Sadat-Akhavi recognizes this form of

conflict when stating that
there must be two definitions of conflict: one is concerning conflict between mandatory
norms and another concerning conflict between a permissive and a mandatory norm.
Accordingly we have the following definitions: (1) A conflict between two mandatory
norms occurs when it is impossible to comply with all requirements of the norms; (2)
A conflict between a permissive and a mandatory norm occurs, when it is impossible
to make use of the permission and at the same time comply with all requirements of
the other norm.21
In the same understanding Pauwelyn explains that
to talk of conflict of obligations would obscure the fact that international law is com-
posed of obligations and rights … [A] conflict may consequently arise not only as
between two contradictory obligations, but also between an obligation and an explicit
right.22
The same author warns that
[c]arving out certain situations as not being conflicts ‘in the strict sense’ or ‘technically
speaking’… is focusing on one type of conflict only, thereby ignoring the complexity
of the potential forms of interplay between norms. Doing so, one essentially solves
part of the problem by ignoring it.23
The term conflict in this study is used in a broader, non-dogmatic way, in-
terchangeably with ‘inconsistent’ or incompatible’. A conflict between two
norms thus exists when compliance with an obligation or making use of a
20
See S.A. Sadat-Akhavi, Methods of Resolving Conflicts between Treaties, 2003, 5.
21
Sadat-Akhavi, 2003, 6, fn 3. For a similar approach see also Wolfrum and Matz, 2003,
6; G. H. von Wright, ‘Is there a Logic of Norms?’ (1991) Ratio Juris, 4, 270–272; W.
Czaplinsky and G. Danilenko, ‘Conflict of Norms in International Law’ (1990) 21 NYIL,
3; P. Hilpinen, ‘Conflict and Change in Normative Systems’ in Å. Franberg and M. Van
Hoecke (eds.) The Structure of Law, Proceedings of the 2nd Benelux-Scandinavian
Symposium in Legal Theory, Uppsala, 1987, 38; C. E. Alcuourrón, ‘Conflicts of Norms
and the Revision of Normative Systems’ (1991) 10 Law and Philosophy, 417–418; Th.
Schilling, Rang und Geltung von Normen in gestuften Rechtsordnungen, 1994, 380; and
J. Neumann, Die Koordination des WTO Rechts mit anderen völkerrechtlichen Ordnun-
gen- Konflikte des materiellen Rechts und Konkurrenzen der Streitbeilegung, 2003, who
states that “ein Widerspruch besteht nicht nur, wenn ein Gebot mit einem Verbot kollidiert
… sondern auch, wenn eine Erlaubnis mit einem Verbot kollidiert, also das Verbot die
Inanspruchnahme einer Möglichkeit in Frage stellt” (16).
22
Pauwelyn, 2003, 9.
23
Ibid. 171.
permission has led or may lead to a breach of an obligation.24 No conflict

arises, however, when one norm positively states that it derogates from, or is
an exception to, the other norm.
In general, States are presumed to have negotiated in good faith, and are
obliged to implement their international obligations accordingly. However, in
some cases of conflict a harmonious interpretation and simultaneous compli-
ance is simply not possible (‘genuine conflicts’). In this situation, one of the
norms must be suspended or abrogated. In order to decide which norm while
ensuring the effectiveness and coherence of international law, certain princi-
ples exist that could inform the settlement of genuine conflicts. They are the
well-known principles of lex posterior and lex specialis, though more might
be found.
Conflicts can further be conceived of in a wider sense, as including not only
conflicts of substantial law but of institutional arrangements and jurisdictions
of courts and tribunals. For the purpose of this assessment I shall concentrate,
however, on legally binding substantive norms and their normative content.
7.2.2 Permissive Norms in the Climate Regime
In the area of climate change, a narrow conflict definition would be likely to

overlook a number of potentially conflicting situations. The UNFCCC and
the Kyoto Protocol require Parties to implement policies and measures to
achieve their quantified emission limits and reduction commitments and in
order to promote sustainable development (Article 2 KP). In order to alleviate
the costs of these measures, economic instruments may be employed.25 With
regard to the reduction of GHG emissions, the Kyoto Protocol gives Parties
the discretion to select whatever policies and measures they see fit to fulfil
their obligations. The Kyoto Protocol thus provides for non-specific measures
that can be taken individually by Parties in order to achieve the objective of
the Kyoto Protocol/UNFCCC.26
With regard to Joint Implementation, Article 6 permits Annex I Parties to
‘transfer to, or acquire from, any other such Party emission reduction units’.
Article 12.3(b) permits the use of certified emission reductions accruing from
a project under the Clean Development Mechanism to contribute to compli-
ance with part of the Annex I countries’ commitments. Under Article 17, the
24
Ibid. 176.
25
See D. M. Driesen, ‘Choosing Environmental Instruments in a Transnational Context’
(2000) 27 Ecology Law Quarterly, 1, 8.
26
See R. Tarasofsky, 2005, 4.
Parties included in Annex B of the Kyoto Protocol may participate in emission

trading for the purpose of fulfilling their commitments under Article 3. Since
the use of these instruments is not mandatory but merely permitted or allowed,
there is no obligation to comply with them in the strict sense. Compliance with
permissive or non-specific norms (stricto sensu a norm that gives the freedom
to act in a way that is neither obligatory not prohibited) is not possible; one
can only make use of a permission.
Having said that, the flexibility mechanisms have become a favoured
means of complying with emission reduction commitments. The use of eco-
nomic instruments in order to fulfil the object and purpose of a multilateral
environmental agreement was not envisaged by the regulations of the WTO.
If WTO rules turn out to be incompatible with the mechanisms adopted under
the climate regime, a conflict cannot be said to not exist on the grounds that
no obligations under the environmental agreements existed to implement the
economic measure in question. If a treaty permits certain privileges or pos-
sibilities or rights in pursuance of its object and purpose, these possibilities
have to be given normative weight. If a Party considers applying them it acts
then in compliance with the object and purpose of the treaty.
As said above, a definition of conflict includes not only the obligations of
a treaty but the implementation and compliance modalities it provides for.
In a situation where treaty provisions allow for a certain privilege in order
to comply with its obligations, a Party cannot under the premise of acting in
good faith be expected to refrain from exercising this privilege. This remains
so even though making use of the implementation or compliance possibility
brings the State’s action into conflict with another international instrument.
For example, where the non-obligatory provisions of the Kyoto Protocol regu-
lating these economic instruments are incompatible with WTO rules, while we
may not have a conflict in the narrow sense, a normative discrepancy seems
nevertheless undeniable.
The permissive character of the norms of the Kyoto Protocol governing the
use of economic mechanisms thus does not hinder the possibility of a conflict
with WTO norms.
In conclusion it can be said that permissive norms allow a choice of im-
plementation measure at a domestic level from a range of alternatives. Such
norms give a discretionary right to a Party on how to implement a certain
obligation. In this study a wider definition of conflict is applied according to
which permissive and commanding norms may come into conflict. It covers
therefore also conflicts between permissive norms on one hand and obligations
on the other.
Chapter 8
Climate Measures and WTO Law: General Comments
8.1 Introduction
The relationship between the climate change regime as an environmental and

developmental regime and the WTO shall serve in the following as a case
example of normative interaction within a conflict scenario. From the outset,
however, the legal interface between the climate regime, in particular possi-
bilities under the Kyoto Protocol, and the WTO agreements appears extremely
complex. It involves a large number of diverse legal issues, many of which are
less than clear cut.
In order to reduce this complexity, this part of the thesis will focus on some
specific concerns regarding the interplay between the flexible mechanisms
provided for by the climate regime and WTO norms. As noted, the consider-
able size of the artificial market created by the flexibility mechanisms is ex-
pected to have significant economic impact on many sectors of society as the
mechanisms are implemented. Measures adopted to implement and enforce
flexibility mechanisms are likely to distort trade by influencing the competi-
tive balance between products and services that is governed by WTO rules. In
addition, some discriminatory aspects of the mechanisms might prove to be in
direct violation of WTO norms.
The relationship between flexibility mechanisms and the international
trading systems can be defined and analysed in various ways. For practical
reasons, the approach adopted here will distinguish between direct and indirect
relations. Direct relations refer to the question whether flexibility mechanisms
themselves are subject to WTO rules, and if so, to what extent they could
affect the rights and obligations of other WTO Members, in particular those
that are not Members to the Kyoto Protocol. Indirect relations point to the
wider effect flexibility mechanisms could have on existing trade in goods and
services.
8.2 Limitation of Scope
We shall concentrate on the design and use of two of the flexibility mecha-
nisms, Emissions Trading and CDM, envisaged under the Kyoto Protocol.
Rather than looking exclusively at existing emissions trading schemes, my
objective is also to assess how prospective developments in the scope and
stringency of emissions trading would interface with WTO rules.
The examination is limited to existing WTO rules entailed in two of the
WTO covered agreements, the General Agreement on Tariffs and Trade
(GATT) 1994 and the General Agreement on Trade in Services (GATS). Other
points of interaction to be expected between the flexibility instruments and the
Agreement on Trade-Related Investment Measures (TRIMS), the Agreement
on Subsidies and Countervailing Measures (SCM), the Agricultural Agree-
ment and the Agreement on Technical Barriers to Trade (TBT) are excluded.
Not covered is the suspended Doha Development Agenda (DDA), though the
outcome of the negotiations – if there ever is one – could have implications
for climate measures. Particularly relevant are the negotiations on the relation
between MEAs and the WTO.1
Even this limited assessment cannot be exhaustive. The design of the
flexibility instruments is still ‘work in progress’ and national implementation
in many countries is at an early stage. Therefore, changes, adjustments and
further developments are expected.
These self-imposed constraints should be seen in light of the purpose of this
thesis, which is not to map out all and every current or future conflict between
climate measures and WTO rules. Rather, I attempt to identify some specific
issues that could indicate a normative conflict between measures provided for
by the Kyoto Protocol and rules entailed in the WTO agreements.
Since no dispute has arisen yet, the character of this assessment will re-
main largely assumptive. It has been warned that ‘[a]s with any exercise that is
speculative, and that is aimed at comprehensive ‘issue spotting’, the analysis
[of greenhouse gas emissions trading and the WTO] risks overplaying the
potential for theoretical conflicts, and the potential that theoretical conflict
might lead to actual disputes between states’.2
Aware of this warning, determining whether and where there may be seri-
ous cause for conflict and to facilitate the search for constructive solutions
and conflict resolution processes is considered necessary. Not only would
such solutions help to reduce worries about infringement of trade rules which,
reportedly, have led to a ‘chilling effect’ in some climate negotiations, they
1
See, for example, the mandate in Art 31(i) of the Doha Ministerial Declaration.
2
Chapter 8 – Climate Measures and WTO Law 205
would also help us understand the parallel regimes and highlight some of the
synergies that could be developed.3
8.3 General Compatibility of the Objectives
The two regimes have formally stated objectives that reflect a mixture of com-
patible and conflictive interests. With regard to international trade Article 3.5
of the UNFCCC states that ‘Parties should cooperate to promote [an] … open
international economic system’ and that ‘measures taken to combat climate
change, including unilateral ones, should not constitute a means of arbitrary or
unjustifiable discrimination or a disguised restriction on international trade’.
Accordingly, Article 2.3 of the Kyoto Protocol notes that Parties should ‘strive
to implement policies and measures … in such a way as to minimize adverse
effects, including the adverse effects … on international trade’.
The stated objectives generally converge with those of the international
trade regime. The Preamble of the WTO Agreements states the commitment
of its Parties to seeking both to protect and preserve the environment.4 In
the 2001 Doha Ministerial Declaration the Parties expressed their conviction
that ‘the aims of upholding and safeguarding an open and non-discriminatory
multilateral trading system, and acting for the protection of the environment
and the promotion of sustainable development can and must be mutually
supportive’.5
Despite the apparently broad conceptual compatibility, the practical con-
sistency of the above-mentioned objectives is less clear. The WTO is not an
environmental protection agency. Nor is there any intention for it to become
one. But as long as WTO’s role is exclusively focused on the regulation of
liberalized international trade, as well as on ensuring that environmental poli-
cies do not act as obstacles to trade, chances are high that a conflict will most
likely be settled in favour of trade law.6
Yet, within traditional, positivistic trade law, considerable ‘legal leeway’
exists that could give deference and flexibility to climate measures. In this
context, the discussion in the next chapters analyses the possibility for such
‘leeway’. It will, in particular, examine whether trade-restraining climate
mitigation measures under the flexibility mechanisms fall within the scope of
3
See Charnovitz, 2003, 141.
4
Agreements Establishing the World Trade Organization, Marrakech 1994.
5
Ministerial Conference – Fourth Session – Doha, 9 – 14 November 2001 – Ministerial
Declaration – Adopted on 14 November 2001, WT/MIN(01)/DEC/1.
6
Brack, 2002, 341.
WTO agreements, whether they might violate substantive rules of the WTO
agreements, and if so, whether they may be covered by exemption clauses.
Chapter 9
International Emissions Trading and WTO Rules
9.1 Introduction
The Kyoto Protocol sets a ‘cap’ on emissions from Parties included in its An-
nex B. These States are allowed to sell or buy parts of the assigned amounts
(assigned amount units). In addition, States can trade with tradable units de-
rived from project mechanisms, such as Joint Implementation or the Clean
Development Mechanism, i.e., Removal Units (RMUs), Emission Reduction
Units (ERU), and Certified Emission Reductions (CERs). Emissions units can
be traded at two different levels, at the level of sovereign States and at the
level of private entities. Also a transaction from a State to a private entity or
vice versa is possible.
The participation of private companies and other private entities in the
emissions trading system is clearly desired although not explicitly mentioned.
Despite missing reference in Article 17 of the Kyoto Protocol it is generally
accepted among Annex B Parties countries that private entities may participate
in such trading with the approval of the relevant Party.1 In this study, the focus
will remain on the responsibilities of States, that is, the effect transnational
emission trading by private and public entities has on the responsibility of a
State Party under both the international trade regime and the climate regime.
An Annex B Party to the Kyoto Protocol might set up a domestic emission
trading scheme and allocate allowances or tradable emission units to private
domestic entities, who could use these rights for trading with other private
entities within the same or foreign countries. The obligations under the Kyoto
Protocol, however, remain sovereign obligations of the State Parties to the
Protocol. States therefore would need to regulate private actors in a way that
enables the State to comply with its international obligations.
1
C. Hepburn and C. Brown, ‘Privatising the Commons? A Global Greenhouse Emissions
Trading Regime at COP-6’ (2000) 19 Austral. Mining & Petro.L.J., 169–170; Voon 2000,
94; Werksman 1999, 253.
It is thus useful to distinguish between private entities and States engaging

in emissions trading.2
9.2 WTO Concerns of Sovereign Exchanges in Emission Units
The first question to consider is whether the exchange of AAUs and other
emission units between Parties to the Kyoto Protocol as such is guided by
WTO rules.
With the agreed cap on GHG emission committed to by State Parties to the
Kyoto Protocol in its Annex B, states have imposed sovereign obligations on
themselves. Below this committed cap, they have the respective rights to emit
greenhouse gases. Under an Emission Trading scheme, the State Parties may
engage in the acquisition and transfer of these sovereign rights to emit within
the agreed cap. Articles 3.10 and 3.11 in accordance with the rules agreed
under Article 17 (Marrakech rules), allow parts of these assigned amounts
(Assigned Amount Units – AAUs) to be traded among Annex I countries of
the UNFCCC. At this level of ‘international emission trading’ no trading in
the understanding of participation in a market place occurs. The exchange of
AAUs between sovereign States does not create a market in the context of
the WTO Agreements as economic activities between sovereign States is in
principal not guided by WTO rules.
The reasons for this argumentation lie within the WTO system itself.
The WTO system is characterized by its overriding principle that barriers to
trade imposed by governments need to be subjected to international disci-
pline. Under WTO regular procedures were established looking to diminish
or eliminate such barriers and to set up a regime of non-discrimination – i.e.
a generally applicable regime of most-favoured-nation treatment, a prohibi-
tion of quantitative restrictions, and a commitment to reduction of trade bar-
riers and opening markets. In short, the WTO system aims to delimit trade
restrictions that nations impose on transboundary trade in goods and services,
e.g., unilateral high tariff and discriminatory economic arrangements, import
quotas and protection systems.3 The economic relations between States are in
general not covered by the WTO Agreements.
Nor does the WTO – despite its name – govern trade itself. Even under
the WTO Agreements trade is not considered a value, but a means to the end
of, inter alia, higher living standards, full employment and a large and stead-
2
See also C. Voigt, ‘WTO Law and International Emissions Trading: Is there Potential for
Conflict?’, 1 Carbon & Climate Law Review 2008, 52–64.
3
A. Lowenfeld, International Economic Law (Oxford University Press, 2002) 21.
Chapter 9 – International Emissions Trading and WTO Rules 209
ily growing volume of real income.4 Pauwelyn recognizes that trade and its
liberalization ‘is not sought after for the achievement of some ‘global com-
mon’ that transcends the sum of individual state interests.’5 Trade is a mere
instrument, he maintains, to ‘increase the economic welfare of states’.6 WTO
rules are thus not framed in positive terms of ‘freedom to trade’, but in terms
of governing trade restrictions that nations impose on transborder trade in
goods and services and respective market access that is provided between
States.7 Obligations are framed in terms of ‘negative integration’ goals, such
as non-discrimination and least-trade restrictiveness and apply only to certain
tradable units under WTO law, i.e., ‘products’ and ‘services’.
International Emission Trading, despite its name, does not imply trade in
actual GHG emissions. What it envisages is international trade in rights to
emit. AAUs (as well as CERs, ERUs and RMUs) are government creations to
facilitate the compliance with an international obligation. They are issued by
sovereign governments for the purpose of domestic implementation of green-
house gas emission limitation obligations. They exist only in consequence, of
and through, the legally binding commitments of sovereign nations to limit
GHG emissions.8 The trade in these rights in general (just for being some
form of transnational trading activity) is not covered by WTO rules. It has
therefore been generally recognized in legal literature that the acquisition and
transfer of emission units between sovereigns does not create a ‘market’ in
either goods or services.9
The GATT itself does not define ‘products’ although the term is widely
used in the WTO agreements. The character of products is that they are ‘com-
modities’, produced by labour, intellectual effort or natural processes and that
they can be transported from place to place.10 The idea of products however is
not limited to tangible items only. The European Court of Justice in Munici-
pality of Almelo v. NV Energiebedrif IJsselmij 11 ruled that electricity is a good.
The requirement of tangibility has thus become less restrictive, which may
have repercussions in other international judicial bodies, too.
In order to distinguish between ‘products’ and transactionable components
of sovereign obligations a 1985 GATT panel found that Maple Leaf (Cana-
4
Preamble Marrakesh Agreement establishing the World Trade Organization.
5
Pauwelyn, 2003, 73.
6
Ibid.
7
Charnovitz, 2003, 10.
8
Petsonk, 1999–2000, 200.
9
See Werksman 1999, 252; Buck and Verheyen, 2001, 24; Voon 2000, 96.
10
Black’s Law Dictionary 624, 1088 (1979).
11
Case C-393/92, Municipality of Almelo v. NV Energiebedrif IJsselmij [1994] ECR
I–1477.
dian) and Krugerrand (South African) gold coins, when traded as investment
goods, were ‘like products’ to other investment assets.12 However, when these
coins were utilized as a ‘legal tender’, they were regarded as a means of pay-
ment, rather than products. The distinction thus depends on the pecuniary
value attached to the exchanged commodity. Emission units, such as AAUs,
ERUs, and CERs, are basically government creations to facilitate compliance
with international obligations deriving from the Kyoto Protocol. In this sense
they differ from ‘products’ insofar as they are closer to ‘means of payment’ in
satisfaction of international obligations, than to investment goods.
A similar reasoning can be deduced from the US–Softwood Lumber deci-
sion of the WTO Panel.13 In the different context of evaluating what constitutes
a financial contribution, the Panel ruled that the right to harvest public trees
establishes a valuable transfer of resources amounting to a financial contribu-
tion (in this case constituting a subsidy). However, the value was attached to
the actual physical attributes of the transferred resource, to which a right was
given. Timber by itself is a tradable good, something emissions are not.
If tradable emission units, however, were traded purely as investment
goods, they might be deemed products, i.e., like investment assets in the sense
of the Canada–Gold Coins report. Here again, the distinction is necessary be-
tween sovereign exchanges and private participation in an international emis-
sion trading market. As said above, on a sovereign trading level, the transfer
of tradable units is unlikely to satisfy any investment interest.
Some commentators point out that the sovereign interference in an emis-
sion trading market could nevertheless have WTO relevance.14 If, for exam-
ple, a State acquires emission units from companies based in other countries
in order to comply with its emission reduction commitment by the end of a
commitment period, this activity could fall within the scope of the Agreement
on Government Procurement (AGP). This requires that the marketing of emis-
sion units can be defined as services (Article 1 AGP) and needs to be listed in
Annex 4 Appendix 1 to the AGP. Purchases of emission units or allowances
are not listed there; hence AGP rules do not apply to emission trading. This is
not to exclude the possibility that a respective alternation to include trade in
emission units could take place.
12
GATT Panel in Canada–Measures Affecting the Sale of Gold Coins, Panel Report, L/5863,
1985 (not adopted).
13
Panel in United States–Investigation of the International Trade Commission in Softwood
Lumber from Canada, Recourse by Article 21.5 of the DSU by Canada, WT/DS277/RW,
circulated on 15 November 2005.
14
Buck and Verheyen, 2001, 24.
It can in general be concluded that the State-to-State transfer of AAUs,

CERs, RMUs and ERUs to date does not create a legal conflict with WTO
rules.
9.3 WTO Concerns of Private Exchanges in Emission Units
On a second – parallel – level private legal entities and non-State actors can
exchange emission units in domestic and transborder trades.
From a legal perspective three issues have to be distinguished: first, the
initial allocation of emission units to emitting entities in the states territory
and, second, the trading of emission units between these entities. A third issue
is related to the many services – e.g. financial, legal, management, involved in
operating the various national and the international emissions trading regime.
By engaging in emissions trading three different kinds of markets are created,
each posing different questions of WTO compatibility.
A primary artificial market is created by the actual exchange of emission
units themselves between entities. The primary market could be directly af-
fected by WTO rules.
From the primary market a secondary market derives in which buyers and
sellers, in particular for investment purposes, hold and exchange derivative
financial instruments based upon tradable emission units.15
Finally, a third market which is indirectly affected by emissions trading,
and not created by it, is the existing market in goods and services. The mar-
ket segments particularly prone to such an influence are the energy market,
especially when based on non-renewable energy sources, the trade in highly
energy-intensive products (e.g. cars, electronic devices), and the trade in prod-
ucts with a high carbon content (e.g. crude oil and gas, coal). For the direct
and indirect effects of emissions trading different analyses are necessary in the
context of WTO rules.
In what remains of this chapter we shall assess governmental regulation
related to private exchanges of emission units with regard to how it directly or
indirectly affect rights and obligations of States under WTO law.
15
Werksman 1999, 255.
9.3.1 Private Trading with Emission Units and GATT Rules
In terms of private trading investment interests can play a stronger role in trans-
action decisions. Private entity emissions trading occurs alongside sovereign
exchanges. The traded rights do not have the same legal nature as the rights
traded among sovereign states. While the latter carry the decisive element of
a sovereign obligation, allocated rights – derived from the sovereign – entail
no sovereign element. Emission allowances or permits will be traded interna-
tionally among private entities because they represent an economic value. In
economic terms, they could arguably be regarded intangible products.
If tradable emission units, be they credits, units, or allowances, are consid-
ered ‘products’ – a possibility that could not entirely eliminated – according to
GATT, regulations for their trading would need to be measured against GATT
requirements.
A challenge could arise where Member States to both the Kyoto Protocol
and the WTO restrict freedom to participate in the emissions trading system
according to the Protocol. Participation in emissions trading can be restricted
on the basis of ‘country of origin’ by excluding trade with non-Annex B Par-
ties and non-complying Parties to the KP and private entities located in these
countries. These participation restrictions may be found inconsistent with the
rules of Most-Favoured-Nation Treatment (Article I GATT) and the National
Treatment (Article III).16
From a climate law perspective, the reason for restricting participation in
emissions trading follows directly from the international provisions. Explicit
in the Kyoto Protocol is a restriction on participation in international emissions
trading to ‘Parties included in Annex B’. As a requirement these Parties also
have to fulfil the eligibility requirements set out by the Marrakech Accords.17
16
The argument has been made that another restriction inherent in the regulation of emis-
sions trading is the imposition of a ‘cap’. According to Art. 17 KP Parties included in
Annex B may participate in emissions trading for the purpose of fulfilling their commit-
ments under Art. 3. The assigned amounts ultimately limit the quantity of emissions and
any such trading shall be supplemental to domestic actions to fulfil the emissions reduc-
tions obligations. The supplementarity requirement means an additional limitation to the
already restricted volume of tradable emissions in a domestic emissions trading market.
Such quantitative restrictions on the import of emission units or the prohibition of market
access might be inconsistent with Art. XI GATT (General Elimination of Quantitative
Restrictions). See Kim, 2000, 6; Petsonk, 1999; Werksman 1999, 255.
17
To participate in the mechanisms, Annex I Parties must meet, among others, the following
eligibility requirements:
– They must have ratified the Kyoto Protocol.
– They must have calculated their assigned amount, as referred to in Articles 3.7 and
3.8 and Annex B of the Protocol in terms of tonnes of CO2-equivalent emissions.
Participation by non-Parties is not envisaged under the Kyoto Protocol rules

(Article 17) and the modalities set out in the Marrakech Accords.
The same holds generally true for private entities with respect to their home
country’s ‘Kyoto-status’. Most Annex B countries, having established or are
contemplating national emission trading schemes, will allocate Kyoto units to
private entities who are then free to trade in them, either within the national
trading system or recognized systems of other Kyoto Parties.18
To issue or transfer Kyoto units, however, an entity (company or installa-
tion) or individual must have access to an electronic account under a registry
established under the Marrakech Accords. Currently only Annex I Parties to
the Protocol can create such accounts.19 Private companies from non-Kyoto
Parties are therefore generally excluded from participating in the emissions
trading market.
Foreign companies from non-Kyoto Parties could theoretically register
subsidiaries within the territory or jurisdiction of a Protocol Party in order to
buy, hold and sell Kyoto Protocol credits on behalf of the non-Party parent
company.20 Where a subsidiary has the same access to the emissions trading
market as domestic companies, no WTO challenge exists. However, foreign
companies could be excluded. If, for example, the subsidiary only acts as
a ‘straw company’ simply for the purpose of speculating on the emissions
trading market, it could be excluded from participation. Participation of such
companies in the international emissions trading market would not support
the ultimate objective of the Convention as it allows non-Party companies to
profit from emissions trading without incurring any of the costs of emissions
reductions.
In order to prevent circumvention of the Kyoto Protocol and Marrakech
requirements, domestic regulation regarding registration may limit the ability
of foreign companies to participate.21 The restriction, for example, to only cre-
– They must have in place a national system for estimating emissions and removals of
greenhouse gases within their territory.
– They must have in place a national registry to record and track the creation and
movement of ERUs, CERs, AAUs and RMUs and mustÂ€annually report such infor-
mation to the secretariat.
– They must annually report information on emissions and removals to the secretariat.
18
Wilder, 2005, 231–232.
19
3/CMP.1(for CDM); 9CMP.1(for JI), and 11/CMP.1 (for emissions trading under Art. 17
of the Kyoto Protocol).
20
See Wilder, 2005a, 258.
21
Kyoto Parties can, however, decide to open their emissions trading market to participants
from non-Kyoto Parties. The current consideration of linking the EU-ETS with some US
State-based emissions trading schemes is one example of such an exception. See Britain,
California to Work Together on Global Warming, <http://www.planetark.com> (1 August
ate registry accounts for domestic companies or companies with a substantial

business in the domestic jurisdiction, could be a possible response to prevent
non-Party companies from participating in emissions trading.
Another challenge could arise by the inclusion of mobile sources, such as
air and marine traffic. The inclusion of aviation is being contemplated under
the EU-ETS22 and discussions on ship traffic have started.23 If these flexible
emission sources are included, cross-border issues are likely to occur. If, for
example, all air traffic with a destination or stop-over in a Kyoto Member State
were required to be covered by an emissions trading scheme and hold the nec-
essary allowances, then aircraft operators registered in non-Kyoto countries
may not be able to fly in the respective State unless they had been allocated
emission allowances or bought them. The country of registration might claim
this to be a violation of the WTO most-favoured nation and national treatment
obligation as well as market access obligations.
The expansion of the EU ETS aims at avoiding such discrimination by
including foreign aircraft operators in the scheme.24 The practicability of
such inclusion is, however, still an unresolved matter. Changing flight routes,
including stop-overs in EU territory, the entrance of new carriers in the avia-
tion market, large number of covered vessels, lobbying etc. might eventually
reduce the scope of air traffic included in the emissions trading scheme to
airlines of EU Member States.
2006); Bodansky, 2001; Blyth and Bosi, Linking Non-EU Domestic Emissions Trading
Schemes with the EU Emissions Trading Scheme, OECD and IEA Secretariat, COM/
ENV/EPOC/IEA/SLT(2004)6.
22
On 20 December 2006, the Commission adopted a proposal for legislation to include
aviation in the EU Emissions Trading Scheme. The proposal provides for aviation to be
brought into the EU ETS in two steps. From the start of 2011, emissions from all domestic
and international flights between EU airports will be covered. One year later, at the start
of 2012, the scope will be expanded to cover emissions from all international flights –
from or to anywhere in the world – that arrive at or depart from an EU airport. On 13
November 2007, the European Parliament adopted its first reading position on the Com-
mission’s proposal and on 20 December 2007 Environment Ministers reached unanimous
political agreement on the Council’s first reading position on the Commission’s proposal.
(information available at: <http://ec.europa.eu/environment/climat/aviation_en.htm>).
23
The Environmental Council of 3 March 2008 agreed that European action is needed to
tackle shipping emissions in climate change strategy. See: <http://www.eubusiness.com/
news-eu/1204578137.17>.
24
The European Commission proposed to apply the emissions trading scheme to all carriers
without regard to nationality. The 1944 Chicago Convention on Civil Aviation provides
that laws and regulations relating to international flights shall be applied to aircraft with-
out distinction as to nationality. The EU emissions trading regulation needs to be consist-
ent with this Convention. To the extent that air carriers operate from airports in the EU,
foreign airlines would thus be affected in the same way as EU airlines.
Similarly, the recognition of foreign emission units might also be restricted

to those rights deriving from a Kyoto Party. Such a limitation is an important
environmental safeguard of the climate regime as it prevents the undue infla-
tion of the emission cap imposed on those Kyoto Members with reduction
obligations. The acquisition of additional units from non-Parties could entail
the danger that ‘hot air’ rights, which neither reflect emission reductions nor
respective obligations, could enter the otherwise capped trading scheme.
9.3.2 Are All Emission Units ‘Like Products’?
These limitations could come into conflict with the Most-Favoured-Nation

Treatment principle if emission units from non-Parties and from Kyoto Parties
are considered ‘like products’ according to Article I.
In the Asbestos case the Appellate Body accepted an earlier GATT panel’s
‘construction’ of ‘like products’ according to the following criteria: (1) physi-
cal properties of the products; (2) the end uses of the product; (3) consumer
tastes and habits; (4) tariff classification; and (5) the risk associated with the
product.25 While criteria number 1 and 4 seem irrelevant in this context, the
remainder could give some indication. The end uses of emission units created
outside the Kyoto Parties arguably differ from those created by Parties. While
the latter can be used by Kyoto Parties to meet their obligations under the
Protocol, permits created outside the Kyoto scope are not permitted for this
purpose.26
Also consumer tastes and habits could give support to the argument that
the permits are not ‘like’. If the consumers are private enterprises or brokers
there is likely to be a preference to acquire allowances which will be recog-
nized for regulatory compliance. Such recognition is unlikely of non-Party
credits in the absence of a specific bi- or multilateral recognition agreement.
Furthermore, if States want to acquire rights that can be used to meet their
sovereign obligations under the Kyoto Protocol, they are required to buy units
from other Kyoto Parties. Therefore, consumer preference may indicate that
the two types of units are not alike. Finally, if consumers were to buy non-Party
units which subsequently were not recognized for the purpose of domestic or
international compliance they would be risking economic loss through the
necessity to purchase valid permits.27
25
AP in EC–Asbestos, paras. 32–39, with reference to Japan–Alcoholic Beverages.
26
Jinnah, 2003, 749.
27
Ibid. 750.
In any case, the argument can be made that even if emission units are
considered products, those that derive from Kyoto Annex B Parties and those
that were created by non-Members are not ‘like’ products. Therefore, they are
not subject to equal treatment under Articles I and III GATT. Accordingly,
differences in treatment can be made (i) between domestic units of a Kyoto
Annex B Party and foreign units from non-Members and (ii) between foreign
units from Kyoto Annex B Party and from non-Members when entering the
domestic emissions trading market.
If, however, the arguments presented here should not suffice, the restric-
tions might still be justifiable under Article XX GATT. Article XX is examined
in greater detail below.
9.4 Emissions Trading Affecting Existing Markets
Emissions trading can indirectly affect other market segments that are not cre-
ated by tradable emission units but covered by emissions trading. The market
segments particularly prone to such an influence include the energy-product
market (e.g. electrical energy), especially when based on non-renewable ener-
gy sources, the trade in highly energy-intensive products (e.g. cars, electronic
devices), and the trade in products with high carbon content.
The points of trade disturbance can differ. In the following assessment, we
focus on the energy market and explore its interaction with the distribution of
emission units and the requirements for trade with these units.
9.4.1 Import and Sale of Energy Products
One issue raising the question of WTO compatibility under – inter alia – the
national treatment rule are constraints on imports of energy or energy-related
products, i.e. electricity, oil or gas, as an effect of an emissions trading scheme.
Under Article III:4 GATT 1994 an imported product would have to be treated
no less favourably than ‘like’ domestic products. Any system of emissions
allowance trading would be required to provide for the ‘effective equality of
opportunities for imported products in respect of law, regulations, and require-
ments affecting the internal sale, offering for sale, purchase, transportation,
distribution or use of products.’28 An upstream emissions trading system,
however, could for example demand the import and sale of fossil fuels or
28
Panel in US–Gasoline, para. 6.10, modified by the AB in US–Gasoline, citing United
States–Section 337, para. 5.11.
energy products generated by combustion of fossil fuels to be accompanied by

emission allowances.29 The same system might for reasons of environmental
integrity demand different amounts of emission allowances for the import of
fuels or energy products depending on the amount of CO2 emitted during their
production process or on the carbon content of the product.30
Differential treatment of products due to climate considerations can apply
to a large variety of apparently ‘competitive’ products in the same market-
place. The following non-exhaustive list of examples shows some of the prod-
uct groups that could be affected by climate regulations, such as an upstream
emissions trading system. The treatment of products could be based on the
following criteria:
(i) the carbon content of the products, e.g. fuel products with high carbon
content (crude oil, crude petroleum, coal, propane) vs. fuels with a
lower carbon content (natural gas) vs. certain bio fuels (wood), prod-
ucts with lower carbon content or wood substitutes (carbon free),
(ii) the quantity of emissions in the production process, e.g. aluminium,
steel, cement, paper or energy products (i.e. electricity) based on fos-
sil fuel and energy products based on the use of carbon-free renew-
able energy sources (emissions vs. emission-free) or electricity based
on the use of fossil fuels with different carbon contents (i.e. oil and
natural gas) (high v. low amount of emissions),
(iii) the quantity of emissions expected in the consumption process, e.g.
fuel with high carbon content (crude oil, crude petroleum, propane)
vs. fuels with a lower carbon content (natural gas), or cars, planes,
motor boats, scooters, motors etc. with high consumption of fossil
fuels (diesel, gasoline) vs. ‘same’ products with better fuel efficiency
or electro-cars, hydrogen cars (fossil fuel alternatives),
(iv) energy consumption in the production process, e.g. traditionally
highly energy-intensive products (aluminium, steel, glass) vs. ‘same’
products based on modern production technologies,
29
See Werksman, 2001, 177–179. A different scenario raising, however, the same kind of
questions would be the combination of an emissions trading scheme with a Border Tax
Adjustment. In this case, the measure would not consist in obliging importers to purchase
allowances but a tax equalling the price of the allowance could be imposed. J. de Cendra,
Emissions Trading and Equal Competition, METRO Research Paper, 9 November 2005.
30
Furthermore, as already mentioned, the system might not recognize emission units or
allowances originating in countries that are not Parties to the Kyoto Protocol or not in
compliance with the Protocol thereby violating the Most-Favoured Nation Treatment
rule, Art. 1:1 GATT 1994 and the prohibition of quantitative import restrictions, Art. XI
GATT 1994. See examples given by Charnovitz, 2003, draft, 10.
(v) expected energy consumption in the consumption process/usage, e.g.

electronic or electric devices (TV-sets, electric heaters, household
devises) with different levels of energy efficiency, or
(vi) other climate considerations; e.g. products with different GHG emis-
sion levels as waste (i.e. methane), or, e.g., different treatment of wood
products depending on the ‘ecological function’ of the area where the
products originate from (rain forest wood products (destruction of
natural sinks) vs. products from plantations or produced from ‘wood
waste’.
The variety can be extensive and the final determination rests on the facts of
the specific case. For reasons of scope, we shall only examine the quantity
of greenhouse gas emissions in the production process of energy products
(electricity) in the following assessment.
9.4.2 Electricity as an Energy Product
An important starting point is the definition of electrical energy as a good

or service. The international debate regarding the definition and coverage of
energy tends toward the general recognition that within the existing WTO
framework, the generation of electricity falls under the scope of the GATT,
while the transmission, distribution and related services fall under the scope
of the GATS.31
Electricity (electrical energy) is intangible, a quality that has traditionally
been used as an argument against the classification of items as goods. As indi-
cated above, this view is subject to change. Also the Harmonized Commodity
Description and Coding System (HS) classifies electricity as a commodity – a
good – though unlike other goods under an optional heading.
Evidence that the GATT covers electricity and that many WTO Members
as such consider electricity a good can be found in the fact that it is included in
the Schedule of Commitments to the GATT 1994 of most of the major trading
partners (e.g., the US, the EU and Canada). Those schedules contain WTO
Members’ tariff commitments for specific listed goods. The GATS currently
31
Horlik/Schuchhardt/Mann, “NAFTA Provisions and the Electricity Sector”, Background
Paper Nr. 4, Environmental Challenges and Opportunities of the Evolving North American
Electricity Market, Secretariat Report to Council under Article 13 of the North American
Agreement on Environmental Cooperation, June 2002, p. 4.
has some bearing for services related to electricity, this application remains,
however, rather limited.32
9.4.3 Energy Imports and National Treatment Rule
The differential treatment of energy imports based on the quantity of green-

house gas emissions in the production process could raise questions of WTO
compatibility. If, for example, the domestic production of energy were based on
renewable energy sources or natural gas, while energy to be imported is based
on fossil fuels, then differing requirements as to the amount of allowances ac-
companying the import and sale of these products (oil having a higher carbon
content than natural gas and generally emitting larger quantities of CO2 in
the process of producing electricity) would mean favouring domestic climate-
friendly energy sources against imported products.33 This kind of system may
lead to discrimination against or between imported energy products if they
are produced by more carbon-intensive methods making it difficult to import
certain products based on the use of fossil fuels. Such a favourable treatment
of ‘green electricity’ could potentially violate Article III GATT 1994.
9.4.4 Like or Directly Competitive or Substitutable Products
The question concerning the import of electricity that derives from different
energy sources, i.e. renewable energy and fossil fuels or fossil fuels with vary-
ing carbon content, is therefore whether they ought to be classified as ‘like
products’.
Products are not like when their physical properties differ. Yet, the product
‘electricity’ itself generated by burning of fossil fuels is not physically distin-
guishable from electricity based on alternative energy sources.
Process and production methods could make a difference. It remains uncer-
tain whether in analyzing the ‘properties’ of a product focus could be extended
to the product’s production and processing methods (PPMs). It is essentially
32
The clarification of how energy and electricity services are classified, as goods and/or
services is part of the Doha round of GATS negotiations, which was suspended in July
2006.
33
Similarly, if energy imports from country A are based on renewable energy sources, while
country B produces energy based on fossil fuels, the products from both countries, given
that they are like products, would be subject to different requirements as to the amount
of emission allowances accompanying the import and sale, thereby violating the Most-
Favoured Nation Treatment rule, Art. I:1 GATT 1994.
the market that decides whether products are like or directly competitive or
substitutable. If the market differentiates between electricity based on fossil
(non-renewable) fuels and renewable (‘green’) sources, it could and should
provide a legitimate basis for laws or regulations to do the same. The condi-
tions of competition are in the first place set by consumers’ choices and merely
‘codified’ by respective regulation. Consumers increasingly base the choice of
products on the manner of their production. This is evident in preferences for
‘organic food or ‘GMO-free food’, ‘turtle-safe shrimp’ or ‘dolphin-safe tuna’.
Similar preferences start to apply to electricity providers where consumers
show an increasing awareness and sensitivity to the source of electrical en-
ergy. There are clear indications that such consumption behaviour is likely to
become more attuned to the effects of climate change as they become more
palpable.34 Consumer choices would undoubtedly affect providers’ position in
the market place.
One could moreover ask whether different production processes pose dif-
ferent risks to human life and the environment and thus (indirectly) define the
characteristics of the end product. Energy produced by fossil fuel combustion
emits a significantly higher amount of CO2 than generation based on natural
gas, while both fossil fuel energy sources have a higher climate impact than
renewable energy sources. There is international scientific consensus regard-
ing the causation of a globally changing climate by anthropogenic emission of
CO2 and other greenhouse gases as there is consensus that a changing climate
poses a threat to human life, health and the environment.35 It can be argued
that processes that emit more greenhouse gases bear greater responsibility for
the accumulation of greenhouse gases in the atmosphere, increasing the likeli-
ness of a more violent global climate and the risk to human life, health and
the environment. Since electricity can be linked to its generation process (i.e.
by describing it in terms of ‘green power’), the health risks of the respective
processes can be ‘associated’ with the end-product electricity and thus deter-
mine the non-likeness of ‘green’, ’not-so-green’, and ‘dirty power’.
However, given the contentiousness of process-based discrimination, it re-
mains yet to be seen whether different levels of risk or consumer perceptions
of climate impacts associated with the production process will be recognized
by panels or the Appellate Body as decisive criteria for the determination of
likeness of products. Although the interpretation of the ‘like products’ clause
seems to increasingly include environmental aspects, the interpretative ap-
34
See IEA Report, Energy Technology Perspectives: Scenarios and Strategies to 2050, June
2006.
35
For an overview see Intergovernmental Panel on Climate Change, Fourth Assessment
Report, Climate Change 2007: Synthesis Report, Summary for Policymakers, 2007.
proach of the WTO panels and the Appellate Body remains subject to change.
Some note of caution in this respect has been warranted in legal literature.
Depending on the scope of market barriers and market distortions that could
arise as a consequence of governments implementing comprehensive climate
change programmes, panels and the Appellate Body may resort to a more
conservative interpretation of the ‘like-product’ clause.36
Despite strong indications it cannot be concluded with certainty that
electricity from different sources (renewable vs. fossil fuel-based) would be
considered products that are not alike.
9.4.5 No less-favourable Treatment or Effective Equality of Competitive

Conditions
For a violation of Article III:4 GATT to have occurred it must further be

shown that the regulation is not applied consistently to domestic and to im-
ported products, thus hurting competitive opportunities of imports. In the
example of imported non-green (or less-green) electricity and predominantly
green domestic electricity – as is the case in Norway or New Zealand where
domestic energy supply is almost exclusively based on hydropower – a dif-
ferent requirement of electricity importers and domestic providers in terms of
emission allowances would have a stronger impact on imported electricity.
The non-recognition of ‘non-Kyoto allowances’ could also amount to a barrier
to market access for electricity based on fossil fuels and/or produced in non-
Kyoto Member states.
This applies in particular to energy products entering the energy market
after the initial allocation of allowances. In order to enable entrance to the
domestic market of new domestic and foreign energy products, a certain
amount of allowances can be set aside to build a reserve to be provided to
new entrants. Out of such reserve, foreign and domestic ‘new entrants’ would
receive the allowances necessary according to their emission projections in
order to establish themselves on the market. The national treatment rule of
Art III:4 GATT requires that imports from any other Member state must be
treated in a manner equivalent to the best treatment afforded (‘no less favour-
able’) to a domestic product. This does not merely imply that imports from a
foreign new entrant to the energy market have to be treated no less favourably
than a domestic new entrant who wishes to enter the market after the initial al-
location of allowances. It is suggested that an imported product must be able
to compete on a level playing field with an established domestic like product,
36
See Buck/Verheyen, 2001, 9.
rather than a ‘similarly situated’ domestic new product.37 Given the necessar-
ily limited availability of allowances in such a reserve if allowances become
scarce, according to the non-discrimination rule the importing government
may be required to favour foreign ‘new entrants’ over domestic ‘new en-
trants’. However, such an outcome may cause some political controversy.38
It is not guaranteed that states set aside a reserve. In fact, the Norwegian
system – a downstream system – does not entail such a reserve at all. Do-
mestic and new foreign entrants need to ‘buy themselves into’ the existing
emissions trading market depending on the availability of allowances, while
installations that already have established themselves at the time of initial
allocation receive allowances free of charge. The differentiation in treatment
between domestic products and ‘new foreign products’ lies in the different
operational costs of ‘establishing market presence’ and the access to allow-
ances. The availability of allowances at the time of entering the new market
can be reduced to zero when no reserves are in place and all available al-
lowances have been allocated to domestic products, thus precluding market
access entirely. While the availability of allowances will determine the ‘if’ of
market access, the price of allowances generally determines the ‘how’ of such
access. Both, non-available allowances or high allowance prices could result
in de facto market entrance barriers.
Whether trade rules would conflict with an emissions trading scheme also
depends on evidence of the protectionist application of the climate rule.
A country that logically can explain why a difference in treatment occurs
might be able to show that protectionism did not prompt the measure. Unfor-
tunately, logic alone might not necessarily suffice to convince a panel of the
environmental objective of a measure that otherwise discriminates between
like products. In Chile–Alcoholic Beverages, Chile offered four justifications
for the imposed measure (revenue collection, eliminating type distinctions,
discouraging alcohol consumption, minimizing regressive taxes), all of which
seemed logical – but none of them was found to be convincing.39
When it comes to climate measures that bear heavily on the differential
treatment of like or directly competitive or substitutable products, a logical
explanation of non-protectionist motives of the measure appears to be a ten-
able justification, yet its convincing force has to be seen.
One key problem is while climate measures that treat foreign products less
favourably may not be motivated by protectionism, however, they might not
37
See Werksman, 1999, 258.
38
Ibid., 258.
39
Appellate Body in Chile–Alcoholic Beverages, WT/DS87/AB/R, 13. December 1999,
62.
be entirely free of it either. In order to implement the commitments a country

has made under the Kyoto Protocol it might be necessary to prevent or restrict
high GHG emitting products (or products with high carbon content or with
low energy efficiency) from entering its domestic market. Setting more restric-
tive requirements for such products and their producers for participation in an
emissions trading market, i.e. via requiring emissions allowances according to
GHG emissions in the production process (or the carbon content), might imply
protectionist notions, in particular if domestic industry is based on renewable
energy, low carbon products or products with high energy efficiency. It might
even be necessary to protect a domestic ‘green’ industry in order to set up
effective climate measures and to avoid ‘carbon leakage’, i.e. the relocation of
polluting industries to countries with less stringent climate laws.
It seems that the less concerns for the competitiveness of domestic in-
dustries play into the design of the measure the less likely it is that a panel
would find the measure unjustifiably protectionist. But this is a fine line and
determining whether it is breached must depend on the facts of the case and
the willingness of the deciding panel to accept the competitive side effects that
follow from the climate measure.
9.4.6 Conclusion
Our brief analysis shows, that the possibility of conflict between the design
of an emissions trading conflicting with rules of international trade cannot be
ruled out.
Given the increasing demand for energy and the central role the energy
market plays in the global economy, it can be assumed that it is a mere matter
of time before a government’s implementation of a comprehensive climate
mitigation measure will be challenged. It can only be recommended here that
WTO Member states be granted a margin of appreciation in implementing
climate measures (or other measures protecting collective public interests)
that also aim at protecting the effectiveness of a ‘climate-friendly’ industry.
9.5 GATT Exception Clauses
If a climate mitigation measure taken in order to comply with the commit-

ments under the Kyoto Protocol violates a substantive GATT obligation, it
may nevertheless be found to be in compliance with GATT if it falls within
one of the general exception provisions of Article XX (a)-(j). One needs to
remember, however, that exception clauses provide a limited and conditional
exception.40 They are ‘windows’ in the general structure of WTO law that
allow outside, non-trade interests to be assessed and balanced against trade
imperatives.
9.5.1 GATT Article XX(g): Relating to the Conservation of Exhaustible

Natural Resources
One requirement is that climate measures relate to an exhaustible natural

resource. It is suggested here that the capacity of the Earth’s atmosphere to ac-
cumulate GHGs at a level that does not lead to changes in the average surface
temperature has to be regarded as a natural resource. This notion of capacity
embodies an element of limitation and finity.
It is clear however that dealing with global climate change is an issue far
more complex than any of the issues previously dealt with in WTO disputes.
There are many and varying causes, the many mitigation measures vary widely
too and their effects are difficult to predict. In addition, the UNFCCC allows
for a certain degree of climate change. Article 2 focuses on stabilization of
greenhouse gas concentrations in the atmosphere at a level that would prevent
dangerous anthropogenic interference with the climate system. This article im-
plies that to a certain extent climate change is supposed to be unavoidable.41
Another question is whether this capacity can be regarded an exhaustible
resource. The Appellate Body made clear that the ability of a resource to
renew itself does not exclude its exhaustibility.42 The processes responsible
for maintaining a stable and safe global climate are being affected by human
activity to the point of mal- or even dysfunction, by excessive emission of
GHG and clearing of forested lands. Yet, it is the sum of human interferences
and their accumulative effect that threaten the natural capacity of the Earth
40
See for a critique on the limitations of exception clauses: O. Perez, ‘Ecological Sensitivity
and Global Legal Pluralism: Rethinking the Trade and Environment Conflict’, Oxford
2004, pp. 88–93 (focusing on ‘cognitive dilemmas’) and G. Winter, ‘The GATT and En-
vironmental Protection: Problems of Construction’ 15:2 Journal of Environmental Law
2003, p. 115, claiming the need for a doctrinal construction of putting trade law into an
environmental protection framework.
41
Recent studies indicate that a temperature rise of 2°C above pre-industrial levels will have
dangerous implications for human health and ecological system. See: Intergovernmental
Panel on Climate Change, Fourth Assessment Report, Working Group II Report, Impacts,
Adaptation and Vulnerability, chapter 19: Assessing key vulnerabilities and the risk from
climate change, 2007. Also: European Union, Winning the Battle Against Global Climate
Change, COM[2005] 35 final, 12–13.
42
See Appellate Body in United States–Import Prohibition of Certain Shrimp and Shrimp
Products, WT/DS58/AB/R, 12. October 1998, adopted 6 November 1998.
to maintain a stable and safe global climate. Such a complex situation might
resist definition by the conventional meaning of the term ‘exhaustible natural
resource’.
The Appellate Body in US–Shrimp observed in 1998 that the words ‘ex-
haustible natural resource’ crafted more than 50 years ago, had extended their
meaning and must ‘be read by a treaty interpreter in the light of contemporary
concerns of the community of nations about the protection and conservation of
the environment’.43 Thus, it adopted an evolutionary interpretation. An exten-
sion of meaning by interpretation is also provided for by Article 31.3(c) of the
Vienna Convention on the Law of Treaties according to which any relevant
rules of international law applicable in the relations between the Parties shall –
together with the context – be taken into account. Thus, an international instru-
ment has to be interpreted and applied within the framework of the entire legal
system prevailing at the time of interpretation.44 This terminology provides a
mandate to examine other and general public international law in the course
of interpretation.45 Such an interpretation would allow non-WTO international
law to be taken into account when interpreting WTO provisions.
Furthermore, by recognizing the objective of sustainable development as
set out in the Preamble of the WTO Agreement, the Appellate Body in the US–
Shrimp also acknowledged the legitimacy and importance of environmental
protection as a policy worthy of promotion by the WTO. The consequence was
to provide considerable ‘policy space’ to WTO Members so that actions taken
in other fora can – to a certain extent – be seen coherent with trade law.
In this light, the considerations underlying the UNFCCC and the Kyoto
Protocol would also need to inform the meaning of the terms of the WTO cov-
ered agreements. Climate change certainly represents a contemporary concern
of humanity. Considering the expected detrimental effects of climate change
on, inter alia, the health, stability and resilience of ecosystems, on single spe-
cies and biological diversity, on food production and fresh water access, on
the spread of tropical diseases and the expansion of the North–South gap in
general, climate change is recognized as one of the most urgent and important
international concerns.
Yet another requirement of Art. XX (g) GATT is a sufficient link, between
the effects of a changing climate and the territory where a state exercises its
jurisdiction. The dangers associated with an unstable global climate will affect
43
Appellate Body in US–Shrimp, para. 129.
44
See Namibia (Legal Consequences) Advisory Opinion, ICJ Rep. 1971, 31.
45
See G. Marceau, ‘Conflicts of Norms and Conflicts of Jurisdictions, The Relationship
between the WTO Agreement and MEAs and other Treaties’, 35:6 JWT 2001, 1087.
the community of states; every State will therefore, in effect, be justified in

claiming such link.
Moreover, the means need to be reasonably related to the ends and the rela-
tion between them a close and real one. The requirement of holding emission
allowances for import and sale of energy products whose production was ac-
companied by high GHG emission rates (or a higher carbon content or higher
energy intensity) need to stand in a ‘substantial relationship’ to the objective
of climate protection. As previously asserted, the resource at stake is the ca-
pacity of the Earth to maintain equilibrium between GHG input and output,
resulting in atmospheric concentrations that do not jeopardize the stability of
the global climate. The relationship between the general structure and design
of the measure and the policy of stabilizing greenhouse gas concentrations
must be examined, something that may only be carried out on a case-by-case
basis, by careful scrutiny of the factual and legal context of a given dispute.46
That said, some general requirements can be assessed here and now as
evidence of the existence of such relationship. International emissions trading
as set out in Article 17 Kyoto Protocol is explicitly defined as an instrument
for the purpose of fulfilling the commitments under Article 3 of the Kyoto
Protocol. It is, in other words, designed to encourage countries to comply with
their GHG reduction commitments. Requiring emission units for emission
intensive products aims at integrating their negative climate impact into the
emissions trading scheme. The negative impact may derive from the produc-
tion process, e.g. electricity based on the combustion of fossil fuels, or their
use and consumption, e.g. electrical devices with low energy efficiency or
‘petrol-guzzling’ vehicles. It can be argued that this requirement is intimately
connected with the policy of stabilizing GHG emission levels in the atmos-
phere and is not disproportionately wide in its scope and reach in relation to
this policy.
In sum, a climate measure, such as emissions trading, which requires dif-
ferential treatment of products associated with high GHG emitting produc-
tion technology and those produced with low or no emissions, is likely to be
provisionally justifiable by GATT Article XX(g).
9.5.2 GATT Article XX(b): Necessary to Protect Human, Animal or Plant

Life or Health
In order to provisionally justify a climate measure under GATT Article XX(b)

the measure must be necessary for the protection of human, animal or plant
46
See Appellate Body in US–Gasoline, 19.
life or health. The policy objective to protect a stable global climate surely
falls within this range.
According to the Appellate Body, there needs to be a sufficient evidence of
risk to human, animal or plant life or health associated with the policy goal of
the environmental measure. With regard to climate measures, there is scientific
evidence that unrestricted emissions of greenhouse gases endanger the global
climate system, constituting in turn a risk to humans and the environment.
The 2007 Fourth Assessment Report of the IPCC enumerates on the basis
of credible evidence the risks associated with a changing global climate.47
Although the exact timing and local distribution of climate effects are still
under scientific investigation, current knowledge and scientific consensus see
changing climate patterns as a risk to humans, animals and plants. Thus, a
climate measure aiming at reducing the emission of greenhouse gases also
aims at protecting a stable global climate and preventing dangerous interfer-
ence with the climate system, thereby reducing the risk of adverse impacts
on human, animal and plant life or health. The importing country might not
profit directly from the climate measure as it is impossible to establish a direct
causal relationship between a special measure to reduce GHG emission and
local effects. Yet, any reduction reduces the probability and magnitude of
harm to human, animal or plant life or health.
The second condition of Article XX(b), the necessity requirement, is more
controversial. According to WTO jurisprudence, for a measure to be ‘neces-
sary’, no ‘GATT consistent’ or ‘less GATT inconsistent’ measure should be
reasonably available.48 This approach is considered to show deference and
give flexibility and policy space to national governments. Important here
is the availability of alternative measures that are GATT consistent or less
inconsistent. Taking into consideration the effort put into negotiating the
Kyoto Protocol, it becomes evident that the availability of alternative col-
lective measures is hard to imagine. The negotiations resulted in a quantified
reduction commitment of Annex B Parties primarily because certain leverages
were built in. The use of flexibility mechanisms, in particular international
emissions trading, was essential to an agreement on reduction commitments.
Thus, inclusion of an economic means such as emissions trading seemed the
only alternative to get states ‘on board’.
The question is therefore whether, in the design of emissions trading, a
GATT-consistent or less GATT-inconsistent measure could be envisaged. A
47
For an overview see Intergovernmental Panel on Climate Change, Fourth Assessment
Report, Climate Change 2007: Synthesis Report, Summary for Policymakers, 2007.
48
GATT Panel in Thailand–Restrictions on Importation of and Internal Taxes on Cigarettes,
7 November 1990, DS10/R, para. 75.
straight downstream emissions trading system covering point sources of GHG

emissions, for example, might pose fewer GATT challenges. The rationale of
an upstream system, however, is to ensure the inclusion of negative climate
impacts of highly emitting products into the trading system and to require
respective processes to internalize environmental costs. In other words, the
inclusion of these sources renders an emission trading system more effective.
The question is therefore whether the necessity test requires a less restrictive
measure to be chosen even if it is less effective.
The Appellate Body indicated that ‘the more vital or important [the] com-
mon interest or values’ pursued, the easier it would be to accept as “necessary”
measures designed to achieve those ends’.49 The objective pursued by emis-
sions trading is the reduction of greenhouse gases in a cost-effective man-
ner. This aim represents the value the international community attaches to a
stable global climate system. Thus, if trade restrictive measures are chosen
as a means of complying with these commitments, the vital and important
common interest in the end pursued by these measures has to be taken into
account.
A provisional justification of trade restrictive climate measures seems
therefore possible.
9.5.3 Chapeau of GATT Article XX
At this stage, the manner of application seeks justification. Even if the policy
objective of a climate measure falls within the terms of Article XX (b) or (g),
it is not justified under Article XX if the operational provisions or application
constitute a means of arbitrary or unjustifiable discrimination or a disguised
restriction on international trade. To what extent a climate measure would be
found rigid and unbending by not taking into account the conditions in the
states affected by the imposition depends on the facts of a case. The panel in
US–Shrimp seemed to favour implementations based on the application of
certain standards.50 However, no international standards on emissions of GHG
from industrial processes exist.
Moreover, the intended or de facto coercive effect of a climate measure
on the climate policy of other governments would need to be accompanied
by a degree of discretion or flexibility in how to compare foreign climate
policies and domestic ones. However, if a state decides to require emission
units on the import of energy products based on fossil fuels (or electricity-
49
Appellate Body in US–Shrimp para. 162.
50
Panel in US–Shrimp II, 5.124.
intensive products), the state will be imposing its own regulatory programme
on other states. Such imposition might, however, be a necessary corollary
of the multilateral commitment to the purpose and objective of the climate
regime. If a state sets up national policies and measures, including a system of
tradable emission units, then expectations are harboured that other states have
implemented comparable or identical programmes. Thus, it is not the state’s
own policy that is imposed on other states, but a reflection of the collective
interest and expectation of all states committed to the overall objective of the
UNFCCC.
Flexibility should not require different regulatory programmes to be im-
plemented by a state in order to differentiate between Kyoto Members and
those that are not. However, if in the country of export, the product already
paid a carbon tax or was subject to an emissions offset requirement, this must
be “deducted” from any climate regulation in the importing country. To treat
those imports in the same way as imports from a country without any climate
change policy would arguably be treating different situations the same, hence,
discriminatory. Under the prohibition of ‘arbitrary discrimination’, the im-
porting state imposing the trade restrictive measure would need to allow each
WTO Member potentially affected by the measure to show how its climate
change policy tackles emissions from the sources covered by the emissions
trading scheme. While Kyoto Members included in Annex B in most cases
could prove to have a programme comparable in effectiveness in place, non-
Kyoto Members might have difficulties establishing evidence of an effective
climate change programme.51 In these cases, it remains unclear how differ-
ences in prevailing conditions could or even should be taken into account
when applying the trade restrictive measure.
In addition, the states involved in a trade dispute over climate measures
need to have engaged in serious, across-the-board negotiations with the objec-
tive of concluding bi- or multilateral agreements on the protection of the global
climate system. Here it can safely be said that the international negotiations
on the UNFCCC and the Kyoto Protocol represent profound and substantial
efforts to reach a global agreement on the issue. The protection of the cli-
mate system as an issue of global concern is expressed and acknowledged in
multilateral environmental agreements, policy declarations and national and
international scientific expert reports. There is to date no other environmental
challenge that has received as much political attention and been the object of
51
It has been suggested to use as a starting point the National Reports submitted by the
Parties to the UNFCCC and to the Kyoto Protocol encapsulating all national policies and
measures on climate change in accordance with Arts. 4.1 and 12 UNFCCC and Arts. 5, 6
and 8 of the Kyoto Protocol.
such long-term and wide-ranging diplomatic efforts. Thus, no argument based

on missing concerted or cooperative efforts and resulting unilateralism would
appear to be plausible.
Furthermore, a measure will constitute an abuse if it is a disguise to con-
ceal the pursuit of trade-restrictive objectives. Whether a measure is applied
for protectionist purposes can often be discerned from its design, architecture
and revealing structure.52 The effect of favouring domestic products alone
does not render a trade restrictive measure protectionist. The panel in EC–
Asbestos admitted that there is always a possibility that measures might have
a protectionist effect. ‘[T]his is a natural consequence of prohibiting a given
product and itself cannot justify the conclusion that the measure has a pro-
tectionist aim, as long as it remains within certain limits’.53 However, these
limits or the extent to which domestic products or industry may benefit to
the detriment of third country producers have not been quantified and their
determinations remain basically within the judicial discretion of the DSU.
This, arguably, constitutes an obstacle to the predictability of the justifiability
of trade-restrictive climate measures.
Some of the criteria introduced to ascertain the existence of such disguise
are the ‘publicity’,54 transparency,55 and ‘the design, architecture and reveal-
ing structure’56 of the measure. With regard to an emissions trading scheme,
a clear public announcement of the sources, products and processes covered
will likely be made. As for the second criterion, even if there were protection-
ist concerns as regards domestic energy production, they would need to be
discerned from the design of the emissions trading scheme. Here, the inclusion
of other sources of greenhouse gas emissions as well as the equal application
of the trading system to all imported products would make it difficult, if not
impossible, to discern such motives.
Although some conclusions can be drawn, considerable uncertainty remains
as to the precise meaning of the terms of the chapeau.57 The examination is
52
Panel in European Communities–Measures Affecting Asbestos and Asbestos-Containing
Products, WT/DS135/R, para. 8.236.
53
Ibid., para. 8.238.
54
See Panel in US–Canadian Tuna, which noted that “the United States’ action should not
be considered to be a disguised restriction on international trade, noting that the United
States’ prohibition of imports of tuna … had been taken as a trade measure and publicly
announced as such.”, para. 4.8.
55
See discussion by Fauchald, Ole Kristian, Environmental Taxes and Trade Discrimina-
tion, London 1998, 451–453.
56
Panel in EC–Asbestos, para. 8.236; also in US–Shrimp (Art. 21.5), para. 5.142.
57
See, for example, the most recent Appellate Body report on the Brazilian import ban of
retreated tyres from the EC: Brazil–Measures affecting Imports of Retreaded Tyres, WT/
DS332/AB/R (3 December 2007).
contingent on the facts of the case and GATT and WTO practice so far has
failed to come up with a clear and consistent test of what is to be considered
‘arbitrary’, ‘unjustifiable’ or ‘disguising’. This situation is unsatisfactory not
only because it leaves so much to the discretion of the panels and the Appel-
late Body, but also because recent practice shows that when discrimination is
considered unjustified under Article XX, the legal argumentation is essentially
based on the chapeau.
It remains unclear how panels or the Appellate Body will decide in the face
of a significant potential for trade distortion, the degree of prevailing scientific
uncertainty as to the concrete effects of the measure, and the timing and local-
ity of climate change impacts and the absence of international standards on
greenhouse gas emissions in production processes of energy products. The
legal uncertainty and lack of clarity in this respect may not only enhance the
‘regulatory chill’, they also impact the timeliness and effectiveness of climate
change response measures.
9.6 Conclusion
In conclusion, a number of uncertainties can be said to exist as to how a

panel or the Appellate Body would view a trade restrictive emissions trading
scheme. This applies in particular where the design of an emissions trading
system affects non-Kyoto Members’ sovereign interests.
While currently existing emissions trading systems appear unlikely to
come into conflict with WTO rules, one would expect future designs to in-
clude more stringent emission caps, more gases, sources and emitting prod-
ucts and processes. Such design of an emissions trading system is within the
general mandate given by the Kyoto Protocol. Given the fact that significant
reductions down to a fragment of current emissions are required to stabilize
atmospheric GHG concentration levels to prevent dangerous climatic change
and that emissions trading has been identified as a cost-effective way to reach
a given reduction target, the evolution of much more stringent emissions trad-
ing schemes appears likely.
A restrictive emissions trading system may indeed be necessary for reasons
of effectiveness of the multilateral climate regime. However, discriminatory
treatment or general exclusion of participants from non-Kyoto countries as
well as a design which requires emission allowances to accompany the import
and sale of fossil fuels, energy products or energy-related services with high
levels of GHG emissions in their production process, may infringe substan-
tive non-discrimination rules contained in GATT. While exception clauses
appear applicable to this situation, WTO jurisprudence suggests they might
not remedy all infringements of WTO law. Where climate measures cannot be
justified under Article XX GATT a normative conflict exists.
Chapter 10
The Clean Development Mechanism and WTO Rules
10.1 Introduction
The implementation of the Clean Development Mechanism interacts with the

economic relations between States, prompting yet another series of complex
questions regarding the relationship to WTO rules.
Because the CDM is the only instrument of the Kyoto Protocol to include
non-Annex I countries in efforts to reduce greenhouse gas emissions, it is
considered an important catalyst for starting and spreading climate-friendly
initiatives, technology, capacity and financial resources in these countries. In
particular, its likely function as a role-model for post 2012 strategies, which
combine mitigation efforts in Annex I Parties with climate projects in the de-
veloping world, not only make it necessary but opportune to ponder upon the
trade relation of this instrument.
Because the rules guiding CDM projects have only recently been finalized,
the manner in which they interact with international trade provisions remains
to be seen. The assessments in this paragraph can only be hypothetical as none
of the so far 950 registered CDM projects have given rise to claims of WTO
law incompatibility.
The CDM field is rapidly evolving and the demand for clarification of the
relationship between the two sets of rules is increasingly urgent. Although the
question of compliance with trade rules can only be determined by the dispute
settlement body of the WTO, the analysis is nevertheless of importance from
the perspective of attracting investments for CDM projects. Concerns about
infringement of trade rules would tend to exert a ‘cooling effect’ on future
negotiations on CDM or climate protection measures after 2012 in general,
and may diminish willingness of potential project participants, both on the
side of investors and the hosts, to engage in CDM projects.
CDM projects can entail diverse types of international business and
trade transactions. In most cases a CDM project will be based on a bilateral
partnership between a developed country and a developing country. Project

developers in most cases will be private investors from Annex I States who
set up State contracts with developing States, where the private Party on the
one side enters a contractual relationship with a sovereign Party on the other.
CDM project creation will not necessarily be limited to individual private
investors. Project developers and investors can be distinct entities from the
same or from different countries. The project developer could also be a local
company, a consortium or joint venture, a multinational corporation or local,
regional or national government.1 Further, an international organization, e.g.
the World Bank Prototype Carbon Fund, could be involved that pools financial
resources, manages projects or channels funds to eligible project developers.
Brokers could also be involved to mediate contact between private investors
and projects.
Depending on the scale and type of a project, the project developer might
carry out the entire project on his own or arrange for local and/or foreign com-
panies to provide services required by the project. Some developing countries
may even want to develop unilateral CDM projects, and develop and finance
them without entering into partnerships with Annex I countries with the pros-
pect of selling CERs on the international emissions trading market.2
Depending on WTO membership of the involved countries in a CDM
project, WTO norms could govern all or parts of these economic relations. Not
only international trade in goods and international trade in services but also
technology transfer under a CDM can be related to WTO covered agreements.
The operation of the CDM will involve substantial investment decisions and
attract significant financial flows to and from Kyoto Parties that might not
otherwise occur. Although WTO rules are not directly applicable to invest-
ments per se, they may nonetheless be relevant to the trade-related aspects of
investment activities.3 We would need not only to examine financial and other
kinds of services and their relation to GATS, but their interface with the SCM
Agreement and the TRIMS Agreement as well. Due to limitations of scope,
we will focus on GATS in the following elaborations.
As an initial step, the first paragraph seeks to scope the types of services
involved in CDM projects. In the second step we examine the relationship to
rules of GATS.
1
Wiser, 2002, 296.
2
See M. Jahn, A. Michaelowa, S. Raubenheimer, H. Liptow, Measuring the Potential of
Unilateral CDM – A Pilot Study, HWWA Discussion Paper, 2004, 263.
3
See Murase, 2003, 13.
Chapter 10 – The Clean Development Mechanism and WTO Rules 235
10.2 CDM Activities as Services under GATS
The CDM project activity cycle has seven distinct steps: (1) Project design,
(2) National Approval, (3) Validation and Registration, (4) Project Financing,
(5) Monitoring, (6) Verification and Certification, and (7) Issuance of units for
Certified Emission Reductions – CERs. At a minimum, steps 1, 4 and 5 will
involve different services. The designing stage, for instance, requires techno-
logical, accounting and legal services. While the project design originates with
the host country, it can be modified in cooperation with other entities, presum-
ably from Annex I countries. A CDM project involves numerous activities
which collectively could be described as ‘CDM project activity services”.4
Skills and capacity of a high order are needed to successfully complete
a project. At times they can be in scarce supply in host countries. Project
success rests on the successful completion of many subordinate tasks, includ-
ing, e.g., (i) feasibility studies based on the potential of the project and local
conditions; (ii) gaining the approval of the host government; (iii) defining the
project boundaries; (iv) designing baseline methodology; calculating baseline
emission amounts and reduction achieved by the project; (v) carrying out
adjustments to compensate leakages; (vi) accessing proof of additionality;
(vii) structuring monitoring methodologies and ditto plan; (viii) preparing
environmental impact assessments, and (ix) ensuring reliable stakeholder
consultation.5
Designing a CDM project will also, inter alia, require construction and
related engineering services, architectural and planning services, transport and
distribution services, as well as legal and accounting services. If they are not
already attached to the project, these services will need to be drafted in the
pre-project period. Apart from the services employed in the development of a
CDM project, other responsibilities fall within the purview of CDM projects
such as project implementation, management and monitoring, the subsequent
trade in CERs and ‘secondary” financial services related to trade in CERs.6
Whether these ‘CDM services’ are covered by the General Agreement on
Trade in Services depends on the service categories of the Agreement. In the
absence of a generally agreed definition of ‘service’ under the Agreement, the
WTO secretariat has published a Services Sectoral Classification list, which
4
Wilder, 2002, 290.
5
For a project design checklist see Appendix B of the Marrakech Accords and the Project
design Development Document Form (PDD CDM) developed by the Executive Board
available at <http://cdm.unfccc.int/Reference/Documents/cdmpdd/English/CDM_PDD_
ver02.pdf>.
6
For an overview over service categories see also Springer, 2000, 65–84.
divides all services into 12 categories and a large number of sub-categories

(see Table 1).7
Table 1: GATS Service Sectoral Classification List – Overview
No. Category name No. Category name

1 Business Services 7 Financial Services
2 Communication Services 8 Health Related and Social Services
Construction and Related Tourism and Travel Related
3 9
Engineering Services Services
Recreational, Cultural and Sporting
4 Distribution Services 10
Services
5 Educational Services 11 Transport Services
Other Services not Included
6 Environmental Services 12
Elsewhere
Source: WTO
Most WTO Members have provisionally or by mandate adopted this Services

Sectoral Classification list to describe and categorize their GATS commit-
ments. A list of specific agreements sets out the sectors in which the corre-
sponding countries have to apply the substantive provisions of GATS. The
commitments on this list can either apply to all sectors or to single sectors and
sub-sectors.
The listed general categories and sub-categories will also cover the various
aspects of CDM development and implementation (see Table 2).
The core services of a CDM project are likely to fall under category 6,
‘Environmental Services’, most likely under category: ‘D. Other’, although
the inclusion in one of the other three subcategories is not excluded.
United Nations Central Product Classification (CPC), which replicates the
GATS subcategories, includes the following services in the sub-category ‘oth-
er’: cleaning services of exhaust gases; noise abatement; nature and landscape
7
See WTO, MTN.GNS/W/120, (98–0000), 10 July 1991 (available at <http://www.wto.
org/english/tratop_e/serv_e/mtn_gns_w_120_e.doc>).
Table 2: GATS Services Sectoral Classification List – Relevant Sectors for

JI/CDM
No. Category Subcategory Activities

1 Business A. Professional b) Accounting, auditing and book
Services Services keeping services
e) Engineering services
f) Integrated engineering services
C. Research and a) R&D services on natural sciences
Development c) Interdisciplinary R&D services
Services
F. Other Business c) Management consulting services
Services d) Services relating to management
consulting
f) Services relating to agriculture,
hunting and forestry
i) Services incidental to manufacturing
j) Services incidental to energy
distribution
m) Related scientific and technical
consulting services
6 Environ- A. Sewage
mental B. Refuse Disposal
Services Services
C. Sanitation and
Similar Services
D. Other
Source: WTO
protection services; and other environmental protection services.8 Cleaning

services of exhaust gases include emission monitoring and control services of
pollutants in the air; whether from mobile or stationary sources; concentration
monitoring; and control and reduction services of pollutants in ambient air.9
8
Although there is no direct applicability of this list to GATS, the WTO Secretariat has
made use of the CPC for structuring and enumerating the lists of specific commitments to
the GATS.
9
CPC Nr. 9404.
Some CDM services tend, it seems, to cluster under this category or under
‘other environmental protection services’.10
CDM services include also numerous categories, in particular business
services (Category 1) and sub-categories such as ‘A. professional services’,
e.g. auditing, integrated engineering services, ‘C. research and development
services’ and ‘F. other business services’.11
All four modes of service supply are possible under the CDM. Cross
border supply (mode 1) of some environmental services, although previ-
ously considered lacking technological feasibility, could now be feasible,
e.g. satellite-based monitoring, cost estimations, feasibility studies. The other
three modes – consumption abroad, commercial presence and the presence of
natural persons seem to be involved by the majority of services covered by a
CDM project.
Given that a host country is a Member to the WTO, services, such as busi-
ness and engineering services are thus in general covered by the obligation
to accord the same treatment to services and like services from all Member
States and not to discriminate services from different Members.12
In addition, States that have made specific commitments in service sec-
tors covered by CDM (e.g. environmental or business service sectors) have
to give market access and treat all like services from Member States no less
favourably than national service providers (National Treatment rule in Article
XVII).
Under GATS, service categories are generally mutually exclusive. A serv-
ice falls within a category or it does not. The complexity of interlinked and
interdependent CDM services, however, means that a CDM investment could
cover several service categories – making it difficult to assess whether a CDM
project as such would be covered by the categories of GATS, and if so, to
which of the services the non-discrimination clauses would apply. The situa-
tion is likely to arise it seems when some of the services employed in one CDM
10
Springer gives a further argument by comparing the GATS/CPC list with a list provided
by the OECD and Eurostat, the statistical office of the EC, which more explicitly de-
fines this category as ‘any systematic and creative activity which is concerned with the
generation, advancement, dissemination and application of scientific and technological
knowledge to reduce or eliminate emissions in all environmental media and to improve
environmental quality. Included creative scientific and technological activities for the de-
velopment of cleaner products, processes and technologies’. See COM/TD/ENV(98)37/
FINAL. Springer, 2000, 75–76.
11
See Springer, 2000, 74.
12
The US has proposed in the GATS committee an inclusion of service activities in support
of the protection of ambient air and climate, i.e. services which reduce exhaust emissions
and other emissions to improve air quality, as an environmental service. See Brack and
Gray, 2003, 22, fn. 46.
project are covered by liberalized categories of a host State while others fall
within restricted categories or do not fall within any service sector of GATS at
all. This situation challenges a coherent approach to WTO compatibility.
This ambivalent situation has positive and negative consequences. If CDM
services do not fall within a liberalized service sectors, the national treatment
and market access rules of GATS do not apply. At the same time, a closed
market may discourage potential participants from joining a CDM project.
Springer notes that the small number of commitments in the environmental
service sector is unfortunate for three reasons. First, specialization is less prof-
itable in a smaller market; second, cost differentials are reduced leading to a
narrower possible range of projects and respective range of reduction costs;
and third, open market access enhances the number of participants and helps
‘closing deals’ between industrial and developed countries.13
In order to support an open service market, the suggestion has been made
to ‘cluster’ CDM services. This issue links to the discussion of including what
are known as service-clusters in the Schedule of Commitments. Such an ap-
proach is based on the idea that GATS-specific commitments could be negoti-
ated for ‘clusters’ of interdependent services classified in different parts of the
GATS Services Sectoral Classification List.14
As mentioned above, CDM activities cross multiple service sectors and it
might be in the interest of host countries and investor countries alike to lib-
eralize markets when accommodating CDM projects. Clustering the various
respective services could lead to the set-up of a specific ‘CDM cluster’.
Table 3 maps, in broad terms, a possible cluster approach to CDM activities.
Table 3
Transport Services Financial Services
Environmental CDM Construction Services

Services
Business Educational Services
Services
13
Springer, 2000, 80.
14
OECD, Trade Directorate/ Trade Committee, TD/TC/WP(2000)9/FINAL, Assessing
Barriers to Trade in Services using ‘Cluster’ Approaches to Specific Commitments for
Interdependent Services, 07 November 2000, 4.
The shaded areas represent those parts of service sectors that could form
part of a CDM project cluster (the ‘cluster services’, e.g. transport services
related to the activity).
It is important to recall at the outset that these related services would not
actually move their position in Services Sectoral Classification List and that all
commitments would still be scheduled under their existing heading. However,
particular issues for scheduling commitments may arise for clusters in terms
of identifying specific parts of infrastructure services which are related to the
core service (the shaded parts). If Members wanted to make commitments in
these services, including on an autonomous basis, it would need to be clear
exactly which activities were covered by the commitment. While it is possible
to refer to cluster services in general terms (e.g. construction services related
to CDM), it is unclear how useful this would be when it came to making
commitments.15
However, the discussion shows clustering might be a move to get around
the rather stringent categorization of services while providing a more flexible
approach to market liberalization. This is also indicated by the work of the
OECD Secretariat, where the role played by environmental services alone,
comprising – inter alia – services in the design, engineering, construction,
installation, maintenance and upgrading of environmental facilities and sys-
tems, has been stressed.16 The Secretariat has compiled a chart comparing
the integrated classification for environmental services used in the OECD
Environmental Goods and Services Industry Manual17 with the ‘vertical’ sec-
toral classification used in the GATS.18 It suggests that a broader definition/
classification of environmental services could be used for trade negotiation
purposes that would not necessarily require an overhaul of the GATS clas-
sification system. The Secretariat has explored several options in this regard,
15
Ibid., 14, for a similar approach to tourism.
16
Environmental Goods and Services: an assessment of the environmental, economic
and development benefits of further global trade liberalisation, OECD, COM/TD/
ENV(2000)86.
17
OECD/Eurostat, The Environmental Goods and Services Industry, Manual for Data col-
lection and Analysis, 1999.
18
The OECD/Eurostat definition includes services provided to “measure, prevent, limit,
minimise or correct environmental damage to water, air, soil, as well as problems related
to waste, noise and eco-systems. The classification system encompasses services relating:
(i) to pollution management, including those related to the construction and installation of
facilities for such purposes; as well as services related to the installation and utilisation of
(ii) cleaner technologies and products, and (iii) technologies and products which reduce
environmental risk and minimise pollution and resource use”. See Table 4 in COM/TD/
ENV(2000)86.
including a core and cluster approach based on an updated classification of

core environmental services.19
This notion of going outside of the GATS classification in the context of en-
vironmental services liberalisation has also been considered by APEC, which
has compiled a consolidated list of services related to the environment, many
of which are classified in other chapters of the GATS. This recognition across
various fora of the limited nature of the GATS classification is indicative of
potential benefits attached to a cluster approach to the environmental sector.
However, if such a cluster approach is going to be implemented, markets
will be open to competition, and restrictions on the basis of Kyoto Mem-
bership could constitute an infringement of GATS market access and non-
discrimination rules.
The higher the level of market access, the higher the likelihood of host-
ing foreign investments. However, once the market has been liberalized, the
same access needs to be given to all services and service suppliers from WTO
Member States and to domestic and foreign suppliers alike.
10.3 Participation in CDM Activities and Discrimination
The Most-Favoured Nation clause of Article II GATS is applicable to all serv-

ices that fall within the scope of the agreement irrespective of whether specific
commitments are undertaken or not.20 Given that a potential host country is a
Member of the WTO, services, such as business and engineering services, are
thus in general covered by the obligation to accord the same treatment to like
services and service suppliers from all Member States and not to discriminate
among services from different Members.
A central aspect of CDM activities relevant to this rule is the choice and
treatment of service providers in the development and implementation of a
CDM project. Here, the question arises whether a host country, according to
WTO rules, could differentiate between CDM project providers based on the
provider’s home country status of an Annex I or non-Annex I country or upon
the ratification of the Kyoto Protocol or the compliance status. In other words,
could project developers from countries that have not acceded to the Kyoto
19
COM/TD/ENV(2000)86.
20
As mentioned above, this is conditioned on the Member not having sought an exemption
at the time of the acceptance of the Agreement (for acceding countries: date of acces-
sion). These exemptions are contained in country-specific lists, and their duration must in
principle not exceed ten years. The provision in Art. II:2 GATS provides justification for
giving the country or countries specified in the exemption more favourable treatment. See
GATS Art II:2 and GATS Annex on Art II exemptions.
Protocol or have not complied with their binding commitments be excluded

from carrying out a CDM project to the point of receiving emission credits?
Such exclusion, if imposed by the local, regional or central government of
the host State and of general application, i.e. by law, regulation, rule, proce-
dure, decision, administrative action, may come into conflict with the Most
Favoured Nation clause of Art II GATS.
Legal analysts have frequently referred to this possibility as one example
of direct conflict between WTO and climate rules.21 While it is somewhat
difficult to see why developing countries wanting foreign investment would
focus particularly on CDM, it appears necessary for those who want to host
CDM projects to exclude services from non-Kyoto Parties. Recent analyses
of the CDM show the significant efforts undertaken by developing countries
to attract CDM investments.22 However, as a result of entry barriers into the
CDM, the number of recipient countries of large CDM investments is small.23
Hosts countries which have attracted the development of large-scale CDM
projects include India, China, Costa Rica and Brazil.24 Apparently, States
heavily reliant on coal for their energy needs or which host major energy
users that are relatively inefficient tend to have the greatest potential for
larger, cheaper CDM projects.25 On the other hand, primarily due to missing
infrastructures and investment uncertainty, African countries are supposed to
benefit the least.26
Potential host States might compete for CDM funding. In fact, nurturing
CDM investment opportunities is seen as a task to be carried out by host
States.27 Unsurprisingly, an evolving market of capturing CDM investments
has been observed. Many analysts now accept that only countries with the
21
Wiser 2002, 297–298; Murase, 13; Buck and Verheyen 2001, 28 and 41; Charnovitz
2003, 156; Voon, 2000, 106; Werksman, Baumert, Dubash, 2001, 9–10; and 2003, 71 et
seq. (with regard to discrimination between investors).
22
IETA Position, 2004, Lessons Learned in the CDM.
23
S. Foot, ‘An Evaluation of the Present Clean Development Mechanism’, 16:3 ELM, 2004,
128.
24
Energy for Sustainable Development LTD (2003) CDM Susac Background ESD, <http://
cdmsusac.energyprojects.net>). One analyst goes so far as to calculate prospective project
distribution. He suggests the credits are accounted for by China will cover 47 per cent,
those by India 11 per cent. Z.X. Zhang Meeting the Kyoto Targets: the Importance of
Developing Country Participation, FEEM Working Paper No. 30, 2001, Honolulu Fon-
dazione Eni Enrico Mattei (FEEM) 1–13.
25
S. Foot, 2004, 128; F. Jotzo and A. Michaelowa, ‘Estimating the CDM Market under the
Marrakech Accords’ (2002) 2:(2–3) Climate Policy, 179–96.
26
EcoSecurities (2002). Moving Towards Emissions Neutral Development (MEND) Ox-
ford, EcoSecurities, 8.
27
A. Michaelowa, ‘Interest groups and efficient design Development Mechanism under the
Kyoto Protocol’ Discussion Paper No 58 (Hamburg HWWA). Foot, 2004, 128.
best-prepared, most dynamic infrastructure will attract CDM investment,

despite the fact that the UNFCCC requires a geographically equitable distri-
bution of investments across non-Annex I Parties – a requirement that cannot
currently be enforced.28
There is a potentially high demand for CERs that needs to be linked to
the demand for CDM investments in host countries.29 The initial imbalance
between demand for CERs and what CDM is producing, which was primarily
due to insufficient quality of project designs, uncertainties attached to the re-
quirement of additionality and the complexity of the entire CDM process that
made it difficult to integrate CDM projects into the normal course of business
processes, seems to be rapidly improving.30
Thus, the existing obstacles in design, requirements and process are likely
to be overcome soon, enabling a functioning linkup between CDM demand
and CER supply. In an increasing CDM market, host countries may indeed
be interested in attracting investment only from Kyoto Parties that results in
CERs. The question is therefore whether there is a legal requirement to ex-
clude participants from non-Annex I Parties or Annex I Parties that have not
ratified the Kyoto Protocol.
The restriction of State participation follows from the Kyoto Protocol in
combination with the Marrakech Accords (MA). The Marrakech Accords spe-
cifically provide that State participants in the CDM, whether or not included
in Annex I, need to meet certain eligibility requirements. First and foremost,
the non-Annex I Party needs to be a Party to the Kyoto Protocol:
30. A Party not included in Annex I may participate in a CDM project activity if it is a
Party to the Kyoto Protocol.31
In order to use CERs for complying with their commitments, Annex I-Parties
have to meet further requirements. The Marrakech Accords state:
31. Subject to the provisions of paragraph 32 below, a Party included in Annex I with
a commitment inscribed in Annex B is eligible to use CERs, issued in accordance with
the relevant provisions, to contribute to compliance with part of its commitment under
Article 3, paragraph 1, if it is in compliance with the following eligibility require-
ments:
(a) It is a Party to the Kyoto Protocol;
28
EcoSecurities, Moving Towards Emissions Neutral Development (MEND) (Oxford, 2002)
8. Energy for Sustainable Development.
29
IETA GHG Market Position 2007, CDM, 3.
30
Ibid.
31
FCCC/CP/2001/13/Add.2, Decision 17/CP.7.
(b) Its assigned amount pursuant to Article 3, paragraphs 7 and 8, has been cal-
culated and recorded in accordance with decision –/CMP.1 (Modalities for the
accounting of assigned amounts);
(c) It has in place a national system for the estimation of anthropogenic emissions
by sources and anthropogenic removals by sinks of all greenhouse gases not
controlled by the Montreal Protocol, in accordance with Article 5, paragraph 1,
and the requirements in the guidelines decided thereunder;
(d) It has in place a national registry in accordance with Article 7, paragraph 4, and
the requirements in the guidelines decided thereunder;
(e) It has submitted annually the most recent required inventory, in accordance with
Article 5, paragraph 2, and Article 7, paragraph 1, and the requirements in the
guidelines decided thereunder, including the national inventory report and the
common reporting format. For the first commitment period, the quality assess-
ment needed for the purpose of determining eligibility to use the mechanisms
shall be limited to the parts of the inventory pertaining to emissions of green-
house gases from sources/sector categories from Annex A to the Kyoto Protocol
and the submission of the annual inventory on sinks;
(f) It submits the supplementary information on assigned amount in accordance with
Article 7, paragraph 1, and the requirements in the guidelines decided thereunder
and makes any additions to, and subtractions from, assigned amount pursuant to
Article 3, paragraphs 7 and 8, including for the activities under Article 3, para-
graphs 3 and 4, in accordance with Article 7, paragraph 4, and the requirements
in the guidelines decided thereunder.32
However, the Marrakech Accords do not explicitly deal with participation of

Parties that are Annex I Parties but are not Parties to the Kyoto Protocol. While
it is redundant to say that these States do not need to use CERs to further com-
pliance with their commitments under Article 12, they might however have an
interest in acquiring CERs via CDM projects. Such an interest in CERs could
be revenue motivated by the prospect of selling them on the international
emissions trading market. CERs are considered to have an inherent value as
an investment that could be sold to countries where CERs have value in the
legal system.33 CERs can also be used to achieve compliance with national
reduction commitments if the national system recognizes these credits.34
32
FCCC/CP/2001/13/Add.2.
33
Werksman and Santoro, 2001, 200. They also note in this context that ‘if CERs are de-
signed as a tradable commodity, it is entirely possible that an investor without commit-
ments of its own would see the investment potential in buying and holding CERs to sell
to the highest bidder should supplies become scarce.’ 2001, 199.
34
For example, it may be possible that the US state-based emissions trading systems recog-
nize CERs for compliance with ‘state caps’.
It is generally accepted that nothing in the Marrakech Accords prevents

non-Annex I Parties from carrying out unilateral CDM projects.35 Another,
related question, however, is whether a formal restriction exists on Annex I
Parties that have not ratified the Kyoto Protocol to engage in CDM projects.
The roles of these Parties as well as Annex I Parties with no commitments
inscribed under Annex B of the Protocol are not clear. As set out by MA provi-
sions, until the Protocol entered into force, all Parties to the Convention could
participate in CDM projects.36 After that, non-Annex I Parties may participate
only if they are Party to the Protocol and fulfil the requirements of eligibility
at the time at which they want to use CERs for compliance, i.e. at the end of
the compliance period. Thus, the CDM modalities do not explicitly exclude
the possibility of non-Parties to the Protocol participating in CDM projects in
other ways than using CERs for compliance purposes.
Some scholars suggest therefore that non-Parties to the Kyoto Protocol
could engage in CDM activities and sell CERs on the emissions trading mar-
ket since they are not subject to the restrictions on the ‘use’ of CERs.37 They
might however find it difficult to sell CERs since the rules of Article 17 of the
KP preclude these States from participating in emissions trading. Only Annex
I Parties with commitments inscribed in Annex B of the KP that have ratified
and or acceded to the Protocol may acquire and transfer credits.38
Even if it is accepted that non-Kyoto Parties can participate in CDM activi-
ties, it is assumed that in most cases it will be private entities that actually get
involved in these kinds of projects. CDM project participants could be the
project developer, the purchaser of CERs and the investor or financier of the
project. As part of the registration, all participants must sign a statement for
the Executive Board lining out the way in which they will communicate with
the Secretariat and the Executive Body with regard to instructions on CER
allocation.39
A non-Kyoto entity wishing to participate in the CDM needs to become a
‘project participant’. With regard to private entity participation, the Marrakech
35
See Jahn et al. Unilateral CDM – Chances and Pitfalls, GTZ, Division 44 – Environ-
ment and Infrastructure, November 2003, 5; UNFCCC (2001); Jahn et al., Measuring
the Potential of Unilateral CDM – A Pilot Study, HWWA Discussion Paper, 263, 2004,
13. See also: Work Programme on mechanisms (Decisions 7/CP.4 and 14/CP.5), Report
by the Co-Chairmen of the negotiating group, FCCC/CP/2001/CRP.2, Bonn; Yamin and
Depledge, 2004, 149.
36
See Yamin and Depledge, 2004, 149.
37
H. Wilkins, ‘What’s New in the CDM?’ (2002) 11:2 RECIEL, 145.
38
FCCC/2001/CP 13/Add.2, para. 6, 8, 9. See Wilkins, 2002, 145–146.
39
See Executive Board: <http://cdm.unfccc.int/Reference/Documents/PddGlossary/English/
pddgloss>.
Accords clearly set out the requirements of eligibility. Only a country that is
a Party to the Kyoto Protocol may authorize private entities to participate in
the CDM:
33. A Party that authorizes private and/or public entities to participate in Article 12
project activities shall remain responsible for the fulfilment of its obligations under the
Kyoto Protocol and shall ensure that such participation is consistent with the present
annex. Private and/or public entities may only transfer and acquire CERs if the author-
izing Party is eligible to do so at that time.40
Private entity participation includes authorized domestic and foreign entities

from Annex I States that are Parties to the Kyoto Protocol (Article 12.9). Enti-
ties from non-Kyoto Parties can participate only if they have been authorized
by a Party or the non-Party gives its consent to be bound by the Kyoto Proto-
col.41 If domestic policies of Kyoto Parties exclude the authorization of non-
Party entities, they would be excluded from CDM participation in general.
However, any Kyoto Party that authorizes the participation of private or
public entities in the CDM will remain responsible for fulfilling its sovereign
obligations under the Kyoto Protocol. Private project participants may only
receive or transfer CERs if the authorizing country is a Party to the Kyoto
Protocol and in compliance with its obligations.42 Transfer and acquisition by
private entities are thus contingent on the continued compliance of the Party
which has authorized them.43
The Kyoto status of the State authorizing private participants is thereby an
eligibility criterion for the participation of a private entity, and host countries
will need to respect this requirement in their CDM investment decisions.
In conclusion it can be stated that CDM promotes investments in climate-
friendly projects in Parties not included in Annex I of the UNFCCC. Eligi-
bility to host a CDM project will be granted to developing countries only,
while eligibility of a country to use Certified Emission Reductions (CERs) as
a result of a successful CDM project requires the ratification of and compli-
ance with the Kyoto Protocol. In other words, three types of service providers
will be ineligible for transfer and acquisition of CERs: (1) non-authorized
entities from non-Annex I countries that are not Parties to the Kyoto Protocol,
(2) non-authorized entities from Annex I countries that are not Parties to the
Kyoto Protocol, and (3) authorized project participants where the authorizing
40
FCCC/CP/2001/13/Add.2.
41
Vienna Convention on the Law of Treaties, Arts. 34 and 35.
42
UNEP, Legal Issues Guidebook to the Clean Development Mechanism, June 2004, 41.
43
See also Wilder, 2005a, 253.
country is not in compliance with its eligibility requirements for participation

in the flexibility mechanisms.
The participation requirements in the CDM therefore establish absolute
restrictions on services and service suppliers from these countries, which af-
fect trade in services and thus could constitute less-favourable treatment than
accorded to service suppliers authorized by complying Kyoto Parties.44 Such
discrimination is likely to violate the general obligation of the National Treat-
ment and Most Favoured Nation rules of GATS.
10.4 GATS Exception Clauses
In the case that such restriction is found to constitute an infringement of Arti-

cle II GATS, justification of the measure is still possible under Article XIV (b)
GATS insofar as the interpretation of Article XIV (b) GATS can be expected
to be nearly identical to the environmental exception clause in Article XX (b)
GATT, as discussed above.
Whether or not the exclusion of non-Kyoto participants in the CDM is
necessary to protect human, animal or plant life or health needs to be assessed
with regard to the objective and purpose of the mechanism. As noted above,
the requirements set up in US–Gasoline are likely to also determine the justi-
fication of trade in services restrictive measures that violate the most-favoured
nation rule. The State violating this provision is required to prove that
a) the policy in respect of the measure falls within the range of policies designed to
protect human, animal or plant life or health,
b) the GATS inconsistent measure is necessary to fulfil the policy objective and
that
44
This discriminatory potential was recognized by the OECD Secretariat in a similar in-
vestigation of relation of the CDM to investment law. The Secretariat notes: “If quotas
or permits are earned by enterprises as a return on participation (investment) in a pollu-
tion reducing project in a developing country, the question would arise as to whether the
ineligibility for such a quota or permit (return) of enterprises of countries not Party to the
system constituted a discriminatory measure of the project host.” Reference in Werksman
and Santoro, 2001, 200. The whole range of issues arising in the relation to investment
law outside the WTO will for reason of scope not be discussed in this study. See for fur-
ther information: Werksman, Baumert, Dubash, Navroz 2001, Will International Invest-
ment Rules Obstruct Climate Protection Policies?, World Resources Institute, Climate
Notes, April 2001; Werksman and Santoro, ‘Investing in Sustainable Development: The
Potential Interaction between the Kyoto Protocol and a Multilateral Agreement on Invest-
ment’ in: C. Bradnee (ed.) Global Climate Governance: Inter-linkages between the Kyoto
Protocol and other Multilateral Regimes, Tokyo: UNU, 1998, 59–74.
c) the measure is applied in conformity with the requirements of the headnote (cha-
peau) of Article XIV.
10.4.1 Policy in Respect of the Measure
The policy behind the Clean Development Mechanism has to be seen in the
light of the Kyoto Protocol and the Climate Convention. The rationale behind
the CDM is that greenhouse gases mix and accumulate in the atmosphere,
making it possible to reduce emissions at any point on the planet with the
same effect.
Due to the principles of cost-effectiveness and flexibility that are enshrined
in the Kyoto Protocol, Annex I Parties with reduction commitments are via
the CDM allowed to implement reduction projects where the costs are lower/
lowest.
With regard to the link between CDM and climate change mitigation,
the projected consequences of a more violent global climate are important.
Changes in weather patterns and rising sea levels are predicted to detrimen-
tally bear on health and food conditions, housing, access to freshwater and
security conditions. These consequences may include the deterioration of liv-
ing conditions for humans, flora and fauna alike. CDM projects aim at real,
measurable, long-term benefits related to the mitigation of climate change;
they therefore constitute a means to protect human, animal or plant life or
health. It can therefore be concluded that the policy in respect of the measure
falls within the range of policies in Article XIV GATS.
10.4.2 Necessity
The first question is whether the exclusion of non-Kyoto Parties and private
entities originating in the countries is indispensable for the policy pursued
by the measure. As already mentioned, the policy in respect of the measure
is threefold and the design of the measure has to be seen in respect of all
three goals. The CDM is designed in a way to accommodate promotion of a
sustainable development path in developing countries, offer a climate miti-
gation tool by reducing greenhouse gas emissions in developing countries
while being a cost-effective compliance instrument for Annex I Parties with
reduction commitments.
While arguably all three policies could be achieved separately and in alter-
native ways, it is exactly the integration of the three goals within one measure
that makes the CDM stand apart. The integration of these three goals is mani-
fested as the will of all Parties to the Kyoto Protocol. The Parties of the Kyoto
Protocol, by agreeing on the availability of market mechanisms, considered
them to present the least impairment to global market competitiveness.45
The main purpose for the exclusion of non-Kyoto Parties is to secure the
functioning of this system by providing for a predictable and credible frame-
work. Kyoto Parties are subject to strict requirements, and need to have in
place national monitoring systems of anthropogenic emissions by sources and
reductions by sinks, systems for calculating and recording assigned amounts
pursuant to Article 3 KP and national registries and inventories to corroborate
that GHG reductions are real and measurable.
The possibility of the compliance committee’s enforcement branch to
intervene if compliance with these requirements is found lacking is another
credibility component. The enforcement branch is essential to ensure the envi-
ronmental integrity of the climate regime by overseeing and assessing compli-
ance with the above-mentioned requirements. But while these requirements
need to be ‘oversee-able’ by the enforcement branch, it lacks the competence
to assess compliance by non-Kyoto Parties. If Annex I Parties that have not
ratified and implemented the Kyoto Protocol were allowed to participate in
CDM and sell CERs on the international emissions trading market, a number
of requirements of the Kyoto Protocol could thus be circumvented. The by-
passing of the Protocol’s requirements, such as the establishment of a national
authority and methodological and reporting requirements,46 harms the cred-
ibility of the entire system and puts its environmental integrity at risk.
Although Parties that do not want to use CERs for compliance are not
obliged to meet all of these requirements, they nevertheless have to have a
designated national authority and fulfil the monitoring and reporting require-
ments. Determining the level of fulfilment of these criteria in entities that are
not from Parties to the Kyoto Protocol will be practically and administratively
difficult to carry out. Not only is it unlikely that non-Kyoto Parties would
be willing to set up the institutional infrastructure to facilitate participation
in the CDM, the reporting requirements would require access to information
45
See Foot, 2004, 126, fn 7 with reference to the European Commission proposal for a
Directive of the European Parliament and of the Council Establishing a Framework for
Greenhouse Gas Emissions Trading Within the European Community and Amending
Council Directive 96/61/EC, 2001.
46
See FCCC/2001/CP 13/Add.3, Decisionx/ CP 7 (Principles, nature and scope of the
mechanisms pursuant to Art. 6, 12 and 17 of the Kyoto Protocol): “5. Decides that the
eligibility to participate in the mechanisms by a Party included in Annex I shall be de-
pendent on its compliance with methodological and reporting requirements under Art.
5, paragraphs 1 and 2, and Art 7, paragraphs 1 and 4, of the Kyoto Protocol”, see also
Wilkins, 2002, 145.
that might be considered confidential by non-Parties. Finally, there will be no

non-compliance procedure if those Parties are not in compliance with their
requirements. Much would therefore depend on how far these non-Parties are
trusted to provide adequate and sufficient information. For these reasons, the
exclusion of non-Kyoto States and their private entities could be considered
indispensable, thus necessary in the sense of Article XIV GATS.
According to the Appellate Body’s approach in Korea–Various Measures on
Beef, even if the ‘indispensability’ requirement were not fulfilled, the measure
could be justified by applying a ‘process of weighing and balancing a series of
factors which prominently include the contribution made by the compliance
measure to the enforcement of the law or regulation at issue, the importance
of common interest or values protected by that law or regulation and the ac-
companying impact of the law or regulation on imports or exports.’47
Here, the importance of the common interest and values that are protected
by the particular design of the CDM would need to be balanced against the
commercial interest in inclusion of non-Parties and respective private entities.
As already mentioned, this procedure will depend on the facts of the case, and
one can only speculate as to the result. However, three general observations
can be made.
First, Annex I Kyoto Parties suffer a comparative disadvantage that derives
from the internalization of costs of climate mitigation. A balance will need to
be struck therefore between their interest in protecting their economic sectors
covered by reduction obligations and the economic interest of non-Parties in
having free (ride) access to a new market and perhaps profit from flexible
mechanisms’ market – a market which was created for other purposes and
participants – without incurring the costs of binding obligations to reduce their
emissions.
Given the reason that costs for Annex I Parties occur out of implementation
of and compliance with their climate obligations in the first place, exclusion
of entities from those States that are not willing to commit to a binding emis-
sions reduction target, appears proportionate. ‘In fact,’ as Wilder notes in this
context,
there is a possibility that businesses in Kyoto Protocol Parties (such as those of the
European Union) may feel at a competitive disadvantage in comparison with busi-
ness based in non-Party countries, which are not internalizing the costs of meeting
Protocol targets. Such businesses may pressure their governments, not only to prohibit
the participation of non-Parties in the Kyoto Protocol flexible mechanism, but also take
47
AB in Korea–Beef, para. 164.
affirmative action to pressure those non-Parties to ratify [the Kyoto Protocol] such as
through trade measures.48
Second, for participation in emissions trading, Annex I Parties need to estab-

lish national emissions trading registries, where national companies are able
to hold their accounts for buying and selling CERs.49 If entities from non-
Parties were authorized to participate in the CDM, this could actually amount
to giving these companies a ‘free ride’, while domestic companies face com-
pliance costs of reducing emissions on a domestic level.50 Accordingly, Annex
I Parties may therefore have an interest in excluding non-Party companies
from CDM participation.51 Another author noted in this context that allowing
tradable credits from non-Kyoto Parties in the international scheme would
provide profit to those States from servicing the abatement needs of Parties
committed to making GHG reductions.52
Third, the exclusion of non-Kyoto Parties is further based on the argument
of environmental integrity of the scheme which seeks to prevent tradable cred-
its that do not meet the stringent (formal and substantial, such as additionality
and prevention of ‘leakage’) requirements to enter the trading scheme. How-
ever, even if CERs generated by non-Annex Parties were to be verified CERs,
selling these credits could have a disproportionate inflationary effect on the
total quantity of available credits on the international emissions trading mar-
ket. The market price of tradable allowances would fall, and ‘capped’ entities
and States would find it easier to comply with their emission reduction and
limitation obligations by buying ‘themselves out’. The availability of large
quantities of additional CERs might also diminish the interest and willingness
of Annex I Parties with reduction commitments to engage in CDM projects.
Although strong arguments in favour of exclusion of non-Kyoto participa-
tion can be marshalled, whether such exclusion is balanced and proportionate
to the purpose of the CDM is difficult to ascertain in abstract at this early
stage of the CDM. What is clear, however, is that non-Party participation in
48
M. Wilder, 2005a, 255.
49
FCCC/CP/2001/13/Add.2, Modalities and Procedures for a CDM.
50
See, for example, New Economic Foundation, Free Riding on Climate, 2003, <http://
www.nef.org>; also D. Bodansky, Implications of Kyoto’s Entry into Force without the
United States, Pew Centre for Climate Change, available at <http://www.pewclimate.
org>.
51
See, for example, European Union, cited in D. Bodansky, Implications of Kyoto’s Entry
into Force without the United States, Pew Centre for Climate Change; also: New Zealand
Government, National Interest Analysis: Kyoto Protocol to the UN Framework Conven-
tion on Climate Change, available at: <http://www.climatechange.govt.nz/about/kyoto/
html>.
52
Foot, 2004, 130.
the CDM will become an issue which the Member States to Kyoto Protocol
will need to address.
10.4.3 Chapeau
The chapeau requires that in order to be justified a measure that has satisfied
the conditions set out by the paragraphs of Article XIV must no be ‘applied
in a manner which would constitute a means of arbitrary or unjustifiable dis-
crimination between countries where like conditions prevail, or a disguised
restriction on trade in services’.
The general scope of the Article XIV chapeau has not been defined, but
also here the identical wording to the chapeau of Article XX GATT suggests
that a similar approach would be taken by a panel or the Appellate Body if
they were to decide on the application of Article XIV.53 Again, according to
the findings of the Appellate Body in US–Gasoline and US–Shrimp, the ap-
plication of the exceptions must not frustrate or defeat the legal obligations of
the rights’ holder under the substantive rules of the GATS and must maintain
a balance of rights and obligations between the right of a Member to invoke
an exception and the substantive right of another.54 By determining arbitrary
or unjustifiable discrimination, the manner in which the measure is applied
would be considered.
An unjustifiable discrimination would be one that could have been fore-
seen and that was not merely inadvertent or unavoidable.55 Efforts undertaken
to negotiate and the flexibility of the measure come into play here.
With regard to the requirement of negotiation it can be concluded with
reference to the more than ten-year-long negotiation history of the Kyoto Pro-
tocol, that serious efforts have been undertaken to include all States that are
Parties to the UNFCCC in the scheme and commitment of the Protocol. The
fact that some States prefer to remain outside the Kyoto Protocol cannot be
explained by a lack of serious negotiation efforts. Indeed, the consent of the
176 States that have ratified the Kyoto Protocol56 is evidence for the serious-
ness – and success – of the efforts to conclude a multilateral agreement for the
mitigation of climate change.
53
See WTO Secretariat, An Introduction to the GATS, Trade in Services Division, October
1999, 4.
54
AB in US–Gasoline, 21; AB in US–Shrimp, 156.
55
AB in US–Gasoline, 27.
56
<http://unfccc.int/essential_background/kyoto_Protocol/status_of_ratification/items/
3134.php; March 2008>.
The measure would also need to show a certain degree of flexibility. The
question here is whether the inclusion of participation rules in the Marrakech
Accords makes it redundant to further inquire into the requirement of flex-
ibility. Apparently, the Kyoto Parties multilaterally agreed on the design of the
CDM and a degree of flexibility that would be both negotiable and reasonable.
In fact, the current modalities are considered to present the least impairment
to global market imperatives.57 The fact that the exceptions listed in Article
XX GATT and Article XIV GATS do not include reference to Multilateral
Environmental Agreements (MEAs) does not mean that multilaterally agreed
provisions with trade restrictions need not be considered differently from uni-
lateral trade measures.
The Appellate Body in US–Shrimp made it clear that the application of the
introductory note of Article XX GATT to measures based on multilateralism
would take into account the concerted and cooperative efforts of the respec-
tive States.58
Environmental measures, addressing transboundary or global environmen-
tal problems that are as far as possible based on international consensus, are
arguably more likely to be recognized as appropriate by the WTO. The WTO
Members in the report of the CTE on the occasion of the Singapore Ministe-
rial Conference noted in this regard the support for
multilateral solutions based on international cooperation and consensus as the best and
most effective way for governments to tackle environmental problems of a transbound-
ary or global nature. WTO Agreements and multilateral environmental agreements
(MEAs) are representatives of efforts of the international community to pursue shared
goals, and in the development of a mutually supportive relationship between them, due
respect must be offered to both.59
With reference to these policy declarations of the WTO it has been argued
that
[t]he near universal acceptance of the climate change instruments, by WTO and non-
WTO Members alike, coupled with the Appellate Body’s expressed interest in envi-
ronmental issues, greatly reduces the likelihood that the Appellate Body will ignore,
57
See European Commission Proposal COM(2001) 581 final, 2: “Emissions trading is, first,
an instrument for environmental protection, and, second, one of the policy instruments
that will impair competitiveness the least.” Also: Foot, 2004, 126.
58
AB in US–Shrimp, 168.
59
Report (1996) of the CTE, WT/CTE/1, 12 November 1996, para. 171, section VII of the
report of the general Council to the 1996 Ministerial Conference, WT/MIN(96)/2, 26
November 1996.
or that WTO Members will seek to challenge as WTO-inconsistent, the eventual UN

Framework Convention on Climate Change implementation program.60
This does not mean tensions will not arise, however, nor that situations cannot
be imagined where conflicts will arise. In particular, disputes based on concerns
of competitiveness are likely to arise because those choosing to stay outside of
the Kyoto Protocol and any future climate instruments may benefit from lower
production costs.61 Under these circumstances, Appleton concludes,
WTO panels and the Appellate Body would only be willing to countenance the applica-
tion of trade measures against Kyoto non-participants when climate change remedies
satisfy the non-discrimination principle, when those obligations are close to universal
acceptance (which they are), when climate change remedies require a very serious
trade measure for their resolution, and reasonable cooperative measures to address
climate change problems fail.62
Thus, despite the proclamation of recognition of MEA-based environmental

measures and mutual supportiveness of the WTO and MEAs, ‘passing’ the
introduction clause of Article XIV GATS remains a task of some stature.
The CDM rules depend on rather stringent methodological requirements
and standards with regard to monitoring and reporting. Agreed upon by the
COP (and/or the Executive Board) and as such representing multilateral con-
sensus on this issue, the exclusion of non-Kyoto Parties to ensure the integrity
of the international emissions trading scheme cannot be found to comprise any
of the arbitrariness criteria. Here, it is not one State’s regulatory programme
that is required to be in place in another State, it is the institutional and techni-
cal framework of the CDM and the integrity of the entire emissions trading
system that requires the measurability and reality of emissions reductions. It
also requires emission caps not to be inflated and that prices represent the value
of the tradable commodity. Projects carried out for revenue reasons alone, and
that are not restricted by the national supplementarity constraint, are likely to
take focus away from abatement needs within countries with a commitment
by simply servicing the need for emission units.
Whether such exclusion also corresponds to prohibition of ‘disguised re-
strictions on international trade’ might be less clear, however. The Panel in
EC–Asbestos noted that
60
A. E. Appleton, The World Trade Organization’s View: Emissions Reduction in a Free
Trade World, Swiss Re Centre for Global Dialogue, Rüschlikon, Switzerland, October 11,
2001, 13.
61
See Appleton, 2001, 13.
62
See Appleton, 2001, 13.
a restriction which formally meets the requirements of Art XX(b) will constitute an
abuse if such compliance is in fact only a disguise to conceal the pursuit of trade-
restrictive objectives.63
With regard to the exclusion of non-Parties, the publicity of the CDM rules
would certainly be a non-concealed form of trade restriction. Such a publicity
test cannot be the sole requirement. Another was taken into account by the
panels in EC–Asbestos and US–Shrimp, where the ‘design, architecture and
revealing structure’ of the measure was examined in addition in order to dis-
cern its protective application.64 What a Panel would make of the design and
architecture of the CDM will need to be seen. Final determinations cannot be
made at this place and point of time. However, the critical role of governments
in creating and influencing the CDM market is exemplary for this new instru-
ment and the reason for possible confrontation with WTO provisions.
10.5 National Development Priorities under the CDM
Another point of concern relates to unilateral CDMs and preferential treatment

of domestic industries. The host country that has made specific commitments
in the service sectors covered by a CDM project and has listed the sectors in its
Schedule of Commitments has to give market access (Article XVI) and accord
no less-favourable treatment (Article XVII) to all service suppliers from WTO
Member States than that given to its own like services and service suppliers.
A host State may, however, attempt to design its regulations and compliance
cost structure in a way that favours domestic industries engaging in a project
over foreign firms.65 Host States could also decide to carry out CDM projects
unilaterally, denying in effect access to a certain service market by a potential
foreign investor.66 The reasons for such a policy might be a country’s national
sustainable development priorities. A host State that defines its sustainable
development path in a way that seeks to employ as many domestic services
as possible might risk WTO constraints on protectionism. Host country de-
velopment priorities, however, need to be recognized in the application of the
63
Panel in EC–Asbestos, para. 8.236.
64
Panel in EC–Asbestos, para. 8.237; Panel in US–Shrimp II, para. 5.142.
65
Kim, 2000, 14.
66
See Werksman, Baumert, Dubash, 2003, 74; Baumert, Kete, Figueres, Designing the
Clean Development Mechanism to Meet the Needs of a Broad Range of Interests, World
Resource Institute, 2000.
flexibility mechanisms.67 In particular, a CDM project needs to be consistent

with the host State’s development policies.68
A host country may consider protecting its domestic services and service
providers in emerging domestic industries, such as environmental services,
through the sale of CERs or employment opportunities in CDM projects.
These environmental services could include manufacture and installation of
solar panels or wind power stations, plantations and agro-forestry, solar water
heaters or biomass cooking stoves essential for meeting sustainable develop-
ment goals, not only by reducing dependency on fossil fuels and extending
the availability of electricity,69 but promoting poverty alleviation by acquiring
additional capital.70
WTO rules provide for access to services in developing and implementing
CDM projects. If, for example, a host State enters into commitments under
GATS and opens its service markets, then the national treatment rule and the
MFN rule apply, requiring not only the non discriminatory treatment of all
foreign service providers, but also of the foreign service provider that enters
the market equal to that of domestic service providers.
CDM rules, on the other hand, respect the prioritization a host country
takes. Article 12 states that CDM projects should be certified on the basis of
‘voluntary participation approved by each Party involved.’ Thus, any investor
or developer trying to coerce a project would not be able to obtain CERs.71
So even if a foothold in the host country market is achieved by application
of the market access rule, foreign service providers would not be treated as
favourably as domestic service providers since their project would not result
in CERs.
A host country could also provide for domestic regulations which put
domestic firms at commercial advantage. As mentioned above, a developing
country is free to design and implement its own CDM projects for the purpose
67
Hanafi, G.A., ‘Joint Implementation: Legal and Institutional Issues for an Effective
International Program to Combat Climate Change’ (1998) Harvard Environmental Law
Review, 480.
68
Kim, 2000, 14.
69
See Wiser, 2002, 299.
70
For project examples see UNCTAD, An Implementation Guide to the Clean Development
Mechanism, Putting the Marrakech Accords into Practice, New York and Geneva, 203,
11, with references to Aukland et al., Laying the Foundations for Clean Development:
Preparing The Land Use Sector, March 2002; Seroa da Motta et al., ‘Brazil: CDM Oppor-
tunities and Benefits’ in Austin D. and Feath, P., Financing Sustainable Development with
the Clean Development Mechanism, World Resource Institute, 2000; and D. Austin and P.
Feath, How much Sustainable Development can we expect from the Clean Development
Mechanism?, World Resource Institute, 1999.
71
Wiser, 2002, 298.
of exporting CERs, given that these projects satisfy the CDM requirements.
In such a case, the host country that allows foreign service suppliers to de-
velop projects, but subjects those suppliers to more stringent regulation than
domestic project developers would also be violating the national treatment
provision.72 The validity of such a claim would, of course, depend on the facts
of the case. The potential for conflict, however, exists.
In such a case, justification under Article XIV (b) GATS may prove diffi-
cult. Here it is not (so much) the environmental integrity and functioning of the
climate regime that is at stake than the objective of sustainable development
at the domestic level of the host country. How this situation can be solved
with regard to WTO norms will be subject of the discussion in the next and
final part of this thesis. Here, suffice it to say that this question relates to the
applicable law in the context of normative conflicts between climate and trade
rules. In my view, trying to solve this situation on the basis of interpretation
of WTO norms alone would arguably not capture or not adequately address
the importance of the underlying considerations. The application of general
public international law, in particular the principle of sustainable develop-
ment, to normative conflicts of this kind would doubtlessly allow a solution to
emerge that was not reflected in or contrary to the positive WTO law. General
international law could and has required certain positive norms to be corrected
or, where correction is not feasible, to be disapplied.
10.6 In Sum
In sum, existing WTO jurisprudence indicates that the restrictive participa-

tion requirement in CDM which excludes countries that are not Party to the
Kyoto Protocol and private entities from these countries which – under certain
conditions – fall within the ambit of the WTO General Agreement on Trade
in Services. While such climate measures may provisionally be covered by
the exception of Article XIV(b) GATS, the requirements of the chapeau of
Article XIV could prove an obstacle to their justification. Uncertainty remains
in particular with regard to the view of a panel or the Appellate Body on
the necessity of such a measure under WTO law where alternatives not only
include considerably higher administrative input but constitute a threat to the
environmental integrity of the climate regime in general. In addition, it remains
unclear how the importance of common interests or values protected by the
CDM and the accompanying impact on imports or exports would be balanced
in the settlement of a dispute, in particular where concerns of competitiveness
72
Art. XVII:1 GATS
of Members to the Kyoto Protocol are at stake. After all, while a panel or the
Appellate Body could decide in favour of a trade-restrictive climate measure,
there is no certainty as to whether they indeed would.
Chapter 11
Concluding Remarks on Part II
It has to be acknowledged that the panels and the Appellate Body have pro-
gressively developed jurisprudence that seeks to address the compatibility of
national measures aimed at the protection of the environment or other con-
cerns with world trading rules. Yet, these developments remain insufficient
for, at least, three reasons.
First, despite the positive signals given by the jurisprudence of the Appel-
late Body, no certainty exists as to whether a panel or the Appellate Body will
follow its own line of argumentation in future decisions. In fact, in the absence
of stare decisis the jurisprudence of the panels and Appellate Body is marked
by constant change and more restrictive interpretations cannot be excluded.
Depending on the scope of trade distortions that could arise as a consequence
of governments implementing comprehensive climate change programmes,
WTO Panels and the Appellate Body may resort to a more conservative and
less flexible interpretation of WTO clauses.
Second, the political character of interpretation enhances legal uncertainty
and unpredictability.1 Interpretation is a highly political act and the changing
political preferences of the changing membership of the panels and the Appel-
late Body may be directly reflected in their legal findings.
Third, also newer developments largely rest within the narrow constraints
of a ‘trade-lens’ and do not always accord sufficient weight to the overall
objective of sustainable development, which is beginning to be officially and
jurisprudentially recognized as the main objective of the WTO.
‘We must remember’ says WTO Director General, Pascal Lamy, ‘that sus-
tainable development is itself the end-goal of this institution [the WTO]. It is
1
See J. Klabbers, ‘On Rationalism in Politics’, 74 Nordic Journal of International Law,
2005, pp. 426–427.
enshrined in page 1, paragraph 1, of the Agreement that establishes the WTO.’2

If these words are taken seriously, it means that the purpose of the WTO is
the regulation of sustainable international trade or of international trade based
on the common policy of sustainable development. If such common policy
is seen as underlying (or arching above) the WTO legal framework, it will
determine the substantive content of WTO norms as well as the outcome of
dispute settlement.3 As a consequence, measures that otherwise violate WTO
norms could be justified as ‘necessary to ensure sustainable development’.
Even in the absence of the acceptance of a common WTO objective of
sustainable development, this legal argumentation remains viable. As we will
see in the final part, sustainable development remains directly applicable as a
general principle – part and parcel of general international law – to the settle-
ment of disputes concerning claims of WTO incompatibility. The application
of the principle, consisting of a necessity test and a proportionality test, would
provide for a consistent and uniform method to deal with the conflicting in-
terests at stake.
The argument rehearsed in part III is that the principle of sustainable devel-
opment as a general principle in international law provides for a more explicit
balancing. The difference from the present approach by the Appellate Body
is that the end of sustainability is included in the jurisprudential technique.
Necessity and proportionality would then need be determined against the
objective of sustainable development, giving stronger and more predictable
indications of the result of such balancing.
2
Pascal Lamy, Director-General of the WTO, “Trade can be a Friend, not a Foe, of Con-
servation”, Speech at WTO Symposium on Trade and Sustainable Development within
the Framework of Paragraph 51 of the Doha Ministerial Declaration, Geneva 10 October
2005.
3
See Sindico, “Unravelling the Trade and Environment Debate through Sustainable De-
velopment Law Principles”, paper presented at the ESIL inaugural conference, Florence,
June 2004, also: Voigt, “Conflicts and Convergence in Climate Change and Trade Law:
The Role of the Principle of Sustainable Development”, paper presented at the ESIL
inaugural conference, Florence, June 2004. Both papers are available at: <http://www.
esil-sedi.eu/english/florence_agora_papers.html>.
Part III
Sustainable Development as a Principle of Integration

of Climate and Trade Law
Introduction
In a situation where there is potential for normative conflicts, recourse to in-

terpretation is a necessary step to clarify whether the apparently conflicting
norms can be harmonized or ‘interpreted away’. However, interpretation re-
mains one step – the first of a number of legal mechanisms that aim at solving
a normative conflict. Despite the usefulness of interpretation with regard to
clarifying the terms of a treaty, several inherent limitations make it a tool that
not always provides a solution to a conflict.
In situations where normative conflicts cannot be solved by interpretation
alone, principles of conflict resolution come into play. These principles deal
with the law applicable to the respective conflict. Here, general principles play
an important role. However, what exactly this role comprises, in particular in
the relationship between WTO law and other areas of law, remains a conten-
tious issue.
In this book it is suggested that among the principles that provide for
reconciliation of conflicting norms, the principle of sustainable development
holds most potential for dealing with normative conflicts between interna-
tional trade law and other multilateral agreements, in particular those with an
environmental or developmental objective.
This part attempts to show that the principle of sustainable development
as a principle of integration has both procedural and substantive elements that
allow for reconciling diverse interests, given that the inherent hierarchy of
values embedded in the principle is taken into account.
In turn, the following matters will be examined: first, whether and why
there is a need for the principle of sustainable development to be employed
(chapters 12 and 13), second, why the principle could or even must be ap-
plied to disputes arising under the WTO law that involve measures that aim
at protecting collective non-trade interests (chapters 14 and 15), and, third,
which specific requirements the principle would pose to the solution of a trade
dispute (chapters 16 and 17).
Chapter 12
Is there a Need for the Principle of Sustainable

Development in WTO Dispute Settlement?
12.1 Introduction
The question why sustainable development as a principle of integration is to be

employed by WTO dispute settlement can be approached by inquiring whether
there is a need for such a principle. This need, if it exists, is closely linked to
limitations of interpretative processes and conflict-resolution principles that
aim at creating coherence of international legal norms.
Once these limitations of treaty interpretation are identified, it can be con-
sidered whether reliance on treaty interpretation alone is an adequate means
to determine the settlement of a dispute or whether alternative or additional
tools and legal mechanisms ought to be applied in the quest for fairness and
legitimacy of the finding. This part is thus meant as a constructive critique of
the WTO approach to interpretation and dispute settlement involving non-
trade interests.
This is not purely a theoretical exercise. First and foremost, it is part of the
argument for the application of the principle of sustainable development in
the settlement of disputes. The reason for this exercise is that the argument for
sustainable development can only be made if the scope for improvement in the
approach to WTO dispute settlement is sufficiently ample. Particular potential
for improvement lies in the fact that, so far, the proclaimed and authoritatively
recognized commitment of the WTO to sustainable development has not been
sufficiently and consistently reflected in existing jurisprudential practice.
In part II the assessment of a conflict between climate measures and WTO
norms was based on the general approach adopted by WTO panels and the Ap-
pellate Body. As a result, a number of ambiguities remain as to the relationship
between climate measures and trade rules. In this part, it will be shown that
some of the ambiguities can be linked to inherent systemic limitations of the
interpretative process. In course, we shall first focus on some general aspects
of treaty interpretation before turning to the specific context of interpreting

WTO agreements.
12.2 Interpretation in International Adjudication
Treaty interpretation is often regarded as an instrument of conflict resolution.

However, rather than solving conflicts, the process of interpretation seeks to
avoid a conflicting reading of treaty texts. In this sense it has been character-
ized as a ‘conflict-avoidance technique’.1 Who interprets treaty texts and how
the process of interpretation is carried out – which interpretative arguments
are applied – are crucial to the determination of a normative conflict. How-
ever, despite its important function, treaty interpretation, it has been claimed,
remains a ‘deeply obscure and subjective’ process marked by inconsistencies
and other shortcomings.2
Given the importance of treaty interpretation it is surprising to observe
that lawyers in general have been reluctant about formulating specific rules
of interpretation. The major argument against formulating comprehensive
interpretative rules is that these ‘rules’ may become static instruments instead
of the flexible aids.3 It is thus ‘interpretative arguments’ rather than ‘rules’ that
guide the process of treaty interpretation.
Grotius was one of the first scholars to deal with the issue of treaty interpre-
tation. From the doctrine of plain meaning he widened his purview to include
other circumstances.4 His starting point is that ‘words are to be understood
in their ordinary sense’ but only if, he adds, ‘other implications are lacking’.5
Vattel offers a wider variety of interpretative principles.6 His suggestions are
however considered to lack decisive practical importance by being followed
by other, sometimes contrary, principles, and presumptions.7 As Lauterpacht
notes observantly, ‘it is doubtful whether any Party to a dispute can fail to
derive some advantage from the rich choice of weapons in Vattel’s armoury
of rules of interpretation.’8 While, arguably, the majority of academic writ-
1
2
See D. French, ‘Treaty Interpretation and the Incorporation of Extraneous Legal Rules’,
55 ICLQ, 2006, 281.
3
H. Lauterpacht, ‘Restrictive Interpretation and the Principle of Effectiveness in the Inter-
pretation of Treaties’ (1949) 26 Y.B. Int’l L., 48.
4
H. Grotius, On Interpretation, Book IIm ch. xvi, De Jure Belli ac Pacis.
5
Ibid.
6
Vol. I, ch. xvii of Le Droit des Gens.
7
Lauterpacht, 1949, 48.
8
Ibid.
Chapter 12 – Is there a Need for the Principle of Sustainable Development 267
ers on the subject of interpretation have followed in the footsteps of Grotius

and Vattel, others have expressed scepticism as to the usefulness of rules of
interpretation in general.9
Despite the cautiousness of international lawyers to the development of
interpretation rules for treaties, several relevant interpretative arguments have
emerged.10 Among these arguments, however, no clear hierarchy is estab-
lished.
In general terms, the main purpose of any interpretation is to identify the
intention of the negotiators of the treaty (‘subjective approach’).11 Treaties are
also to be interpreted in good faith in such a way as to avoid inconsistencies
if ‘fairly possible”.12 The intention of the Parties can be seen as a basis of
interpretation as expressed in the text.
An alternative approach is to regard the intention of the parties as an in-
dependent basis of interpretation and to consider the text itself as the most
important source of interpretation. The ‘textual approach’ looks to determine
the intent of the negotiators through analysing what they said in the text,
which is presumed to be the final, authentic and most reliable expression of
their intent.13
A third approach focuses on the objective and purpose of a treaty, and
interprets the text in a way considered best adapted to fulfilling that objec-
tive and purpose. This teleological approach tends to result in more dynamic
interpretation of a treaty as an instrument that is changing over time.
The various approaches to interpretation often yield similar conclusions,
but are also capable of leading to radically different results.
The 1969 Vienna Convention on the Law of Treaties sets out certain basic
rules of interpretation in Articles 31 and 32, endorsed as reflecting customary
9
See Anzilotti, Corso, I (Parte Generale), Roma Athenaeum, 1912, 102–104, where he
states that there are no binding rules on interpretation. See also K. Llewellyn, ‘Remarks
on the Theory of Appellate Decisions and the Rules or Canons About How Statutes Are to
be Construed’, 3 Vand L. Rev. 395, 1950; Frankfurter, ‘Some Reflections on the Reading
of Statutes’ (1947) 47 Colum. L. Rev. 527; E.W. Hall, A Treatise on International Law, 8th
ed. (Oxford-Clarendon Press, 1924) 44–45, admits that “there are rules of interpretation
which are unsafe in their application and of doubtful applicability”.
10
The International Law Commission in its work on interpretation confined itself to isolat-
ing the comparatively few general principles, which appear to constitute general rules for
the interpretation of treaties. See Brownlie, 1998, 632.
11
Brownlie, 2003, 624.
12
D. Goldberg, ‘Legal Principles in Resolving Conflicts’ in Goldberg (ed.), The Use of
Trade Measures in Select Multilateral Environmental Agreements, 1995, 301.
13
I. Sinclair, The Vienna Convention and the Law of Treaties, 2nd ed. 1984. See also: In-
ternational Law Commission Commentary on the Draft Vienna Convention, 1966, Vol. II
(ILC Commentary) 220.
law on the subject.14 These articles tend to support an approach where the text
is given primacy as ‘the basic lens through which the ‘intention’ of negotiators
is discerned’.15 The Vienna Convention rules emphasize that what is being
sought is essentially the objectively ascertained intention of the parties as
manifested in the text of the agreement; the expressed intent, rather than the
subjective intent, of the Parties.16
Other elements may be included in this analysis in order to clarify the in-
tent. While interpretation in the sense of Article 31.1 is about giving meaning
to or defining the terms of the treaty, Article 31.2 offers a contextual approach
in the sense that in addition to the original treaty text and its preamble, ad-
ditional agreements and instruments related to the treaty shall be considered.
Article 31.3 extends the spectrum of aspects to be taken into account to some
later actions of the parties and relevant rules of international law.17
14
The ICJ applied customary rules of interpretation as reflected in Articles 31 and 32 of the
VCLT in: Territorial Dispute (Libyan Arab Jamahiriyal v. Chad), ICJ Reports 1994, 6,
21–22, para. 41; Kasikili/Sedudu Island (Botswana v. Namibia), ICJ Reports 1999 (II),
1045, 1059, para. 18; and Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia
v. Malaysia), ICJ Reports 2002, 625, paras. 37–38.
15
M. Lennard, ‘Navigating by the Starts: Interpreting the WTO Agreements’ (2002) 5 JIEL,
21.
16
See ILC Commentary, ibid., 220. See also The Arbitral Tribunal in the Arbitration regard-
ing the Iron Rhine Railway noting: ‘Although the clauses contained within Article 31 are
not hierarchical, there is no doubt that the starting point for interpretation is the ordinary
meaning to be given to the terms, taking them into account, and having regard also to the
object and purpose of the treaty’; para. 47.
17
In addition to the treaty to be interpreted, Articles 31 and 32 VCLT offer six possibilities
for treaty interpreters to refer to other material than the treaty itself. These six possibilities
include:
(i) any agreement relating to the treaty which was made between all the parties in con-
nection with the conclusion of the treaty (forming part of the context, Article 31 (2)
(a));
(ii) any instrument which was made by one or more parties in connection with the con-
clusion of the treaty and accepted by the other parties as an instrument related to the
treaty (forming part of the context, Article 31(2)(b));
(iii) any subsequent agreement between the parties regarding the interpretation of the
treaty or the application of its provisions (to be taken into account together with the
context, Article 31 (3) (a));
(iv) any subsequent practice in the application of the treaty which establishes the agree-
ment of the parties regarding its interpretation (to be taken into account together with
the context, Article 31(3)(b));
(v) any relevant rules of international law applicable in the relations between the parties
(to be taken into account together with the context, Article 31.3(c)); and
(vi) supplementary means of interpretation including, for example, preparatory work of
the treaty or a legal instrument forming the ‘circumstances of the conclusion of the
treaty under interpretation (Art 32).
That said, recourse to additional means of treaty interpretation remains

open. Supplemental means, such as recourse to preparatory work of the treaty
and circumstances of its conclusion may play a role in situation where the pro-
visions of an agreement are ambiguous or obscure, or lead to absurd results.18
While the interpretative arguments provided in Articles 31 and 32 open
for a wide margin of interpretation, as we shall see, they also are marked by
significant inherent limitations.
12.3 Interpretation of WTO Norms: Principles and their Limitations
In the context of disputes brought before the dispute settlement system of the
WTO, competence to interpret the provisions of the covered agreements lies
with the panels and the Appellate Body. Interpretations of the WTO agree-
ments by panels and the Appellate Body are not definite. Only the Ministe-
rial Conference and the general Council have the authority to adopt definite
interpretations by a three-fourths majority of the Members.19
Article 3.2 of the Dispute Settlement Understanding (DSU) requires the
WTO agreements to be interpreted in accordance with customary rules of
interpretation of public international law. The WTO dispute settlement system
has acknowledged that customary international law in the interpretation of
treaties is expressed in Articles 31 and 32 of the VCLT.20 These rules apply
even when a WTO Member is not a Party to the Vienna Convention.21 The
Appellate Body in Japan–Taxes implicitly resolved any uncertainty about the
VCLT’s application to non-parties by declaring that the Vienna Convention
represents a codification of customary international law and is therefore bind-
ing on all States.22 As a matter of predictability of adjudication, interpreta-
tion according to the Vienna Convention has emerged into a ‘legal test’ from
which the panels cannot deviate when reviewing provisions in the covered
18
Art. 32 VCLT. See also Brownlie, 2003, 625.
19
WTO Agreement Article IX:2. The contentious issue of the scope of application and juris-
diction of the panels and the Appellate Body is elaborated in more detail below in chapter
7.1.
20
J. Cameron and D. Gray, ‘Principles of International Law in the WTO Dispute Settlement
System’ (2001) 50 International and Comparative Law Quarterly, 254.
21
P.J. Kuijper, ‘The Law of GATT as a Special Field of International Law’ (1994) 35 Neth-
erlands Yearbook of International Law, 227 232.
22
AB in Japan–Taxes at section D., para. 10. Reaffirmed in US–Gasoline. For further dis-
cussion see Cameron and Gray, 2001, 254; Nichols, ‘GATT Doctrine’ (1996) 2 Virginia
Journal of International Law, 379, 380.
agreements. Failure to apply this test or the use of an alternative pattern of

interpretation can result in overturned rulings.23
12.3.1 Textual Interpretation
By accepting the rules of the Vienna Convention, the panels and the Appellate
Body give priority to an essentially textual approach while acknowledging
that the ‘ordinary meaning of a term’ needs to be informed by the context in
which that term is used.24 The Appellate Body in a number of instances has
confirmed such ‘textualism’ and insisted that panels must take seriously the
wording of the treaty text.25
Accordingly, the Appellate Body in EU-Hormones emphasized the impor-
tance of due attention to the details of the texts. In particular with regard to
competing interests and respective values, the details of the text itself may
reflect a ‘delicate and carefully negotiated balance … between these shared,
but sometimes competing interests of promoting international trade and of
promoting the life and health of human beings.’26 It has been noted that panels
when deviating from the textual approach and instead interpreting a provision
in the light of its purpose without giving due regard to the individual words
and phrases, almost always give rulings that tilt towards one particular value
among the competing values at stake, namely that of liberal trade – since the
23
In the US–Shrimp report the Appellate Body criticized the panel for not having followed
the steps of treaty interpretation. The correct process entailed looking at the text of the
provision first and interpreting the ordinary meaning of the words, then to ascertain the
object and purpose of the treaty where the meaning of the text is equivocal or incon-
clusive or where confirmation of the correctness of the reading of the text is desired.
The examination of the object and purpose of the chapeau was not necessary until the
examination of the context of the chapeau was undertaken. In this case, the determination
of the object and purpose of the chapeau was undertaken independently of the other,
specific provisions of Art XX GATT. Addressing the chapeau first implies the assumption
of the measure being a priori incapable of being justified under the specific provisions.
The Appellate Body stated accordingly “Such an interpretation renders most, if not all,
of the specific exceptions of Article XX inutile, a result abhorrent to the principles of
interpretation we are bound to apply.”, para. 121.
24
AB in Japan–Alcoholic Beverages, 20; Panel in Canada–Automotive Industry, para.
10.12, 807.
25
For an overview of interpretative approaches in WTO law see Lennard, 2002, 17; P. Maki,
‘Interpreting GATT Using the Vienna Convention on the Law of Treaties: A Method to
Increase the Legitimacy of the Dispute Settlement System’ (2000) 9 Minnesota Journal
of Global Trade, 343.
26
AB in EU-Hormones, para. 177.
purpose invariably understood by the panel was the greatest possible disci-
pline on barriers to trade.27
The textual approach to interpretation has limitations. Interpretation con-
tra legem is prohibited. This means that interpretation as a process of giving
meaning to treaty terms cannot by itself create or add any additional meaning.
It is thus confined to defining the meaning of the terms of the WTO covered
agreements. The jurisdiction of the dispute settlement body (DSB) does not
extend to treaty norms outside the covered agreements, nor does it include the
competence to extend the meaning of the terms. The Appellate Body stated
that ‘it is not the task of either panels or the Appellate Body to amend the DSU
… Only WTO members have the authority to amend the DSU.’28
Thus, interpretation cannot extend the meaning of WTO rules that goes
either beyond or against the ‘clear meaning of the terms’ of the respective
WTO rules.29 The Appellate Body confirmed that ‘[a]n interpreter is not free
to adopt a reading that would result in reducing whole clauses or paragraphs
of a treaty to redundancy or inutility’.30
The Appellate Body emphasized that the ‘principles of interpretation [in
the Vienna Convention] neither require nor condone the imputation into a
treaty of words that are not there or the importation into a treaty of concepts
that were not intended.’31 In US–Shrimp, for example, the Appellate Body
was able to interpret the term ‘exhaustible natural resources’ as comprising
not only non-living but living natural resources as well, in this case sea turtle
species, by making references to multilateral environmental agreements.
However, despite these extended references, interpretation would not allow
a reading of the term ‘exhaustible natural resources’ as extending to a resource
that is not exhaustible (such as farmed produce) or an item or issue that might
not be considered a resource (such as wind or an individual animal or plant).
The essential question in this respect is what the negotiating partners, here the
WTO Members, meant when referring to ‘exhaustible natural resources’, not
what the disputing parties understand by this term.
Limitation regarding a textual interpretation of WTO norms so as to ac-
commodate environmental concerns also arises from the historical context of
terms. With regard to various environmental challenges, awareness of these
issues was not present at the time of negotiations of the 1947 GATT. Indeed,
27
See R. Howse, ‘The Early Years of WTO Jurisprudence’ in J.H.H Weiler, The EU, the
WTO, and the NAFTA: Towards a Common Law of International Trade (Oxford, 2000)
53.
28
AB in US–Certain Products, para. 92.
29
30
AB in US–Gasoline, 23, later in Japan–Taxes, 12.
31
AB in India–Patent, 46. See also ILC Commentary to Vienna Convention Arts. 31, 32.
climate change was not then an issue. It is therefore unclear whether a textual
interpretation focusing on the meaning of a term adopted by the negotiating
parties would even allow for an extended literal meaning that takes subse-
quent developments into account. As argued in chapter 5, the interpretation
of ‘exhaustible natural resources’ could be expanded as to include the limited
capacity of the atmosphere of the Earth to provide for a stable climatic system
as such a resource. Whether or not a panel or the Appellate Body would follow
such an understanding is hardly foreseeable since a textual interpretation does
not necessarily mandate such a reading of the term.
Though some commentators seem to imply a much more positive concep-
tion of the conflict-solving potential of interpretative processes,32 it is far from
certain that this potential would be exhausted by panels or the Appellate Body.
Among the interpretative arguments, no hierarchy, let alone compulsory ap-
plication, exists.
Despite these efforts, it is the opinion of this author that textual interpre-
tation is not and cannot be a remedy for all problems related to normative
conflicts between WTO rules and norms of ‘out-side’ law, such as climate
measures. As mentioned above, the meaning of a term is not set in stone, it
changes over time. The initial understanding of the negotiators of a treaty
text might differ significantly from that of later adjudicators with an onus to
reflect contemporary concerns and developments. It remains uncertain how
far textual interpretation is able to ‘stretch’ the meaning of a term. Some con-
temporary issues might simply not be suitable to neatly fit in the confined
semantic scope of written words.
Conceptual differences could also lead to the application of more than one
meaning to a term. While for example the trade law angle of interpretation
of GATT Article XX (g) focuses rather restrictively on resources that have a
certain economic value, the environmental understanding of ‘resource’ might
include certain ecological functions with no or minor calculable economic
benefits. Wetlands or grasslands, for example, untilled soil as a CO2 sink or
certain micro-organisms that have a function in filtration processes, could fall
into this category. The paradigmatic difference in valuing certain functions
and commodities can carry over into interpretative processes, precluding di-
verging understandings or definitions of a given treaty term.
Given the conflict of interests and values, harmonious interpretation based
on the treaty text alone – that is interpretation that seeks to accommodate
non-trade interests into WTO treaty texts – will not be possible under all
32
Marceau, 2001, 1081–1131; G. Marceau, ‘WTO Dispute Settlement and Human Rights’
(2002) 13:4 EJIL, 753.
circumstances. A textual interpretation therefore provides only a very limited

tool for conflict avoidance.
12.3.2 Evolutionary Interpretation
There is, however, more than the plain wording. The significance and mean-
ing of a word may change over time and with the evolution of the law. Such
change is recognized by the principle of ‘evolutionary interpretation’. This
principle is the seemingly contradictory counter-part to the principle of con-
temporaneity.33 According to the latter, terms of a treaty must be interpreted
in the light of linguistic usage at the time when the treaty was concluded.34 A
juridical fact therefore must be appreciated in the light of the law contempo-
rary with it.35 This principle of contemporaneity remains the rule and starting
point of treaty interpretation.
However, there is ample scope for exceptions to this rule. Evolutionary
interpretation provides for such an exception, as it does not make reference to
rules of international law in force at the time of conclusion of a treaty but lets
new, subsequent law influence the meaning of pre-existing treaty terms.
The application of the principle to treaties that are not constitutional in
nature has been confirmed in various ICJ judgments and international arbitra-
tion awards.36 In particular, in the case concerning the Gabčikovo-Nagymaros
33
Also termed: doctrine of inter-temporal law, see for further references: Brownlie, 2003,
126; Lauterpacht, The Function of Law in the International Community, 1933, 283–285;
R. Higgins, ‘Some Observations on the Inter-temporal Rule in International Law’ in J.
Makarcyk (ed.) Theory of International Law, Essays in Honor of K. Skubiszewski, 1999,
173.
34
M. Fitzmaurice, ‘The Practical Working of The Law of Treaties’ in M. Evans (ed.) Inter-
national Law, 2003, 186.
35
The principle of contemporaneity was first expressed in the Island of Palmas arbitration
(Netherlands v. United States) (1928) 2 RIAA 831 at 845.
36
See Aegean Sea Continental Shelf case, ICJ Reports 1978, 3, La Bretagne arbitration
decision (1986) 90 RGDIP 716, para. 49, Guinea-Bissau/Senegal Maritime Boundary
Arbitration (Award of 31 July 1989 [1990]) 83 ILR 1, para. 85. In the latter case the tri-
bunal interpreted terms such as ‘continental shelf’ and territorial sea’ that were mentioned
in 1960 bilateral agreement in the light of new law that existed in 1989. However, the
tribunal made it clear that other notions, such as ‘exclusive economic zone’ could not be
‘interpreted in’ into the preexisting treaty. Incorporation ex post facto into the treaty by
means of interpretation was deemed not possible. “To interpret an agreement concluded
in 1960 so as to cover also the delimitation of areas such as ‘exclusive economic zone’
would involve a real modification of its text and, in accordance with a well-known dictum
of the international Court of Justice, it is the duty of a court to interpret treaties, not to
revise them.” (para. 85.)
Project,37 the Court explicitly acknowledged the principle of evolution in treaty

interpretation. In this case, however, the initial 1977 treaty already entailed
an evolutionary aspect. Articles 15, 19 and 20 of the 1977 treaty explicitly
required the incorporation of new environmental norms and standards in order
to evaluate environmental risks.38 With regard to these provisions the Court
stated that:
[t]hese articles do not contain specific obligations of performance but require the par-
ties, in carrying out their obligations to ensure that the quality of water in the Danube
is not impaired …, to take new environmental norms into consideration when agreeing
upon the means to be specified in the Joint Contractual Plan.39
On that basis the ICJ noted that ‘the Treaty is not static, and is open to adapt to
emerging norms of international law’.40 Indeed, the ICJ continued, it entailed
an obligation to take into account new environmental norms and standards.
Thus, the evolutionary approach to interpretation was a requirement to the
implementation of the treaty with regard to the obligation of the parties to
maintain a certain quality of water and to protect nature. It extends necessarily
to evolving issues, depending on the status and development of environmental
norms.
In more general terms, the Court expressed the relationship between the
dynamism of environmental law and evolutionary treaty interpretation in its
well-known dictum in the same case:
Throughout the ages, mankind has, for economic and other reasons, constantly inter-
fered with nature. In the past, this was often done without consideration of the effects
upon the environment. Owing to scientific insights and to a growing awareness of the
risks for mankind – for present and future generations – of pursuit of such interventions
at an unconsidered and unabated pace, new norms and standards have been developed,
set forth in a great number of instruments during the last two decades. Such new norms
have to be taken into consideration, and such new standards given proper weight, not
only when States contemplate new activities but also when continuing with activities
begun in the past.41
By recalling its Advisory Opinion on the Legality of the Threat or Use of

Nuclear Weapons, the Court also emphasized the fact that ‘the environment
is not an abstraction but represents the living space, the quality of life and the
37
Hungary vs. Slovakia, ICJ Reports 1997.
38
Ibid., para. 120.
39
Ibid., emphases added are the author’s.
40
Ibid.
41
Case Concerning the Gabčikovo-Nagymaros Project, ICJ Reports 1997, para. 140.
very health of human beings, including generations unborn’.42 Hence, par-

ticular ‘common interest’ norms, for example those that aim at the protection
of the environment are necessarily evolving, as they do not relate to a static
abstraction but are related to growing awareness of environmental threats and
scientific progress.
The Arbitral Tribunal in the Iron Rhine Railway case noted a ‘general sup-
port among the leading writers today for evolutive interpretation of treaties’.43
This interpretative rule has also been confirmed by WTO jurisprudence.44
The Appellate Panel in US–Shrimp took an evolutionary approach to treaty
interpretation recognizing that the words ‘exhaustible natural resources’ in
GATT Article XX(g) were crafted more than 50 years ago and ‘must be read
… in the light of contemporary concerns of the community of nations about
the protection and conservation of the environment.’45 The incorporation of
developments in environmental law into the provisions of Article XX(g) was
based on two grounds: first, preambular language, i.e., the objective of sus-
tainable development, and, second, the abstract and general character of the
terms used in Article XX.
While the first argument relates primarily to a teleological approach to in-
terpretation; the latter is relevant to an evolutionary approach to interpretation.
It is, however, interesting to note the apparent connection between these two
approaches. Evolutionary interpretation seems not only to require a ‘semantic
hook’ in the general or abstract treaty terms; it could also be mandated by the
‘evolutionary character’ of the object and purpose of a treaty which, as was
done in that case, can – inter alia – be extracted from preambular language.
The object and purpose of a treaty, as one scholar explains, play
42
ICJ reports 1996 para. 29, referred to in Case Concerning the Gabčikovo-Nagymaros
Project, ICJ Reports 1997, para. 112.
43
Arbitration regarding the Iron Rhine (“IJzeren Rijn”) Railway (Belgium v. Netherlands),
24 May 2005, Permanent Court of Arbitration, paras. 81–84. Not only did the Tribunal
consider evolutionary interpretation to be invoked by conceptual or generic terms in a
treaty it also looked at the object and purpose of a treaty insofar as they entail a certain
degree of dynamism (for instance if the purpose of a treaty is to create longer lasting,
sounder relations between the Parties).
44
See reference in footnote 109, AB Panel US–Shrimp: “See Namibia (Legal Consequences)
Advisory Opinion (1971) I.C.J. Rep., p. 31. The International Court of Justice stated that
where concepts embodied in a treaty are “by definition, evolutionary”, their “interpreta-
tion cannot remain unaffected by the subsequent development of law … Moreover, an
international instrument has to be interpreted and applied within the framework of the
entire legal system prevailing at the time of the interpretation.”
45
a central role in treaty interpretation. This reference to object and purpose can be un-
derstood as entry into certain dynamism. If it is the purpose of a treaty to create longer
lasting and solid relations between the parties …, it is hardly compatible with this
purpose to eliminate new developments in the process of treaty interpretation.’46
Accordingly, the Appellate Body argued that ‘the preamble attached to the
WTO Agreement shows that the signatories to that Agreement were, in 1994,
fully aware of the importance and legitimacy of environmental protection as a
goal of national and international policy.’47 Thus, although Article XX was not
modified by the Uruguay Round it did not preclude any future adjustments in
the meaning of its terms to contemporary environmental concerns.
The reference to the preamble of a treaty is a common means of identifying
the intention of the parties and the context to be used according to Article
31(1)VCLT.48 It could also indicate an evolutive character of the entire treaty.
By referring to the objective of sustainable development, explicitly acknowl-
edged in the preamble of the WTO Agreement, the Appellate Body concluded:
‘From the perspective embodied in the preamble of the WTO Agreement, we
note that the generic term ‘natural resources’ in Article XX(g) is not ‘static’ in
its content or reference but is rather ‘by definition, evolutionary’.49
The use of broad and general treaty terms also gives an indication of the
intention of the drafters of the dynamic character of the WTO Agreement.
Pauwelyn argues that
the use of broad, unspecified terms – such as ‘exhaustible natural resources’, ‘public
morals’ or ‘essential security interests’ in GATT Arts. XX and XXI – is an indication
that the drafters intended these terms to be interpreted in an ‘evolutionary manner’. It
may, indeed, be an indication that WTO Members wanted these terms to evolve with
society and international law, or, at least, should have realized the vagueness of these
terms would result in their meaning being open to discussion and variation depending
on the context and times.50
Given the frequent use of abstract terms in WTO treaties, the same author
continues, evolutionary interpretation has become the rule and contemporane-
ous interpretation the exception.51 Certainly, the WTO Agreement is purported
to create long-lasting, robust economic relations between Members. As such,
46
R. Bernhardt, ‘Evolutive Treaty Interpretation, Especially of the European Convention on
Human Rights’ (1999) 42 German Yearbook of International Law, 16–17.
47
48
See Fitzmaurice, 1957, 227–228; Brownlie, 2003, 634.
49
50
51
Ibid., and 268, footnote 89 with further references. Supporting this view: Fastenrath,
1991, 295.
a dynamic element is inherent in their relations. More importantly, however,

sustainable development as stated in the preamble is part of the WTO Agree-
ment’s object and purpose. In this respect, the interpretation of the WTO
agreements cannot be divorced from the dynamic development around the
Nevertheless, evolutionary interpretation is bound by inherent limitations
of treaty interpretation. Developments in law between the time of negotiation
of a treaty and the time of a dispute may influence the interpretation of the
meaning of treaty terms. Evolutionary interpretation can, however, not go be-
yond or against the ‘meaning’ of the terms – even if the understanding of them
has changed substantially.52 The cardinal principle, it was noted in a slightly
different context, ‘is that interpretation as a procedure seeks to clarify what
has already been decided, with binding force. It must stop short of changing
what has been decided, for that involves revision which is a quite separate pro-
cedure governed by separate rules.’53 Interpretation, including evolutionary
interpretation, may therefore not disapply certain norms even if developments
in international law should render them redundant or inutile. Neither can it
abandon the ‘semantic fold’ in which a certain term is nested.
12.3.3 Teleological Interpretation
Article 31 of the Vienna Convention gives place to textual, contextual and

teleological interpretation.54 The Appellate Body recognized such ‘holistic
nature of the interpretative task’.55 In US–Shrimp it emphasized the interplay
of all three approaches, when it said:
52
53
D.W. Bowett, ‘Res Judicata and the Limits of Rectification of Decisions by International
Tribunals’ (1996) 8 African Journal of International Law 577, 586 (referring to the inter-
pretation of judgments, not treaty norms).
54
Art 31 (1) VCLT: A Treaty shall be interpreted in good faith in accordance with the ordi-
nary meaning to be given to the terms of the treaty in their context and in the light of its
object and purpose.’
55
Panel in United States – Sections 301, para. 7.22, 638. As noted by the International Law
Commission (ILC) – the original drafter of Article 31 of the Vienna Convention – in its
commentary to that provision: “The Commission, by heading the article “General Rule
of Interpretation” in the singular and by underlining the connection between paragraphs
1 and 2 and again between paragraph 3 and the two previous paragraphs, intended to
indicate that the application of the means of interpretation in the article would be a single
combined operation. All the various elements, as they were present in any given case,
would be thrown into the crucible, and their interaction would give the legally relevant
interpretation. Thus [Article 31] is entitled “General rule of interpretation” in the singular,
these rules [customary rules of interpretation of public international law] call for an
examination of the ordinary meaning of the words of a treaty, read in their context, and
in the light of the object and purpose of the treaty involved. A treaty interpreter must
begin with, and focus upon, the text of the particular provision to be interpreted. It is in
the words constituting that provision; read in their context, that the object and purpose
of the states parties to the treaty must first be sought. Where the meaning imparted by
the text itself is equivocal or inconclusive, or where confirmation of the correctness of
the reading itself is desired, light from the object and purpose of the treaty as a whole
may be usefully sought.56
It has been noted that elements of the context include the preamble and an-
nexes to a treaty as well as all agreements made by all the parties to a treaty
in connection with the conclusion of that treaty, and any instrument accepted
as related.57
As regards object and purpose, in practice the panel and Appellate Body
have considered it an independent basis for interpretation.58 A clear teleologi-
cal approach was, however, rejected for a determination of the objective and
purpose based on the ‘terms of the treaty’. Instead of establishing the objective
and purpose from a treaty as a whole, which involves examining not least the
preamble,59 and other related provisions, the Appellate Body emphasized the
text at hand.
In those instances where the Appellate Body expressed its interpretative
task as examining the object and purpose, its approaches are inconsistent:
sometimes leaning towards the object and purpose of a particular provision,60
sometimes the object and purpose of the relevant WTO Agreement as a whole
not “General rules” in the plural, because the Commission desired to emphasize that the
process of interpretation is a unity and that the provisions of the article form a single,
closely integrated rule.’ (Yearbook of the ILC, 1966, 219–220).
56
WT/DS58/AB/R, 114 with reference to I. Sinclair, The Vienna Convention on the Law of
Treaties, 2nd ed., 1984, 130–131.
57
Lennard, 2002, 25. Cameron and Gray note that the ‘cross-references and interrelation-
ship between all of the WTO Agreements opens the possibility of considering them when
interpreting a particular agreement’, 2001, 255,
58
In Japan–Alcohol, the Appellate Body rejected an teleological approach and noted that
‘the treaty’s object and purpose’ is to be referred to in determining the meaning of the
‘terms of the treaty’ and not as an independent basis for interpretation. AB in Japan–
Alcohol, para. 20
59
G. Fitzmaurice, ‘The Law and Procedure of the International Court of Justice, 1951–54
– General Principles and Sources of Law’ (1953) 30 BYIL, 1; G. Fitzmaurice, ‘Treaty
Interpretation and other Treaty Points’ (1957) 33 British Yearbook of International Law,
207–209, 228. See also: ILC Commentary, 221.
60
See, for example AB in US–Shrimp, paras. 116–117.
was considered,61 and sometimes both.62

Here, our finding in Part I might be of importance. We concluded that sus-
tainable development is defining the end goal, the purpose, of the WTO. Such
finding was backed up by WTO jurisprudence, the text of the Preamble of the
WTO Agreement and concordant statements by the WTO Secretary General.
Teleological interpretation in this sense is thus interpretation in the light
of sustainable development as a concept integrating WTO law and other poli-
cies and strands of law. In this context a ‘new teleological interpretation’ was
identified that recognized that both WTO and non-WTO policies need to be
obtained.63 According to such interpretative attempt, the operationalization of
WTO exception clauses provides policy space to WTO Members so that ac-
tions taken in other fora are coherent with WTO law. In particular the balanc-
ing approach introduced by Appellate Body in US–Shrimp has been described
as ‘nourishing sustainable coherence within the international legal order’.64
While interpretation in the light of sustainable development could provide
an opportunity of creating such coherence, it still awaits further and coherent
jurisprudential elaboration and practice.
Despite its promising nature, also the teleological argument falls short of
accommodating trade restrictive measures that are partly protectionist. This
limitation of teleological interpretation in the light of sustainable development
was stated by the WTO Secretary General
I hope it is now clear that WTO Members’ trade restrictions imposed to implement
non-trade considerations, will be able to prevail over WTO market access obligations
so long as they are not protectionist. In other words, the WTO provisions themselves
recognize the existence of non-WTO norms and other legal orders and attempts to
limit the scope of application of its own provisions, thereby nourishing sustainable
coherence within the international legal order … The WTO does … take into account
other norms of international law. Absent protectionism, a WTO restriction based on
non-WTO norms, will trump WTO norms on market access. In so doing, it expands
coherence between systems of norms or legal order. Moreover, I believe that in leaving
Members with the necessary policy space to favour non-WTO concerns, the WTO also
recognizes the specialization, expertise and importance of other international organiza-
tions. In sum, the WTO is well aware of the existence of other systems of norms and
that it is not acting alone in the international sphere.65
61
See Lennard, 2002, 27–8.
62
See, for example, AB in EC–Hormones ‘Consideration of the object and purpose of Arti-
cle 3 and of the SPS Agreement as a whole reinforces our belief’, 177.
63
P. Lamy, ‘WTO – Do we Need it?’, address before the European Society of International
Law, Sorbonne, Paris, 19.05.2006.
64
Ibid.
65
Ibid., emphases added.
Given that some of the conflicts between trade measures and WTO law arise
because these measures entail a protectionist notion, teleological interpreta-
tion might thus not adequately resolve such conflicting situations.
Moreover, even if a teleological interpretative approach were adequate, it
remains just one out of many interpretative arguments. The indeterminate na-
ture of interpretative arguments provides the WTO dispute settlement system
with the necessary degree of flexibility to fashion its own reasoning while, at
the same time, it inevitably offers a variety of possible results.
12.3.4 Interpretation with Reference to Norms outside the Treaty: Art. 31.3(c)
VCLT: General Comments
Under the Vienna Convention, the existence of other rules of international law
that apply between the parties to a treaty is relevant to the interpretation of a
treaty. Besides the ordinary meaning of the terms, the context, and object and
purpose, these rules have to be taken into account on an equal footing.66
Article 31.3(c) of the Vienna Convention is of particular interest to the
present purpose of harmonizing treaty provisions in the course of interpreta-
tion. According to this provision ‘any relevant rule of international law appli-
cable in the relation between the parties’ shall be taken into account together
with the context of the treaty. It is recognized as vital to include other rules in
judicial decision-making, when appropriate. This recognition is linked to gen-
eral concerns about ‘treaty parallelism’. McLachlan notes: ‘[i]t is no accident
that this renewed attention [on interpretation under Art 31.3(c)] has surfaced
at a time of increasing concern about the fragmentation of international law –
a concern that the proliferation of particular treaty regimes would not merely
lead to narrow specialization, but to outright conflict between international
norms.’67
The purpose of this principle of interpretation is to foster ‘coherence in
the interpretation of treaty obligations’68 and the unity of international law.
In this sense, the ILC Study Group on Fragmentation saw it as a ‘principle of
66
See ILC in YBIEL 1966, vol. II, 220. With reference to Art 31.3(c) ’these three com-
ponents are all of an obligatory character and by their very nature … not … in any way
inferior to those which precede them’, also Neumann, 2002, 357.
67
McLachlan, 2004, 280.
68
Marceau, 2001, 1089. See also French, 2006; McLachlan, 2005; Pauwelyn, 2003,
251–274. For an overview see also P. Sands, ‘Sustainable Development: Treaty, Custom
and the Cross-fertilization of International Law’ in Boyle and Freestone, International
Law and Sustainable Development (1999c) 49, 50.
systemic integration’.69 When applying Article 31.3(c) VCLT, a treaty must

be interpreted against the thick background of all relevant international law.
The principle not only states the applicability of general international law in
the context of interpretation, but ‘it points to the need to take into account the
normative environment (system) more widely’.70
Article 31.3(c) of the VCLT does not limit the scope of other rules in any
particular way. Without restriction regarding their source or to the time of
their coming into existence,71 rules included under the scope of Article 33(1)
(c) have been recognized as including customary law rules, general principles
of law,72 and, where applicable, other treaty provisions.73 Among these other
rules, no rule of preference applies. It remains unclear how to solve a situa-
tion where several relevant, but contradictory rules of international law are
applicable.
Nor does Article 31.3(c) entail any preference for the ‘other rule’ over the
interpreted treaty. Outside rules are not brought into the interpretative process
because of their overriding character (except for jus cogens, but then the inter-
preted rule disapplies). Apparently, Article 31.3(c) is not a conflict norm in the
sense that it deals with questions of priority or hierarchy. It does not attach any
stronger normative weight to rules extraneous to the treaty to be interpreted.
What it seeks is a harmonious reading of apparently conflicting norms by inter-
preting them so as to render them compatible.74 The ILC Study Group offers no
guidance on how the ‘need to take into account’ can be determined. The group
69
Sands, 1995, 85, saw it as a principle of ‘integration’. The notion of ‘systemic’ integration
was recently added by C. McLachlan, ‘The Principle of Systemic Integration and Article
31 (3)(c) of the Vienna Convention’ (2005) 54 ICLQ, 279–320 and ILC, Report of the
Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006, 175.
70
ILC, Report of the Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006,
175–176.
71
Art 31.3(c) does not limit this reference to other rules of international law to those that
existed at the time of conclusion of the treaty, nor does it explicitly include other law that
had developed at the time of application. See: J. Pauwelyn, The Nature of WTO Obliga-
tions, Jean Monnet Working paper 2002.
72
See in particular on general principles taken into account under Art. 31.3(c): ILC, Report
of the Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006, 199; Pauwelyn, 2003,
271; and M. Koskenniemi, ‘General Principles. Reflections on Constructivist Thinking’
in M. Koskenniemi, Sources of International Law (London: Ashgate, 2000) 359–399.
73
McLachlan, 2005, 289; ILC, Report of the Study Group on Fragmentation, A/CN.4/L.682,
4 April 2006, 175 and 180. See also Neumann, 2002, 359: “Daher sind alle in Art 38
IGHSt genannten Rechtsquellen umfasst.” Also: Marceau, 2001, 1087; Pauwelyn, 2003,
255; Sinclair, 1984, 119; Contra: Sands, who seems to limit the rules in Art 31.3 (c) to
customary international law while the relationship between two or more treaties is dealt
with in Art 30 VCLT. Sands, 1999c, 48–50.
74
ILC, Report of the Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006, 174.
appears to be satisfied with linking the significance of ‘taking into account’ to

the performance of a systemic function in the international legal order whereby
specialised parts are linked to each other and to universal principles.75
The paradox of such a view is that any (relevant) rule under this systemic
function is always already linked to and ‘seen in the light’ of any other. In
other words, if, for example, a WTO norm is to be interpreted in the light of a
rule entailed in a MEA, the interpretation of the other rule – equally linked to
the international legal order – may likewise need to take into account the WTO
rule. Such a ‘systemic’ explanation of the need to take other rules into account
could render interpretation a circular process where one rule endlessly undoes
the other. It could become impossible to conceptualize either the WTO rule or
the MEA rule without considering the other, unless there was good reason to
let the outside rule inform the WTO rule.
Such an argument could perhaps be made if the outside rule represented a
‘collective interest norm’, ranging somewhat higher in the international value
system, without a legitimate claim to normative superiority. A number of gen-
eral principles or customary law rules could fall within this category. This
seems to correlate with the somewhat hidden view of the ILC Study Group
that ‘[w]ithout the principle of “systemic integration” it would be impossible
to give expression to and keep alive any sense of the common good of human-
kind, not reducible to the good of any particular institution or ‘regime’.76
Another possibility of attributing stronger normative weight could concern
treaty rules of ‘integral’ character (or treaty obligations erga omnes partes)
that shall be taken into account when interpreting a ‘reciprocal’ treaty. In these
cases, the danger of ‘endless deconstruction’ may be avoidable. Again, the
strength of the need to ‘take into account’ can only be determined on a case
by case basis.
‘Outside’ rules have to be applicable in the relations between the parties.
Unlike customary law and general principles of law which are generally
applicable, the applicability of other treaty rules arguably depends on the
membership to that other treaty. As a traditional minimum-requirement both
Parties in dispute need to be Parties to the other treaty as well. Whether this
applies to all parties to the treaty under interpretation remains a contentious
issue. The ILC Study Group concluded that such requirement would make any
use of other conventional law under Art 31.3(c) unlikely. There is practically
no conformity of membership to multilateral treaties. In fact, were it to be
required, it would sever multilateral treaties from the rest of international law
75
Ibid., 202.
76
Ibid., 205.
as ‘islands’ permitting no reference inter se in their application.77 The Study

group therefore supported the view that membership of the disputing parties
to both treaties should suffice.78
Recent WTO jurisprudence, however, indicates that only agreements to
which all other WTO Members were Parties could be taken into account under
Art 31.3(c) VCLT. The WTO panel in EC–Biotech dismissed the request of
the EC to take account of the rules in the 1992 Convention on Biological Di-
versity and the 2000 Cartagena Biosafety Protocol on the grounds that not all
parties (in particular the US) to the WTO treaty to be interpreted had become
Members to these other treaties.79
Applying this finding to the case-example of a trade-restrictive climate
measure, allows a number of conclusions to be drawn. First, there is no con-
gruence of membership of the WTO and Kyoto Protocol or the UNFCCC.80
According to the view expressed by the EC–Biotech panel, the rules of these
two treaties would therefore not be taken into account when interpreting GATT
or GATS provisions under Article 31.3(c) VCLT. It remains possible to take
these treaties into account as facts elucidating the ordinary meaning of certain
terms in the relevant WTO treaties, though this approach has been criticised
as a ‘rather contrived way of preventing the ‘clinical isolation’ as emphasized
by the Appellate Body’.81
Second, while the terms ‘applicable in the relations between the parties’ in
Article 31.3(c) are seen as referring to the Parties to the dispute, the likelihood
of reference be made to the rules of the Kyoto Protocol when interpreting rules
of WTO agreements remains rather limited. In the examples highlighted in
Part II of this study, it became clear that conflict potential lies mostly where
Members to the Kyoto Protocol discriminate non-Members’ trade with certain
products or services. In this constellation, Kyoto rules would not be applicable
under Article 31.3(c), except for the rather unlikely event that a rule contained
in the Protocol reflects customary law or jus cogens.
77
Ibid., 200. So also G. Marceau, ‘WTO Dispute Settlement and Human Rights’, 13 EJIL,
2000, 781.
78
ILC, Report of the Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006, 200–1.
79
EC–Biotech Products, 7 February 2006, WT/DS 291–293, INTERIM, 7.68–7.70. The
ILC Study group criticized this approach. It found that it ‘makes it practically impossible
ever to find a multilateral context where reference to other multilateral treaties as aids
to interpretation under article 31.3(c) would be allowed. The panel buys what it calls
“consistency” of its interpretation of the WTO Treaty at the cost of the consistency of the
multilateral treaty system as a whole.’, ILC, Report of the Study Group on Fragmentation,
A/CN.4/L.682, 4 April 2006, 191.
80
172 States are members to the Kyoto Protocol, the WTO has 151 members (<http://www.
wto.org/english/thewto_e/whatis_e/tif_e/org6_e.htm>, last visited 12 March 2008).
81
Some of the non-Kyoto WTO Members, however, are Members of the

UNFCCC; in which case the rules of the UNFCCC would remain applicable
in the context of interpretation. The ultimate objective of Article 2 UNFCCC
could give ground for interpretative influence on WTO norms. The overall
commitment to the ‘safe stabilization goal’ would need to be taken into ac-
count when interpreting the provisions of the WTO agreements.
The scope and function of interpretation under Article 31.3(c) VCLT is
perhaps the most controversial aspect. As mentioned above, according to the
claims of some scholars, Article 31.3(c) has the facility to integrate all sources
of international law.82 In this sense, Article 31.3(c) was perceived as ‘quite
essential for promoting harmonization and guaranteeing the unity of the inter-
national legal system’.83
Indeed, the function of ‘systemic integration’ – whereby treaty norms are
interpreted with reference to their normative environment, that is, the ‘system’
of international law as a whole84 – is crucial in this quest for unity. The ques-
tion, however, is whether treaty interpretation is the most adequate means to
achieve such unifying systemic integration.
The arguments put forward in favour of such a broad function are not
convincing. Three concerns relate to the practical use of interpretation under
Article 31.3(c) in this context.
First, interpretation with reference to other rules depends on some textual
or contextual uncertainty of the term to be interpreted. Interpretation with
reference to other international law rules has merits where the treaty norm
to be interpreted ‘calls’ for such an interpretative approach. Four situations
can be identified where use of Article 31.3(c) would ‘normally’ arise. First,
where a treaty rule is unclear or ambiguous; second, where the terms used
in the treaty have a well-recognized meaning in customary law to which the
parties can therefore be taken to have intended to refer; and third, where the
treaty language indicates an evolving meaning or where the terms of a treaty
can be classified as ‘generic’ or are by their nature open-textured and reference
to other sources of international law will assist in giving content to the rule.
Fourth, where the object and purpose of a treaty allow the conclusion ‘that the
parties have committed themselves to a programme of a progressive develop-
ment. In these cases, there is a necessary presumption that the meaning of the
term was intended to follow the evolution of the law and correspond with the
82
French, 2006, 301; McLachlan, 2005, 301.
83
ILC Study Group on Fragmentation, report on Fifty-Sixth session, 2004, Supplement No
10 (A/59/10), 301.
84
meaning attached to the expression by the law in force at any given time.85
Adopting a technically different approach, the Arbitral Tribunal in the Iron
Rhine case applied the intertemporal rule of interpretation as one ‘relevant
rule of international law’ under Article 31.3(c).86
Apart from these ‘hook-ups’ within the treaty, interpretation with refer-
ence to other norms seems to have limited potential for creating ‘systemic
integration’. In particular, where the terms of a treaty are clear, that is, where
there is no such textual or conceptual uncertainty, interpretation is unlikely to
place these terms in their normative environment. Creating unity also relies
however on the relation of ‘clear’ terms to outside norms.
Second, there is considerable uncertainty as to what ‘interpretation with
reference to’ and ‘taken into account’ actually mean. Without attempting a
comprehensive analysis, some internal constraints can be noted. Interpretation
is a semantic exercise. Whether by reference to ‘ordinary meaning’, ‘party in-
tent, ‘object and purpose’, effectiveness, or other relevant rules of international
law – it always is about giving meaning to the terms of a treaty. Interpretation
by taking account of the normative environment under Article 31.3(c) of the
instrument that is being interpreted therefore ultimately finds it limits where
coherence with other norms requires dis-application of the provision to be
interpreted. Interpretation cannot – not even momentarily – ‘set aside’ treaty
provisions. The technique of interpretation is exhausted where a definitive
priority of application is required or displacement of a norm is sought.
It is in this context the critique of Judge Higgins in the Oil Platforms case
may be understood. In her separate opinion she concluded that ‘[t]he Court
has, however, not interpreted Article XX, paragraph 1(d), by reference to
the rules on treaty interpretation. It has rather invoked the concept of treaty
interpretation to displace the applicable law.’87 Such displacement, however,
generally lies outside the scope of interpretation. Despite the apparent poten-
tial of Article 31.3(c) its use for ‘integrating’ other rules in a particular treaty
is rather constrained. In other words, under Article 31.3(c) the treaty being
interpreted retains a primary role.88 The other rule has a secondary role, in
the sense that there can be no question of the other norm displacing the treaty
norm, either partly or fully.89
85
Aegean Sea Continental Shelf (Greece v. Turkey), Judgment, ICJ Reports 1978, para.
77.
86
Arbitration regarding the Iron Rhine (“IJzeren Rijn”) Railway (Belgium v. Netherlands)
24 May 2005, Permanent Court of Arbitration, para. 79.
87
ICJ, Oil Platforms case (Iran v. US) (Merits), ICJ Reports 2003, Separate Opinion Judge
Higgins, para. 49.
88
See Sands, 1999c, 57.
89
Ibid.
If a priority of rules must be established, it must be done by recourse to

conflict rules, such as lex specialis, lex posterior, lex superior or other general
principles that demand integration of norms. These principles deal with the
application of norms, not with their interpretation.
The ILC Study Group seems to adopt a ‘wider’ notion of interpretation,
comprising of both interpretative arguments alongside competence to set
aside invalidated rules. Interpretation as ‘systemic integration’ is understood
as interpreting and applying the treaty in its relationship to its normative en-
vironment, that is, ‘other’ international law.90 This certainly is a possible view.
It is, however, diverting from the traditional view on legal reasoning which
considers treaty interpretation as one component of a wider array of legal
techniques. Usually lawyers proceed from the treaty text to customary law and
general principles of law. This approach has illuminatingly been described as
a progression of legal reasoning through ‘concentric circles’: each one con-
stituting a field of reference and potential assistance for the next.91 Interpreta-
tion under Article 31.3(c) is thus part of a larger interpretation process, while
interpretation is part of a larger process of legal reasoning. In the course of this
study, the distinction between interpretation and application of norms will be
maintained according to this view.
International judicial and arbitral practice have only recently and reluc-
tantly started to use Article 31.3(c) more extensively.92 The US–Iran Claims
Tribunal invoked the principle in order to fill possible lacunae under the Iran-
US Claims Settlement Declaration, for example to find that general rules of
international law defined certain property rights under the Treaty or the deter-
mination of national requirements for bringing a claim before the Tribunal.93
The OSPAR Arbitral Tribunal in the arbitration regarding the MOX Plant
accepted the scope of reference to other rules of international law but rejected
taking account of the instruments contended by Ireland, which were: access to
information based on the 1992 Rio Declaration and the 2001 Aarhus Conven-
tion on Access to Information, Public Participation in Decision-Making, and
Access to Justice in Environmental Matters, on the grounds that they were
90
ILC, Report of the Study Group on Fragmentation, A/CN.4/L.682, 4 April 2006, 179,
205.
91
M. Huber, ‘Letter’ reproduced in (1952) 44-I Annuaire de l’Institut de Droit International,
200–201.
92
See Sands, 1999c, 51. Sands highlights the ‘endemic’ nature of this reluctance by provid-
ing examples from a number of different tribunals: GATT and WTO Panels and Appellate
Body, International Court of Justice, European Court of Human Rights. (51–56)
93
See, for example, Amoco International Finance Corporation v. Iran, Iran-US C.T.R.,
vol. 15, 1987-II, 222, para. 12 and Esphahanian v. Bank Tejarat, Iran-US C.T.R., vol. 2,
1983-I, 157.
‘evolving international law’ but not ‘rules of law applicable between the par-
ties’ according to Article 31.3(c).94
The European Court of Human Rights has a longer history of applying the
principle. In the Golder case the Court expressly invoked Article 31.3(c) to
support the conclusion that the principle of international law forbidding the
denial of justice has to be read into Article 6(1) of the European Convention
on Human Rights.95
As mentioned, the International Court of Justice, albeit previously confirm-
ing that an ‘international instrument has to be interpreted and applied within the
framework of the entire legal system prevailing at the time of interpretation’96
has only recently referred to Article 31.3(c) in the Oil Platforms case.97
12.3.5 Article 31.3(c) VCLT in WTO Jurisprudence
The permissibility of WTO adjudicating bodies applying this principle to

the interpretation of WTO agreements has sometimes been contested on the
grounds of ‘limited jurisdiction’ according to Articles 1.1, 4.2, 4.4, 7 and 11
of the DSU.
Both adjudicating bodies are a creation of the WTO and do not exist inde-
pendently from it.98 According to Article 7.1 DSU the mandate of the panels
is ‘to examine, in the light of the relevant provisions in (name of the covered
agreement(s) cited by the parties to the dispute, the matter referred to the DSB
94
Dispute Concerning Access to Information Under Art. 9 of the OSPAR Convention, Final
Award (Ireland v. the United Kingdom) 2 July 2003, Permanent Court of Arbitration, ILM
vol. 42 (2003), 1137–1138, paras. 99–105.
95
ECHR Golder v. UK, Judgment of 21 February 1975, ECHR Series A no. 18, at 14,
para. 29, 57 ILR 201. For reference to Art 31.3(c) VCLT in order to decide whether
rules on state immunity might conflict with the right of access to courts under Art 6.1
of the European Convention on Human Rights, see Al-Adsani v. UK, Judgment of 21
November 2001, ECHR, 2001-XI, 79; Fogarty v. UK, Judgment of 21 November 2001,
ECHR 2001-XI, 157; and McElhinney v. Ireland, Judgment of 21 November 2001, ECHR
2001-XI, 37. See also Loizidou v. Turkey (Merits) Judgment of 18 December 1996, ECHR
1996-VI, 2231, para. 44.
96
Legal Consequences for States of the Continued Presence of South Africa in Namibia
(Advisory Opinion), 1971, ICJ Reports 31. The court held that the interpretation of the
Covenant of the League of Nations could not remain unaffected by the subsequent de-
velopment of the law, including the Charter of the United Nations and customary law.
A similar approach was adopted in the Aegean Sea Continental Shelf case (Greece v.
Turkey), ICJ reports, 1978, para. 78) and the Gabčikovo-Nagymaros case (ICJ reports
1997, para. 140).
97
Iran v. United States of America (Merits) ICJ Reports 2003, 161, 41.
98
Marceau, 2001, 1102.
by (name of the Party) in document … and to make such findings as will assist
the DSB in making recommendations or in giving the rulings provided for in
that/those agreement/s. Article 11 suggests a limited jurisdiction for panels: it
requires a panel to ‘make an objective assessment of the facts of the case and
the applicability of and conformity with the relevant covered agreements’.
In addition, Articles 3.2 and 19.1 DSU make clear that ‘Recommendations
and rulings of the DSU cannot add to or diminish the rights and obligations
provided in the covered agreements.’
However, the WTO does not exist in hermetic confinement. Accordingly,
the Appellate Body could not allow the covered agreements to be read in clini-
cal isolation from public international law. By accepting the rules of the Vienna
Convention as applicable to WTO dispute settlement, also Article 31.3(c) falls
within the scope of the specific authorization of the DSU itself.
In addition, occasional fear is expressed that interpretation according to
Article 31.3(c) runs counter to the prohibition of adding or diminishing rights
and obligations in the covered agreements, linking this issue to the scope of
interpretation under Article 31.3(c) as explained above. This concern is not
substantiated. Interpretation by definition cannot change the meaning of terms
by propelling them beyond their semantic scope. The rationale of interpreta-
tion is to construct the meaning of an instrument by a legal technique. When
Article 31.3(c) is used, this technique involves taking account of the wider
legal environment. However, these other norms are ‘relevant’ because they
are already binding on (at least) the parties to the dispute. No right would
therefore be added or diminished that did not already exist.
Despite the recognition of the customary rules of interpretation by the DSB;
Article 31.3(c) VCLT has received little explicit reference. In US–Shrimp, the
Appellate Body referred to Article 31.3(c) for introducing ‘additional inter-
pretative guidance, as appropriate, from the general principles of law’.99 Apart
from this example, the Appellate Body has not invoked Article 31.3(c) for tak-
ing account of non-WTO rules. In fact, the EC–Biotech panel used reference
to the article as an argument for not including outside rules.100
As mentioned above, the Appellate Body, however, has in several cases
taken account of newer developments in international law without explicit
reference to Article 31.3(c).101 Again, in US–Shrimp, when interpreting the
99
AB in US–Shrimp, para. 158, fn. 157.
100
It used Art. 31.3(c) for not taking account of rules of the CBD and the Biosafety Protocol
on the ground that not all WTO Parties were parties to these agreements. It also, if more
obscurely, dismissed taking account of the precautionary principle as a general principle
of law by implicitly rejecting its legal status as a ‘relevant rule’.
101
See for an overview Neumann, 2002, 356–364.
words ‘exhaustible natural resource’ of Article XX(g) of GATT 1994 refer-

ence was made to a number of non-WTO treaties, such as CITES, CBD, UN-
CLOS. Here, the Appellate Body did not use Article 31.3(c) to include these
reference points, nor did it need to. The term ‘exhaustible natural resources’,
contended the Appellate Body, must be read by a treaty interpreter in the light
of contemporary concerns of the community of nations. The use of these broad
and unspecific terms indicated their need to be interpreted in an evolutionary
manner.
It remains unclear whether these references were made pursuant to Article
31.3(c) or to Article 31(1) VCLT.102 It seems that an evolutionary approach,
rather than recourse to Article 31.3(c) was accepted. This assumption rests on
the suggestion that a distinction exists between an evolutionary approach to
interpretation and the ‘taking into account of any relevant rule of international
law’ according to Article 31.3(c). The distinction arguably depends on the
spectrum of extraneous law for inclusion in the interpretative process. The
use of newer rules that exist in the same legal ‘topic-area’ as the rules to be
interpreted (e.g. rules of economic law, environmental law, Human rights law)
seems to indicate an evolutionary approach; while under Article 31.3(c) the
entire normative environment becomes the legal background for interpreta-
tion. Though both approaches seek to adjust the treaty to temporary concerns
and strive to enhance the coherence of the legal system; they are both subject
to limitations. Article 31.3(c), although apparently wider in scope in terms of
‘relevant rules’, is limited by their applicability. Evolutionary interpretation,
on the other hand, is not contingent upon the requirement of applicability of
outside rules. Though the scope of ‘relevant law’ is limited, nevertheless, to
‘topically-related’ law.
12.4 Conclusions
This chapter has shown that although interpretation provides an important tool
for harmonizing apparently conflicting norms, it is inherently limited. Limita-
tions relate to the purpose of interpretation as giving meaning to the terms of
a treaty. Newer developments in international law, in particular where they
lead to overlapping and conflicting norms, might not always be easily accom-
modated by the semantic scope of treaty texts. Reference to outside rules by
applying the principle of evolutionary interpretation can only be made in those
102
See Neumann, 2002, 364; Pauwelyn, 2003, 256; Cameron, 1998, 20; Petersmann, 1997,
120; Marceau, 1999, 116; Murphy, ‘Biotechnology and International Law’ (2001) 42
HILJ, 86.
cases where the WTO rule is broad and ambiguous enough to allow for input
from other rules. Article 31.3(c) VCLT allows for another avenue for interpre-
tation ‘in the light of other relevant rules of international law’. However, also
interpretation according to Article 31.3(c) VCLT has several limitations.
First, uncertainty prevails as to what rules are applicable. According to
WTO jurisprudence, only rules that are binding on all parties to the treaty to be
interpreted are ‘applicable’ in the sense of Article 31.3(c). This view excludes
most of other conventional rules.
Second, the argument is in danger of circularity. If a treaty is to be inter-
preted by taking account of its wider normative environment, the treaty also
exerts normative force on other rules within this environment. This could lead
to the somewhat paralysing situation of endless hermeneutic circles.
Third, interpretation is a legal tool for giving meaning to the terms of a
treaty. It falls short of usefulness where extraneous rules are contradictory, in
which case the conflict has to be decided by establishing normative priority.
Treaty interpretation, including interpretation with reference to outside rules,
cannot function as a priority or conflict solution principle to the extent of
overall ‘systemic integration’. It can contribute to promoting harmonization
and unity of the international legal system. But treaty interpretation cannot,
by itself, accomplish this.103 In other words, while Article 31.3(c) provides for
taking account of the normative environment of a treaty norm in the process
of interpretation; limitations exist where the object and purpose of treaty or
the terms of the treaty do not contain the necessary ‘openness’ or ‘ambiguity’
for inclusion of extraneous rules. In cases where outside legal norms are found
to be contradictory to the treaty to be interpreted and no harmonious reading
is possible, the ‘innermost circle’ of interpretation is exhausted and the next
‘concentric circle’ – dealing with the question of priority of rules – needs to be
entered. Article 31.3(c) is not a legal instrument which can be used to disapply
a treaty norm. Where, for example, a WTO rule is strict and clear, an apparent
conflict with a contradicting outside rule cannot be ‘interpreted away’. Only
in those cases where the WTO term itself provides for a ‘hook-up’ by means
of which the other rule could impart meaning in the process of interpretation
could a real conflict with other rules be avoided.
Given the uncertainties as to the application of a certain interpretative
argument coupled with the ‘traditions in legal literature that dictate scepti-
cism about the very possibility of there being anything that could be called
a theory of interpretation’,104 there is no consensus – and surprisingly little
debate – over the proper content of a theory on how legal texts should be
103
104
Moore, 1985, 286.
interpreted. With regard to the subject dealt with in this treatise – the conflict
of norms – limitations of treaty interpretation are of crucial importance. The
adverse consequences of the lack of legally binding principles in such a deli-
cate area are self-evident.105 If there is no consensus concerning the correct
interpretative argument(s) to be applied in the process of treaty interpretation,
the mere existence of interpretative arguments cannot be considered as means
of avoiding or solving an apparent normative conflict.
The lack of legal predictability in the field of treaty interpretation is not
limited to this situation alone. Courts and scholars have never been particu-
larly cautious when distinguishing the theory of interpretation from an overall
theory of legal reasoning (‘adjudication’) of which interpretation is a part.
Interpretation only names one ‘discrete sub-activity within the activity of
legal reasoning. It is not a synonym for legal reasoning itself.’106 Apart from
interpretation, the application of the treaty in the context of other law provides
another example of legal reasoning. This type of adjudication is based on the
fact that every treaty is part of the wider context of international law.107 The
distinction between application and interpretation is a crucial one as it allows
for the consideration of rules outside a treaty for different reasons.108 Legal
reasoning based on the application of a treaty in this wider sense will be dis-
cussed in more detail in the next chapter. Suffice it to say here that the limita-
tions that apply to the process of interpretation do not necessarily constrain
other types of legal reasoning that take account of other international treaties,
non-treaty law or current developments in international law in general.
As we have seen, interpretation cannot provide a panacea; rather there is
increasing demand for applying a ‘principle of integration’. Such a principle
– different from interpretation – would allow us to see the rules in view of
some comprehensible and coherent objective. From the perspective of their
contribution to some generally shared ‘systemic’ objective, the rules have
to be read harmoniously and, when necessary, prioritized according to their
significance to that objective.
One such technique, I suggest, is applying the principle of integration
under the objective sustainable development. This principle would not only
105
Cassese, 2001, 135.
106
Moore, 1985, 284.
107
Pauwelyn, 2003, 202
108
This distinction was made clear by Sir Humphrey Waldock. In his Third Report on the
Law of Treaties he distinguished in Art 56 of his draft between the interpretation of a
treaty in the light of the law in force at the time when the treaty was drawn and the appli-
cation of a treaty governed by the rules of international law in force at the time when the
treaty is applied. YBILC 1964, vol. 2, 8. See for more discussion on this draft: Pauwelyn,
2003, 202.
help overcome the constraints to establishing normative priority that mark the
process of interpretation. More important, it would also elucidate the obscure
‘generally shared – systemic – objective’ of the international legal rules to
which the ILC Study group referred.109 The Study Group came close to defin-
ing this objective as the ‘common good of humankind’.110 My suggestion is
that ‘sustainable development’ might be an objective more appropriate, less
indeterminate and practically more useful. However, ultimately the two no-
tions are probably not so far from each other, only insofar as the latter is more
clearly delineated.
Indeed, if ‘the common good of humankind’ or more succinct ‘sustainable
development’ – provided that it is sufficiently clear in its content – were ap-
plied as the template of integration, it would render meaningful the attempt to
allocate rules to their respective place in the international normative system.
To sum up, as a result of limitations to interpretation, a WTO panel may
be faced with a situation in which interpreting WTO norms may not solve an
apparent conflict. Thus the question how contradictory non-trade rules relate
to WTO law remains open. If the approach to such a situation is exclusively
based on interpretative means, then an important strand of the quest for fair-
ness and legitimacy is cut off. The result could be deemed a legal one, but not
necessarily a legitimate one. In order for a finding to be legitimate it has to be
based on evolving standards of what constitutes right process and the ‘right
substantive law’ to be applied.111 Conflict resolution principles and a judicial
principle of integration are certainly part of an evolving standard of ‘conflict
law’.
After all, the question remains what a WTO panel or the Appellate Body
can or ought to do in the situation where it is unable to find a harmonious read-
ing of WTO and outside law. Can it simply disrespect the outside law, can or
must it pronounce a non-liquet, or are there other solutions to this challenge?
As we have seen, interpretation provides only one mode of legal reasoning
or adjudication. The application of other rules offers another. As we shall
explore now, the determination of what rule remains applicable is left to vari-
ous principles of conflict resolution.
109
110
Ibid., 205.
111
Franck, 1995, 26.
Chapter 13
Principles of Conflict Resolution
In the event of interpretation not leading to a harmonious reading of two

norms, a genuine conflict between WTO law and the other norm exists. If the
other norm is found to constitute a breach of international trade law do other
rules or principles exist that can deal with a genuine legal conflict?
Here, the law of treaties provides a number of conflict resolution principles
applicable when conflict avoidance techniques, e.g. interpretation, have failed.
The specific question with regard to the case example of this study is this: If
the exercise of rights under the Climate Convention or the Kyoto Protocol
leads to a conflict with a WTO norm, what techniques – beyond interpretation
– exist to resolve this conflict?
In this situation international law provides legal tools, so-called ‘priority
rules’ or ‘choice of law rules’, to determine which one of the two rules should
be applied in this situation and which one – momentarily or permanently – has
to give way.1
13.1 Explicit Conflict Clauses
In anticipation of conflict with other norms, States sometimes enumerate in

the text of international treaties methods of dealing with the situation. Thus,
a treaty may contain explicit conflict clauses (or savings clauses) defining
the relationship to pre-existing or future treaties or that very treaty.2 Conflict
1
The rule which is disapplied in this particular situation cannot be breached and does not
give rise, therefore, to State responsibility in this particular case. The discarded norm,
however, remains applicable in other circumstances. Thus, another court or tribunal may
decide differently on the issue of the applicable law.
2
Examples include Article 103 UN Charter “In the event of a conflict between the obliga-
tions of the members of the United Nations under the present Charter and their obligation
clauses define which of the two norms shall prevail. The other norm is not
invalidated or terminated; it is, rather, temporarily set aside. Although the
discarded rule does not apply in the particular circumstance, it may apply in
other circumstances.
The WTO agreements contain no general conflict clause and only very few
provisions that deal with the relationship between WTO law and other norms
of international law.3
In particular, the view of considering Articles 3.2 and 19.2 of the DSU as
conflict clauses needs to be rejected. Articles 3.2 and 91.2 do not proclaim that
WTO covered agreements must necessarily and always prevail over all past
and future law, nor do they address the jurisdiction of the panels or the appli-
cable law before them. They deal with the limits of a WTO panel as a judicial
organ in interpreting WTO covered agreements. Here, – in the limited course
of interpretation – a panel may ‘not add or diminish the rights and obligations
provided in the covered agreements’.4 This view seems to be in accordance
with the WTO panel in Korea–Measures Affecting Government Procurement,
which explained that
We take note that Art 3(2) of the DSU requires that we seek within the context of a
particular dispute to clarify the existing provisions of the WTO agreements in accord-
ance with customary international law rules of interpretation of public international
law. However, the relationship of the WTO agreements to customary international law
is broader that this. Customary international law applies generally to the economic
relations between WTO members. Such international law applies to the extent that the
WTO treaty agreements do not ‘contract out’ from it. To put it another way, to the ex-
tent that there is no conflict or inconsistency, or an expression in a covered agreement
that applies differently, we are of the view that the customary rules of international
law apply to the WTO treaties and to the process of treaty formation under the WTO.5
The WTO agreements are in particular silent about the relationship to MEAs.
Despite the mandate of the CTE to examine the relationship between the WTO
treaty and MEAs, no dedicated solution has been elaborated. The CTE did,
however, endorse ‘multilateral solutions based on international cooperation
and consensus as the best and most effective way for governments to tackle
under any other international agreement, their obligations under the present Charter shall
prevail.”; Art 311(1) UNCLOS ‘The Convention shall prevail, as between State Parties,
over the Geneva Convention on the Law of the Sea of 29 April 1958’.
3
For a discussion of conflict clauses in the WTO treaties; see Pauwelyn, 2003, 343–361.
4
Pauwelyn, 2003, 352–355. Contrary: J. Trachtman, ‘The Domain of WTO Dispute Reso-
lution’ (1999) 40 Harvard Int’l Law J., 342, allowing only for the application of custom-
ary rules on interpretation as part of the procedural, not the substantive, law.
5
Para. 7.96.
Chapter 13 – Principles of Conflict Resolution 295
environmental problems of a transboundary or global nature’.6 Reference to

MEAs has to be seen in combination with the Decision on Trade and Environ-
ment, integral to the Final Act, 1994. The Decision states that
there should not, nor need to be, any policy contradiction between upholding and
safeguarding an open, non-discriminatory and equitable multilateral trading system on
the one hand, and acting for the protection of the environment, and the promotion of
sustainable development on the other.7
The possibility of appropriate modifications of the provisions of the multilat-

eral trade system is moreover envisaged with a view for the need to enhanc-
ing positive interaction between trade and environmental measures, for the
promotion of sustainable development.8 As of yet, no such modification has
been made.
As regards the relationship between climate and international trade rules,
no explicit or general conflict clause can be found, either in the Kyoto Protocol
or the Convention or in any of the WTO covered agreements.
However, even in the absence of explicit conflict clauses, there are implicit
expressions of intent on what to do in the case of conflict. These indications of
Parties’ intentions will primarily play a role in the interpretation of the norms
in question so as to avoid a conflict. However, they may also be important in
the situation of a normative conflict. This will be the case where no clear-cut
solutions to the conflict exist.
13.2 Implicit Conflict Clauses in the Kyoto Protocol and UNFCCC
The question which needs to be answered is whether Article 3.5 UNFCCC and/
or Articles 2.3 and 3.14 Kyoto Protocol entail such implicit conflict clauses.
Despite the importance of clarifying the relationship between the climate
agreements and the WTO, the issue of WTO relevance of climate measures has
been largely absent from the work within the Convention. The UNFCCC Sub-
sidiary Body for Scientific and Technological Advice (SBSTA) gives marginal
information on the relationship with the WTO: ‘the interaction between WTO
rules and measures arising from national implementation of commitments, …
6
WTO/Doc. WT/CTE/1, para. 171 (1996).
7
WTO Secretariat, The Legal Texts. The Results of the Uruguay Round of Multilateral
Trade Negotiations, 1994, 411.
8
Ibid., 412.
has not been the subject of policy-oriented work of the subsidiary bodies of
the Convention’.9
According to Article 3.5 UNFCCC, measures taken to combat climate
change, including unilateral ones, should not constitute a means of arbitrary
or unjustifiable discrimination or a disguised restriction on international trade.
Article 3.5 promotes a supportive and open international economic system
leading to sustainable economic growth and development in all Parties, par-
ticularly developing country Parties.
The wording of Article 3.5 neither prohibits nor endorses the use of trade
restrictive climate measures.10 Nothing in this provision requires climate
measures not to be trade restrictive as long as the threshold of arbitrary or
unjustifiable discrimination is not reached. If climate measures, including uni-
lateral ones, taken to combat climate change, constitute a means of arbitrary
or unjustifiable discrimination or a disguised restriction on international trade,
it remains unclear what the provision implies. While Article 3.5(2) UNFCCC
seems to address issues of regulatory design and decision-making, it entails
no implicit expression of which law ought to prevail in case of conflict with
trade norms.
Article 3.5 UNFCCC is not of a mandatory character, meaning that Member
States to the Convention may apply climate measures in a manner that renders
adverse economic impacts less likely. Member States are not precluded, how-
ever, from imposing stronger trade-restrictive measures, for example, where
the effectiveness of the climate measure or the climate regime is at stake.
Similarly, Articles 2.3 and 3.14 of the Kyoto Protocol express the general
willingness (‘shall strive to’) to minimize adverse effects of response meas-
ures, including adverse effects of climate change, effects on international trade,
and social, environmental or economic impacts on other Parties, particularly
developing countries. Some scholars have therefore inferred a legal duty to
take all reasonable measures to try to reduce as much as possible violations of
GATT rules,11 although no such mandatory language is employed.
Rather, also in this provision, no priority is given to trade rules. Interna-
tional trade is one of many potentially affected areas and no a priori privilege
is accorded to it. Rather the obligation to minimize the adverse effects of
9
FCCC/SBSTA/2003/INF.7, 4.
10
Yamin and Depledge, 2004, 73. So also Bodansky, 1993, 505: ‘It [the principle concern-
ing the need for a supportive and open international economic system] is neutral in effect,
since it does not define what types of trade measures constitute “arbitrary or unjustifi-
able” discrimination or are a disguised restriction on trade. Thus, it neither condones nor
forbids using trade measures of the sort contained in the Montreal Protocol to enforce the
Convention.’
11
Grimeaud, 2003, 81.
climate change, which refers to the overall duty to prevent dangerous climate
change,12 appears to be of principal importance given the primary reference
to the ‘adverse effects of climate change’ in Article 2.3 KP and the ultimate
objective of the UNFCCC and the Protocol.
Indeed, reference to the adverse impacts of climate change was included
against the opposition of some countries who wished to restrict adverse effects
to negative economic impact resulting from the implementation of response
measures.13 So was, for example, the proposal by Australia that the Protocol
should not derogate from rights and obligations under existing international
agreements, in particular the World Trade Organization (WTO), not included
in the final text.14 Annex I Parties and the majority of developing countries felt
that confining the scope of impacts to economic considerations alone would
not have done justice to the range of impacts at stake.15
The references in the Kyoto Protocol to international trade are general in
character and do not specify trade effects or respective trade norms. Could
they still indicate an implicit savings clause? In my view, Article 2.3 of the
Kyoto Protocol could be understood as a general presumption in the sense that
climate measures are presumed to be designed in a way as to avoid conflict
with trade norms. Trade conflict probability is presumed to have been taken
into account in the design and implementation of the measure and attempts
made to eradicate or minimize the potential for trade conflicts.
Moreover, the implementation of climate change mitigation measures may
need to offset the competitive advantage enjoyed by non-Members to the
climate regime or non-compliers, which is another adverse economic impact
of climate responses. Actions to limit greenhouse gas emissions impose high
costs on a country in the short term while the climate change mitigation benefits
occur globally over the next several centuries. This creates a strong incentive
to be a ‘free rider’, i.e. to avoid costs to limit greenhouse gas emissions while
benefiting from the actions of other countries.16 ‘Free riding’ not only aims at
avoiding climate mitigation costs for those countries not participating in the
global efforts under the climate regime. It also leads to competitive advantages
of those States which do not seek to constrain emissions. Non-internalization
12
13
J. Depledge, Tracing the Origins of the Kyoto Protocol. An Article-By-Article History,
Prepared under Contract to UNFCCC August 1999–2000, 2000, Technical Paper, FCCC/
TP/2000/2, 27 et seq.
14
Consolidated Negotiation Text by the Chairman, 13 October 1997. See also Depledge,
2000, 108.
15
Yamin and Depledge, 2004, 252; Bodansky, 1993, 523 et seq.
16
E. Haites, ‘Conclusion: Mechanisms, Linkages and the Direction of the Future Climate
Regime’ in Yamin (ed.) 2005, 337.
of climate mitigation costs might lead to ‘carbon leakage’, i.e. the creation of
cheaper markets for high emitting industries, so-called ‘pollution havens’.
As a result, Annex I Parties to the Kyoto Protocol may seek to maintain their
international competitiveness relative to non-Annex I Parties or non-Members
without targets. The protection of Annex I Parties should also therefore be
seen as a legitimate interest under Article 2.3 of the Protocol.
Where such conflicts nevertheless occur, they are presumed unavoidable
or necessary for the climate measure to be effective, unless proven otherwise.
Therefore, the argument can be made that Article 2.3 entails an implicit con-
flict clause in the following sense: the Parties in implementing climate policies
and measures under Art. 2 KP shall strive to minimize effects on international
trade, unless such effects are necessary to ensure the effectiveness (including
environmental effectiveness) of the climate measure.
If one does not follow this argument, the relationship between climate
change response measures and trade rules appears at best to be neutral.
This is indicated also by the Preamble to the WTO Agreement which states
– inter alia – that the optimal use of the world’s resources in accordance with
the objective of sustainable development, seeking to protect and preserve the
environment is a requirement (‘while allowing for’) for the conduct of trade
relations and economic endeavours. While the Preamble is not a treaty provi-
sion as such it is part of the systemic context against which a treaty has to be
read and applied.17
Moreover, the WSSD Plan of Implementation18 as well as the Doha
Ministerial Declaration19 include provisions that international trade and en-
vironmental protection should be mutually supportive. The original draft still
entailed the clause ‘while ensuring WTO consistency’, but this formulation
was not included in the final text.20 The acceptance of mutual supportiveness
implies that both the GATT/WTO and the UNFCCC/KP are of equal legal
standing in international law.21
17
As the ICJ noted in the South West African Cases with regard to the UN Charter: ‘The
preambular parts of the United Nations Charter constitute the moral and political basis for
the specific legal provisions thereafter set out.’ Ethiopia v. South Africa (Liberia v. South
Africa) ICJ Reports 1966, 34, para. 50.
18
A/CONF.199/CRP.7, para. 92.
19
WT/MIN(01)/DEC/1, para. 6.
20
‘Draft Plan of Implementation of the World Summit on Sustainable Development’, 26
June 2002, A/CONF.199/L.1.
21
M. Winkler, Der Treibhausgas-Emissionsrechtehandel im Umweltvölkerrecht, Arbeitspa-
piere aus dem Institut für Wirtschaftsrecht, Universität Halle-Wittenberg, Oktober 2002,
18.
While no explicit savings clauses can be found in the WTO treaty or any
of the climate treaties, the implicit references fail to give a clear indication of
priority of either climate or trade norms in case of conflict. At best, they appear
to be neutral. Taking the references in the climate treaties and the Preamble
to the WTO Agreements together, any vague and implicit expression of the
Parties to the Convention and the Kyoto Protocol to give priority to any norms
contained the international trade agreements or to require WTO consistency,
as some scholars seem to read into Article 3.5(2) UNFCCC or Article 2.3
Kyoto Protocol,22 evaporates.
In the absence of conflict clauses, either explicit or implicit, resort to the
principles of lex specialis and lex posterior may have to be taken.
13.3 Lex specialis derogat lege generali
In international law there seems to be support for the principle of according

the more specific treaty provision precedence over a more general one deal-
ing with the same subject matter. The principle is occasionally referred to by
scholars,23 and Courts and Tribunals24 including the WTO Dispute Settlement
Body.25 However, these references are often made in different contexts and
may entail different meanings.26
The general idea behind the principle is that a special provision gives the
‘closest, detailed, precise and strongest expression of State consent’27 and
22
So, for example, de Cendra, 2005, 39: ‘the KP … recognizes the need to apply climate
related measures in a way which is consistent with the WTO. Thus domestic climate
change measures that may have an impact on trade must be designed so as to be compat-
ible with WTO law”.
23
See, for example: Sinclair, 1984, 93; Fitzmaurice, 1957, 236–238; McNair, 1961, 219;
Jennings and Watts, 1992, 1280
24
See, for example, Chorzow Factory, PCIJ (ser. A), Nr. 9, 30; Mavrommatis Palestine
Concessions, PCIJ (ser. A), Nr.2, 30–31; Rights of Passage, 1960, ICJ Rep. 6, cf. Simpson
and Fox, International Arbitration, 1959, 75; Gabčikovo Nagymaros, ICJ Reports 1997,
para. 132: “The relationship [between the Parties] … is governed, above all, by the ap-
plicable rules of the 1977 Treaty as a lex specialis.”.
25
For an overview of the ‘mixed WTO jurisprudence’ on the applicability of lex specialis
principle within WTO law, i.e. where one WTO agreement conflicts with another internal
agreement, see: Lennard, 2002, 70–72.
26
The ILC Study group notes that the principle can be understood in two ways: first, as
demanding the specific rule to be read and understood within the confines of the general
rule or standard, and, second, where both rules point in incompatible directions, instead
of the general rule, the specific one is applied. ILC, Report of the Study Group on Frag-
mentation, A/CN.4/L.682, 4 April 2006, 28 et seq.
27
therefore can be considered to reflect the intention of the parties that this pro-
vision ought to prevail. It is, thus, a consequence of the contractual freedom
of States. However, despite being a valid and commonly used principle, its
function and scope as a principle of conflict resolution still require clarifica-
tion.28 The relationship between climate and WTO norms partly elucidates the
problematic application of the lex specialis principle.
The decisive element is speciality with regard to the same subject mat-
ter. This requirement is particularly difficult. What is regarded as the ‘same
subject matter’ depends on the view of the panel or the Appellate Body. It has
been stated that it is the object of the measure challenged which defines the
subject-matter, rather than looking at the objective and purpose of the entire
treaty. Therefore, the argument is possible that a MEA-based measure dealing
with the protection of human, animal or plant life or health, which falls within
the scope of Article XX(b) GATT, (partly) overlaps ratione materiae with this
GATT provision.29 However, also the opposite view is possible, i.e., that the
subject matter of a MEA dealing with issues of environmental protection is
inherently different from the matter dealt with by a WTO treaty if the trade
treaty deals with the environmental issue in an exception clause.
Still, even if it were possible to define a trade-restrictive climate meas-
ure and the violated trade norm as dealing with the same subject-matter, the
determination of specialty is another issue of contention. It is impossible
to rule precisely on the generality or specialty of the multilateral trading
system.30 Lindroos and Mehling note in this context that the scope of the
trading system has become so broad and general as to cross almost all other
areas of international law, while it still, specifically, relates to matters of free
trade.31 Similarly, the international climate regime cannot be defined only in
the narrow context of an environmental agreement. We have seen above that
28
The ILC addressed this issue within its Study Group on Fragmentation of international
Law. In his report on the function and scope of the lex specialis rule and the question
of self-contained regimes, the Chairman of the group, Martti Koskenniemi, suggested
that while ‘special regimes’ can be created, no such regime exist independently of the
framework of general international law. Various special laws and regimes may support
their own hierarchies and priorities and bind the relevant treaty bodies in the sense of
limiting their jurisdiction. However, the applicable law is not limited and includes general
law and other obligations that stand outside the’ special regime’. M. Koskenniemi, Study
on the Function and Scope of the Lex Specialis Rule and the Question of ‘Self-Contained
Regimes’, UN Doc.ILC(LVI)/SG/FIL/CRD.1/Add.1 (4 May 2004) 37–38.
29
Marceau, 2001, 1090.
30
See on this issue Jackson, ‘Fragmentation and Unification Among International Institu-
tions: The World Trade Organization’ (1999) 31 NYU J Int’l L and P, 824.
31
A. Lindroos, and M. Mehling, ‘Dispelling the Chimera of “Self-Contained Regimes”
International Law and the WTO’ (2005) 16 EJIL 5, 864.
the climate agreements have a breadth and contextual richness that goes far
beyond international environmental law sensu stricto.
Without delving further into the theoretical discussion on the principle of
lex specialis, suffice it here to contend that this principle fails to provide any
satisfactory solution for defining the relationship between climate measures
and WTO rules.32 This becomes particularly apparent when assessing climate
and trade norms from the viewpoint of supporting and promoting sustainable
development. Specificity, in this situation, becomes indeterminable.33
The principle may prove to provide constructive solutions in some circum-
stances, though particular difficulties remain. One concerns the distinction
between ‘general’ and ‘special’ law. It can be based on the substantive cover-
age of a provision (subject matter) or the number of legal subjects to whom it
is directed. Each route leads to different conclusions. The relationship of the
principle to other conflict resolution principles, such as, for instance, the lex
posterior principle, is also unclear. Not admitting of automatic application, its
use, functionality and scope depend rather on subjective and informal views
about its ‘relevance’ and ’importance’.34
13.4 Lex posterior derogat lege priori
Articles 30(3) and 30(4) of the Vienna Convention on the Law of Treaties
provide a further conflict resolution principle that deals with the application
of successive treaties of the same subject matter.35 Again, this principle is
an expression of the contractual freedom of States according to which their
32
See for similar conclusion: M. Rodi, M. Mehling, J. Rechel, and E. Zelljadt, ‘Implement-
ing the Kyoto Protocol in a Multidimensional Legal System: Lessons from a Comparative
Assessment’, 16 YbIEL 2005, (forthcoming in 2007).
33
See also Verheyen, noting that ‘nothing in the negotiation history or the structure of the
existing rules of international law indicates that the rules of the climate regime are lex
specialis vis á vis other rules of international law. This applies both to the level of primary
rules and the level of legal consequences for breach of secondary rules’, 2005, 143.
34
35
Art 30.3.: When all the parties to the earlier treaty are parties also to the later but the earlier
treaty is not terminated or suspended in operation under Art 59, the earlier treaty applies
only to the extent that its provisions are compatible with those of the latter treaty.
Art 30.4.: When the parties to the later treaty do not include all the parties to the
earlier one:
(a) as between States parties to both treaties the same rule applies as in paragraph 3;
(b) as between a State Party to both treaties and a State Party to only one of the treaties,
the treaty to which both States are parties governs their mutual rights and obliga-
tions.
latest expression of State consent ought to prevail. Although Article 30 of the

Vienna Convention gives expression to the relationship between successive
treaty norms, this principle also applies in respect of other norms of interna-
tional law, in particular custom.
Article 30 provides a priority norm for the application of conflicting treaty
provisions: both treaties/treaty rules remain in force, they are not invalidated
or terminated, but priority is given to the application of the latter treaty.
Apart from the element ‘same subject matter’ already discussed above, the
decisive feature of this principle is the time of a treaty’s conclusion or adop-
tion. In the case of the WTO treaty, this is, per today, 15 April 1994. It is, thus,
not the date of entry into force that determines the time element of Article 30.36
Depending on the outcome of the Doha Development Round or the work of
the CTE and the CTD, however, certain changes in the legislative framework
might alter this precise date. Treaties, in particular those that address global
concerns, are constantly expanding by, for example, the addition of successive
protocols or amendments. These treaties, referred to as ‘expanding’, ‘living’
or ‘continuing’ treaties’ pose a significant challenge to the determination of
ratione temporis. In fact, as suggested by Lindroos and Mehling, ‘the con-
tinuous development, constant application, and renewed confirmation of most
international treaties, customary law, and general principles virtually rule out
a determination ratione temporis pursuant to the doctrine of lex posterior con-
tained in Article 30(3) VCLT’.37
Application according to a priority ratione temporis may further lead to a
rather arbitrary constellation which has more to do with accident or luck than
consistency with the latest legislative intent of States. Given the complexity
of international law, negotiators may not always be cognisant of or have ex-
amined pre-existing obligations before consenting to a successive one. Nor is
the time of conclusion absolutely predictable, leading possibly to involuntary
derogations from other rules that happen to be concluded at a prior point of
time. This situation was aptly expressed by Jenks as follows:
[n]or, unhappily, is it always reasonable, in view of the complexity of governmental

organizations in the modern State and the wide variations in the procedures whereby
international obligations are now contracted, to assume, when conflicting networks of
obligations have developed simultaneously or almost simultaneously, that the parties
concerned knew, or must be deemed to have known, when undertaking an obligation
36
According to the statement by the Expert Consultant Group at the Vienna Conference,
Official Records of the Vienna Conference, vol. 2, 253, para. 39. See for a discussion
of the relevance of ‘entry into force’ in the relationship between two parties: Pauwelyn,
2003, 372–375.
37
Lindroos and Mehling, 2005, 864.
of a specialized character, of the existence of a prior obligation of a similar character

which may be inconsistent with it.38
As regards the relationship between the WTO treaty and the climate agree-
ments, the arbitrary situation becomes apparent. The text of the UNFCCC
was adopted in May 1992. According to the lex posterior principle, conflicting
provisions with trade norms might be disapplied due to the conclusion of the
WTO Treaty in April 1994. On the other hand, the Kyoto Protocol, concluded
in 1997, could reverse this situation, leading to the odd situation that while the
Kyoto Protocol’s provisions prevail, the references to the Convention would
be cut off. Further reversals may be caused by future WTO treaties or ad-
ditional protocols to the Convention.
The climate agreements, in particular, exemplify the difficulties posed by
‘living treaties’. Most modern multilateral conventions are of this nature. As
Pauwelyn notes:
They are rules part of a framework or system which is continuously confirmed, imple-
mented, adapted and expanded, for example by means of judicial decisions, interpreta-
tions, new norms or the accession of new state parties (for which not only the consent
of the new Party is required, but also the reciprocal acceptance of all, or a majority of,
existing parties). Such treaty norms were not only consented to when they originally
emerged, but continue to be confirmed, either directly or indirectly, throughout their
existence, in particular when monitored and evolving within the context of an interna-
tional organisation (such as the WTO).’39
In either case, it can be assumed that efforts to establish a hierarchy between

trade norms and climate norms by the application of the traditional conflict-
resolution techniques presented by principles of lex posterior and lex specialis
in international law are bound to fail.
13.5 Conclusions
This analysis leads to the conclusions already rehearsed at the outset, namely
that the common, traditionally accepted and applied, techniques for conflict
avoidance and conflict resolution do not under all circumstances lead to
satisfying results. Both, interpretation and conflict resolution principles, are
marked by several inherent limitations that ultimately prevent the setting aside
38
Jenks, 1953, 444. With regard to procedural matters of treaty making, see: E.W. Vierdag,
‘The Time of “Conclusion” of a Multilateral Treaty’ (1989) 60 BYIL 75, 93.
39
of norms, where a priority needs to be established. Those priority principles

that do exist are limited in their usefulness when the resolution of the kind of
conflict exemplified by climate and trade norms is at stake.
It should be noted that traditional legal techniques fall short of indicating
clearly what should be done in the case of normative conflicts. At the same
time, it does not seem advisable to elaborate some kind of ‘general rule on
treaty priority’. Such a rule would be unable to account for the diversity of
interests and values of the international community.
Instead, the heterogeneity of treaties and the situations that may arise call
for some sort of integration. Harmonizing interpretation is possible where
the respective treaties are part of the same regime, share a similar object and
purpose and ‘carry a parallel “ethos” – e.g. between several environmental or
trade instruments inter se.’40
Harmonization, though, is generally excluded where the conflicting norms
are included in treaties under different regimes, a situation, which prompted
the ILC to make the following observation:
[i]t cannot be assumed a priori that a similar readiness [to envisage a ‘mutually sup-
porting’ role of conflicting treaties] exists as between parties to treaties across regimes,
treaties that seek to achieve physically incompatible solutions, or are inspired by very
different (perhaps opposite) objectives in situations experienced as zero-sum games.
In such cases, at the end of the day, one treaty must be preferred over the other. At that
point, focus shifts from co-ordination to rights and obligations. Even as open-ended or
programmatic provisions are easily amenable to accommodation, this cannot be said
of provisions laying out (subjective) rights or obligation. For giving effect to them,
it remains important that the possibility of recourse to regime-independent dispute-
settlement is provided.41
That notwithstanding, the ILC Study Group offers little guidance on how to
determine which norms should be preferred. It is in this context I put for-
ward the principle of sustainable development as a principle of integration
and suggest ranking prevailing norms according to their support sustainable
development.
40
41
Ibid. (emph. add.)
Chapter 14
Applicability of Non-WTO Law in WTO

Dispute Settlement
Next we shall assess the applicability of the principle of sustainable devel-

opment to WTO dispute settlement. The existence of this principle and its
usefulness in situations of normative conflict is one thing. Its relevance in
trade disputes before the WTO Dispute Settlement System is quite another.
Therefore, the chapter will first deal with the question of general applicability
of non-WTO law to WTO dispute settlement before arguing for the specific
application of the principle of sustainable development in this forum in the
following chapters.
Importantly, in the following elaborations, emphasis will not be placed
on the expansion of the WTO DSB’s jurisdiction.1 Rather, it is argued, the
jurisdiction readily encompasses the legal tool to determine the balance and
eventually priority of conflicting norms and respective interests and values.
14.1 WTO Dispute Settlement and Public International Law
WTO law is part of public international law and not a ‘closed’ or ‘self-con-
tained’ regime in the sense that no other law than the positive law of the WTO
Agreements would apply to the resolution of a dispute about WTO Member’s
rights and obligations. Because WTO law does not exist in ‘clinical isola-
tion’ from international law, non-WTO public international law plays a role in
WTO dispute settlement.2
1
For such a suggestion see A. Guzman, ‘Global Governance and the WTO’ (2004) 45:2
Harvard International Law Journal, 306.
2
See AB in US–Gasoline, 621.
WTO law being a special – not a separate – field of international law

engages with other international law in a complex relationship. This was il-
lustrated by Kuijper:
[t]he GATT, as is the case with all those international organizations which have their
own substantive law and are not merely vehicles for international negotiation and co-
ordination, inevitably is a special branch of international law. As with all such branches
it develops rules which deviate from general international law and which further refine
and adapt rules and principles of international law.3
WTO law with all its special rules and particularities must be considered as
international law applied to economics.4 Other international law continues to
apply to the WTO unless the WTO treaty has explicitly contracted out of it.5
States can ‘contract out’ certain rules of international law in their particular
treaty relations. But their competence to do so is quantitatively limited. They
cannot contract out the entire system of international law. Accordingly, in legal
scholarship, is has been stated that
[i]n so far as the WTO treaty was not created nor exists in a legal vacuum, neither
does its dispute settlement system. That system, providing for the judicial settlement
of disputes under certain rules of international law, is merely a tool or an instrument
to enforce WTO covered agreements as they were created and necessarily continue to
exist in the wider corpus of international law.6
Presumption against conflict implies that general international law applies as

long as not expressed otherwise. As a starting point, a treaty therefore has to
be considered within the system of international law. The application of gen-
eral law shall, thus, not be inferred from general rules that have been included
or excluded in the treaty. Such presumption also stands in the way of assuming
that an explicit mentioning of a particular international law rule excludes all
the other (non-mentioned) rules.
By arguing that WTO law does not exist outside of or separate from interna-
tional law, the role of public international law in the WTO becomes apparent.
The crucial question with regard to the application of general law in situations
of conflict of WTO and other norms concerns therefore ascertaining the extent
to which general public international law is relevant in WTO dispute settle-
3
Kuijper, 1994, 228. See also, P. Mavriodis, ‘Remedies in the WTO: Between a Rock and
a Hard Place’ (2002) 11 EJIL, 762.
4
So P. Weil, quote in P.M. Dupuy, ‘Où en est le droit international de l’environnement à la
fin du siècle?’ (1997) 101.4 RGDIP, 873–901, 899.
5
See Pauwelyn, 2001, 577.
6
Pauwelyn, 2003, 460–461.
Chapter 14 – Applicability of Non-WTO Law in WTO Dispute Settlement 307
ment and is able to provide a solution. This question relates to the sources of
law in the WTO and the competences of the WTO Dispute Settlement Body.
14.2 Jurisdiction and the Applicable Law in WTO Dispute Settlement
According to Article 1.1 of the Understanding on Rules and Procedures Gov-

erning the Settlement of Disputes (DSU)7 and Appendix I to the DSU the
substantial jurisdiction of the WTO panels and the Appellate Body is limited
to claims under the WTO covered agreements.8 Article 1.1 DSU stipulates
that any dispute arising out of any of the multilateral WTO agreements may
be resolved according to the rules and procedures of the DSU. The basis or
cause of action of a WTO dispute must, therefore, be found in the ‘covered
agreements’.
This is confirmed by Article 3.2 DSU which states that the DSU mecha-
nism ‘serves to preserve the rights and obligations of the Members under the
covered agreements’.
Furthermore, Article 7.1 enjoins WTO panels ‘[t]o examine, in the light
of the relevant provisions in (the respective agreement(s) cited by the parties
to the dispute), the matter referred to the DSB…and to make such findings as
will assist the DSB in making the recommendations or in giving the rulings
provided for in that or those agreement(s)’ and to ‘address the relevant provi-
sions in any covered agreement‘ (DSU Article 7.2).
Finally, Article 11 instructs panels to ‘make an objective assessment of
the facts of the case and the applicability of and conformity with the relevant
covered agreements, and make such other findings as will assist the DSB in
making the recommendations or in giving the rulings provided for in the cov-
ered agreements.’
Non-WTO rules, such as general public international law rules, are there-
fore generally excluded as a valid legal basis for a claim and can not be en-
forced. Does this imply that non-WTO law or general public international
law do not play any role in the settlement of a dispute where WTO claims are
7
Art 1.1 of the DSU provides: The rules and procedures of the Understanding shall apply
to disputes brought pursuant to the consultation and dispute settlement provisions of the
agreements listed in Appendix 1 to this Understanding (referred to in this Understanding
as the ‘covered agreements’). Of the roughly 70 WTO treaties, only the Marrakech Agree-
ment’s results are covered.
8
According to DSU Art 23.1 (a) to (c) there are three kinds of complaints: (a) violation
complaints – by far the most frequent, (b) non-violation complaints – challenging of a
measure that does not conflict with GATT 1994, but nevertheless results in ‘nullification
or impairment of a benefit’, and (c) ‘situation complaints’.
concerned? This is certainly not the case. However, the exact role of public
international law and the extent to which it is relevant to WTO dispute set-
tlement remain interesting but controversial issues.9 Despite the controversy,
there are convincing reasons for a decisive role of public international law
norms, e.g. general principles, in the course of WTO dispute settlement.
The extent of a panel’s jurisdiction is dependent on the terms of refer-
ence, setting out both the subject matter of the dispute (ratione materiae) and
the parties to the dispute (ratione personae).10 Under the standard terms of
reference, contained in DSU Article 7, a panel is restricted to addressing only
those claims adequately specified in a Member’s request for establishment of
a panel.11 The complainant must, therefore, set out all of the claims it wants
the panel to address. While the panel – and in case of an appeal, the Appellate
Body – is precluded from ruling on different or subsequent claims,12 there
is no limitation on the ‘legal arguments’ advanced to support or reject the
original claims. In the course of a dispute, parties usually develop extensive
legal argumentation. A panel or the Appellate Body, however, is generally free
to accept or reject such arguments and has the discretion to develop its own
autonomous legal reasoning in support of its findings and conclusions.13
This freedom in legal reasoning is based on the competence of the bodies as
quasi-judicial organs, authorized to consider all aspects of a dispute, including
those legal issues not strictly arising under a covered agreement.14 The standard
of review provides this competence by granting panels the authority ‘to make
such other findings as will assist the DSB in making the recommendations or
in giving the rulings provided for in the covered agreements’. Such a view
has important implications for the relevance of public international law in the
course of WTO dispute settlement. The distinction between ‘a claim’ and ‘a
legal argument’ is a consequence of the distinction between the jurisdiction of
the WTO legal organs and the law applicable in their procedures.
9
Matsushita, Schoenbaum and Mavroidis note: “An interesting and unresolved issue is
whether WTO panels and the Appellate Body have jurisdiction to decide question of
public or private international law (or even Member State law) when such issues arise in
connection with a controversy under a covered agreement.”, 2003.
10
See generally: B. Jansen, ‘Scope of Jurisdiction in GATT/WTO Dispute Settlement: Con-
sultations and Panel Requests’ in F. Weiss, Improving WTO Dispute Settlement Proce-
dures: Issues and Lessons from the Practice of Other International Courts and Tribunals,
2001, 45.
11
Palmeter and Mavroidis, Dispute Settlement in the WTO, 2004, 19.
12
WTO Secretariat, A Handbook on the WTO Dispute Settlement System, 2004, 101–102.
13
AB in EC–Hormones, para. 156; AB in Korea–Dairy, para. 139; AB in US–Certain Prod-
ucts, para. 123. For further references see, WTO Secretariat, 2004, 102.
14
See Matsushita, Schoenbaum and Mavroidis, 2003, 24.
A clear distinction needs thus to be made between the jurisdiction of a panel

or the Appellate Body and the legal arguments it can develop to support its
conclusions. This distinction relates to the issue of applicable law in a dispute
settlement process.15 While the jurisdiction of the WTO dispute settlement
body is limited to claims arising out of the WTO covered agreements; this
does not imply a limitation of the scope of the law applicable in interpretation
and conflict resolution.16
While claims brought before a WTO panel thus ought to be based on
rules of the ‘covered agreements’, the question remains whether independent
defences for the claimed breaches of WTO laws can be based on rules that
are not included in the covered agreements. This relates to the matter of the
applicable law. Once it has been decided that a WTO panel has jurisdiction
to hear a case, the law to apply for resolving the dispute must be identified.
Here, the law on which a claim can be based can differ from the law that can
be invoked by the defending Party.17
WTO panels are permitted to take account of WTO law-independent de-
fences. In this context, strong arguments have been made for the applicability
of non-WTO law in WTO disputes.18 As one author states,
despite this obligation to address and possibly apply these [the rules referred to in Art
7.2 DSU] WTO rules, nothing in the DSU or any other WTO rule precludes panels
15
This distinction is commonly accepted in legal scholarship between the jurisdiction of
a court or tribunal and the applicable sources of law before it. See for example ITLOS
in the MOX Plant case, Ireland vs. United Kingdom, Order of June 24 2003 where “The
Tribunal agrees … that there is a cardinal distinction between the scope of its jurisdiction
…, on the one hand, and the law to be applied by the Tribunal, on the other.” 6, para.
19. Another example can be found in the Lockerbie cases where the consideration of
Libyan claims under the Montreal Convention fell under the ‘jurisdiction’ of the ICJ.
The court however continued to examine other (applicable) international law, e.g. UN
Security Council resolution 748 invoked as a defence. See Questions of Interpretation
and Application of the 1971 Montreal Convention Arising from the Aerial Incident at
Lockerbie (Libyan Arab Jamahiriya v. US and UK), Provisional Measures, ICJ Reports
1992, para. 42.
16
Bartels, 2001, 501–502; Palmeter and Mavroidis, 1998, 99; Pauwelyn, 2001, 554/566;
Marceau, 2002, 757–779.
17
The WTO panel is limited in its examination of the case to the claims invoked by the claim-
ant and the defenses invoked by the defending Party (non ultra petita). Counter-claims
are not permitted. If the defending Party wishes to respond with a counter-argument to the
dispute, it has to launch its own claim. Only matters that a panel must examine ex officio
(e.g. its own jurisdiction) need not to be brought before it.
18
See Pauwelyn, 2001, 559–565; and 2003, 440–478.
from addressing and, as the case may be, applying other rules of international law so
as to decide WTO claims before them.19
The relevance of wider international law has also been specified by a recent
WTO panel as follows:
We take note that Article 3(2) of the DSU requires that we seek within the context of a
particular dispute the existing provisions of the WTO agreements in accordance with
customary international law rules of interpretation of public international law. How-
ever, the relationship of the WTO agreements to customary international law is broader
than this. Customary international law applies generally to the economic relations
between WTO members. Such international law applies to the extent that the WTO
treaty agreements do not ‘contract out’ from it. To put it another way, to the extent that
there is no conflict or inconsistency, or an expression in a covered WTO agreement
that applies differently, we are of the view that the customary rules of international law
apply to the WTO treaties and to the process of treaty formation under the WTO.20
The WTO agreement, Pauwelyn argues, is by definition a treaty of public

international law and can therefore not be applied in isolation from other rules
of international law.21
By accepting the applicability of other public international law, the scope
of legitimate defences for non-compliance with WTO law is considerably
widened. Panels may be asked not only to interpret WTO in the light of these
norms, or to fill the (mostly procedural) gaps, but to modify or even to sub-
stantially overrule and thus dis-apply the WTO provision.
In concordance with the view that the treaties of the WTO are ‘automati-
cally born into’ the system of public international law, it remains to examine
which international legal norms retain applicability in the context of WTO
dispute settlement.
14.3 Sources of non-WTO Law in WTO Dispute Settlement
The fundamental source of law in the WTO is the texts of the relevant agree-
ments themselves. In addition, all sources listed in Article 38 I of the Statute
of the International Court of Justice are potential sources of law applicable in
WTO dispute settlement. In this context, Palmeter and Mavroidis list
19
Pauwelyn, 2001, 561. Supporting his view: L. Bartels, Applicable Law in the WTO Dis-
pute Settlement Proceedings, 2001; Palmeter and Mavroidis, ‘The WTO Legal System:
Sources of Law’ (1998) 92 AJIL, 398.
20
Panel in Korea–Government Procurement, para. 7.96.
21
Pauwelyn, 2003, 1001; also Bartels, 2001; Palmeter and Mavroidis, 1998, 399.
prior practice under GATT, including reports of GATT dispute settlement panels, WTO
practice, particularly reports of dispute settlement panels and the Appellate Body,
custom, the teachings of highly qualified publicists, general principles of law; and
other international agreements all contribute to the rapidly growing and increasingly
important body of law known as ‘WTO law.22
When deciding on the applicability of non-WTO law in a WTO dispute, sev-

eral distinctions have to be made. Non-WTO can consist of specific treaty
provisions in non-WTO treaties, e.g., MEAs or human rights treaties. Non-
WTO can also be found in general international law, e.g. general principles
and customary law. The question of applicability has to be considered in the
light of the ‘legal fold’ to which the non-WTO norm belongs.
14.3.1 Customary Law
The inclusion of general public international law, namely the application by

WTO panels of rules of general customary law, may cause legal concerns.
One area, as discussed earlier, where the application of customary rules has
been accepted, is in the process of treaty interpretation according to Article
31.3(c). Apart from the example of interpretative rules, the applicability of
customary principles is more difficult. Given the more abstract nature of cus-
tomary rules, panels have to make an own assessment as to the emergence of a
(new) rule of custom and its particular content in a dispute over WTO law.
The Appellate Body has in general been very reluctant in deciding on
whether WTO treaty provisions have been altered by an allegedly supervening
customary rule. In EC–Hormones, for example, the Appellate Body was ex-
tremely hesitant to considering whether, as the EC claimed, the precautionary
principle as a rule of general or customary international law ought to supple-
ment the provisions of the SPS Agreement.23 The opinion of the Appellate Body
does not reveal what the consequences would have been had the precautionary
principle been accepted as part of customary international environmental law
or general customary law.24 In similar terms, the panel in EC–Biotech found
that the ‘legal status of the precautionary principle remains unsettled’ and that
22
Palmeter and Mavroidis, 1998, 399.
23
AB in EC–Hormones, para. 123: ”The precautionary principle is regarded by some as
having crystallized into a general principle of customary international environmental law.
Whether it has been widely accepted by Members as a principle of general or customary
international law appears less that clear. We consider, however, that it is unnecessary,
and probably imprudent, for the Appellate Body in this appeal to take a position on this
important, but abstract, question.”
24
See Matsushita, Schoenbaum and Mavroidis, 2003, 64–65.
it ‘need not take a position on whether or not the precautionary principle is a

recognized principle of general or customary international law.’25 Despite the
rather debatable logic of this finding, the question still remains as to what the
effect the precautionary principle would have had, had it been recognized as
custom. The panel agreed that it would become relevant under Article 31.3(c)
VCLT. Still, as general international law, it could also be directly applicable
with the effect of modifying or displacing opposing WTO rules.
If it could be established by the defendant invoking, for example, that the
principle is indeed part of customary international law, a WTO panel would
have to take this principle in account even if it were incompatible with WTO
provisions. If it cannot be proven (by the complainant) that the treaty provi-
sion continues to apply as lex specialis, a WTO panel would then have to
acknowledge that the respective WTO agreement had been revised by subse-
quent custom and accept this principle as a valid justification for the alleged
breach of WTO law. One would expected, though, panels to show in any case
extreme caution before concluding that a new customary rule or a general
principle had emerged and that this rule or principle rule would override prior
WTO law.26
In sum, defences based on customary law can only be successful if the
strict rules for the emergence of customary norms are met. This makes the
prospect of new custom overruling explicit WTO treaty provisions extremely
unlikely, if not exactly impossible.
14.3.2 General Principles of Law
While the role of customary rules in a WTO dispute settlement context might
be limited, general principles of law exert a more direct influence on the out-
come of a dispute. On several occasions, GATT and WTO panels and the
WTO Appellate Body have invoked general principles of law to support their
reasoning, though practice is not consistent.
In United States–Measures Affecting Imports of Softwood Lumber from
Canada, the panel invoked the principle of estoppel27 – without actually using
25
Panel in EC–Biotech Products, para. 7.89.
26
See Pauwelyn, 2003, 131–143.
27
Estoppel is a legal principle which precludes someone from denying the truth of a fact
which has been determined in an official proceeding or by an authoritative body. As “a
principle of justice and of equity it arises when ‘a man, by his words or conduct, has led
another to believe in a particular state of affairs, he will not be allowed to go back on it
when it would be unjust or inequitable for him to do so.’ (Moorgate Mercantile v Twitch-
the term – in a proceeding involving subsidies and countervailing measures.28

The principle was implicitly invoked also on other occasions, for example,
in not allowing a claim the claimant had previously explicitly abandoned in
a written statement29 or rejecting the establishment of a panel because of the
untimely evocation of an issue.30 The Panel in Argentina–Poultry quoted a
non-adopted GATT-panel statement that estoppel could only ‘result from the
express, or in exceptional cases, implied consent of the complaining parties’
when it admitted an antidumping claim by Brazil. Argentina had argued that a
previous proceeding before a Mercosur Ad Hoc tribunal had estopped Brazil
from pursuing a claim in the WTO.31 However, the Appellate Body has yet to
apply the principle explicitly. Moreover, in EC–Export Subsidies on Sugar,
the Appellate Body plainly rejected the applicability of the principle in the
settlement of a WTO dispute.32
On other occasions, however, the applicability of general principles was
accepted, particularly procedural principles and some principles of treaty
interpretation that do not have the character of customary law. Examples of
the latter are the principles of effectiveness,33 of in dubio mitius,34 and of le-
gitimate expectations, legal security and predictability.35
General principles of international law are also commonly referred to in
order fill procedural gaps. The WTO Agreement does not contain any provi-
ings [1976] 1 QB 225, CA at 241). The principle responds to the doctrine of venire contra
factum proprium in legal systems based on civil law.
28
Panel in United States-Softwood Lumber, paras. 308–325
29
Panel in US–Steel Plate, 7.29.
30
AB in US–Meat, para. 5.32.
31
Panel in Argentina–Poultry, 7.17. For more examples on the use of the principle of estop-
pel in WTO dispute settlement see Palmeter and Mavroidis, 2004, 43–45.
32
AB in EC–Sugar, stating further: “Moreover, the notion of estoppel, as advanced by the
European Communities, would appear to inhibit the ability of WTO members to initiate
a WTO dispute settlement proceeding. We see little in the DSU that explicitly limits the
rights of WTO Members to bring an action”, para. 12.
33
AB in Japan–Taxes with reference to the 1966 Yearbook of the International Law Com-
mission, Vol. II, 219. The Appellate Body in US–Gasoline held that the interpretation of
a provision cannot result in a reading that reduces whole clauses or paragraphs of a treaty
to redundancy or inutility, as all terms of the treaty must be given meaning and effect. sec
IV, 22.
34
In EC–Hormones, the Appellate Body interpreted the requirement of Art 3.1 SPS that
measures must be ‘based on” international standards as not being a current binding
requirement but as a goal to be realized in future. By applying the principle in dubio
mitius, the Appellate Body rejected the interpretation of Article 3.1 that would transform
international standards into binding norms.
35
Panel in US–Underwear, 7.20 and GATT Panel in US–Superfund, where it was noted that
the multilateral trading system contains rules not only to protect current trade but also to
create predictability needed to plan future trade. See also Petersmann, 1997, 95.
sions on issues such non-retroactivity of treaties,36 burden of proof, standing

and representation before panels, due process, abuse of rights, and error in
treaty formation.37
Finally, the application of general principles of law seems to be less prob-
lematic – if at all – in cases where principles are referred to in WTO texts.38
One example of these ‘manifested’ principles is that of ‘good faith’, mentioned
in Articles 3.10 and 4.3 of the DSU and Articles 24.4, 24.5, 48.2 and 58 of the
TRIPS. The Appellate Body has considered good faith to be ‘at once a general
principle of law and a principle of general international law’.39 The former ref-
erence clearly indicates a link to Article 38 of the Statute of the International
Court of Justice, listing such principles as a source of international law. It is,
however, not entirely clear to what the Appellate Body intended to refer when
it assessed the second term. Probably it was just meant to be another expres-
sion of the understanding of the WTO as no self-contained regime but an open
system within the international legal order.40
The Appellate Body has recognized ‘good faith’ as an ‘organic’41 and
‘pervasive’ general principle that underlies all treaties’.42 Now, the principle
of ‘good faith’ plays numerous roles in the context of WTO law. There is
a general presumption of ‘good faith’ by panels and Appellate Body of the
defending member’s conformity of action with its obligations under the agree-
ments unless there is ‘clear evidence to the contrary’.43 ‘Good faith’ has also
been accepted as a general principle of treaty interpretation, whether via the
36
AB in Brazil–Coconut.
37
For an overview of relevant case law see Cameron and Gray, 2001, 248–298 and
38
The explicit confirmation of certain general principles in WTO agreements does not
implicitly mean to contract out all other general international law. In order for general
international law principles not to apply to any WTO treaty, that treaty needs to explicitly
contract them out. Consequently, any explicit confirmation of general rules and principles
is only declaratory. As the Appellate Body noted in US–Hot Rolled Steel: ‘the rules of
treaty interpretation in Articles 31 and 32 of the Vienna Convention apply to any treaty,
in any field of public international law’. AB in US–Hot-Rolled Steel, 212. For a different
view see Klabbers, 2005, 412; Trachtman, 1999, 324.
39
AB in US–FSC, para. 166.
40
See H.E. Zeitler, ‘Good Faith in the WTO Jurisprudence – Necessary Balancing Element
or an Open Door to Judicial Activism?’ (2005) 8:3 Journal of International Economic
Law, 724.
41
AB in US–Hot-Rolled Steel, para. 101.
42
AB in US–Cotton Yarn, para. 81.
43
Panel in Argentina–Footwear, para. 6.14. See also AB in EC–Sardines, para. 278; Panel
in Argentina–Peaches, para. 7.124; and Panel in Argentina–Footwear, para. 6.14. This
presumption was also applied by GATT panels, See, e.g., Arbitrator Award, Canada/
European Communities – Article XXVIII Rights, DS12/R – 37S/80, 26 October 1990, 4.
reference in Article 3.2 DSU leading to Article 31 of the Vienna Convention

or as a customary interpretative principle.44 The requirement of good faith in
interpretation has been called a ‘core principle of interpretation of the WTO
Agreements’45 and has been used by the panels and the Appellate Body ac-
cordingly.46
‘Good faith’ has also been used as a principle guiding the application
of substantive WTO law. Partly by referring to Article 26 of the Vienna
Convention,47 partly to good faith as a general principle of international law,48
the principle of good faith has been applied to stress the obligation of States
to refrain from acts which would defeat the object and purpose of a treaty
to which they are Members.49 This view, arguably, could work both ways in
the situation of a normative conflict with another international treaty as the
principle could be invoked both in support of a claim of WTO violation and as
an argument for the defence.
14.4 In Sum
It can therefore be summarized that general international law remains relevant

and applicable in a WTO dispute settlement context. The applicability of gen-
eral principles of law is both widely accepted and practised. This practice can
be seen as an expression of an understanding of the WTO as an open system
within the international legal order rather than a self-contained regime. While
claims of WTO violation cannot be based solely on a general principle of law,
justifying a violation on the basis of such a principle, however, is possible.
Panels and the Appellate Body are by no means precluded from taking ac-
count of or applying rules and principles of general international law in order
to decide WTO claims brought before them.
In practice, panels and the Appellate Body have frequently referred and
applied other rules of international law in their examination of WTO claims.
This has only partly been done in the course of interpretation. In addition,
and more importantly, panels and the Appellate Body have frequently applied
44
See Lennard, 2002, 55.
45
See, e.g., GATT Panel Report, US–Hot-Rolled, SCM/185, 15 November 1994, para. 368;
GATT Panel Report, US–Tuna, DS29/R, 16 June 1994, para. 5.18.; GATT Panel Report,
United States–Anti-Dumping Duties on Imports of Stainless Steel Plates from Sweden,
ADP 117, 24 February 1994, para. 235.
46
See, e.g., Panel in US–Underwear, para. 7.20, and Panel in US–Section 301, para. 7.22.
47
See, e.g., Panel in US–Shrimp, para. 7.41; Panel in India–Patents, fn 135 to para. 7.69.
48
See, e.g., AB in US–Hot-Rolled Steel, para. 101.
49
Panel in US–Shrimp, para. 7.41; see also Panel in US–Byrd Amendment, para. 7.64.
other rules and principles of international law independently of giving mean-

ing to specific terms given in a WTO treaty norm.50
50
See for a sophisticated systematization of these examples, Pauwelyn, 2003, 207–212 and
470–472.
Chapter 15
Applicability of the Principle of Sustainable

Development in WTO Dispute Settlement
After seeing how general international law continues to apply to WTO dis-
putes, the next issue to address is whether the principle of sustainable develop-
ment can be applied in situations where a conflict between a WTO treaty and
another international agreement lies at the heart of a trade dispute.
In part II we could see that interpretation in the light of the principle of sus-
tainable development is necessary and possible in order to adopt the meaning
of certain WTO terms to more recent developments within the international
legal order. Thus, the application of the principle of sustainable development
in the course of interpretation is not a matter of debate. Still, it remains to
be clarified whether sustainable development as a legal principle can also
be applied to issues of substance outside the scope of interpretation – as an
independent principle of integration of economic interests, social justice and
environmental protection – with regard to the present and the future – within
the limitations posed by certain fundamental ecological functions.
The applicability of the principle of sustainable development before a
WTO panel or the Appellate Body can be reasoned on various grounds.
15.1 Applicability as Part of WTO Law
First and foremost, the principle is part of WTO law itself. As we explored
in part I, its inclusion within the Preamble of the WTO Agreement means
it is integral to the ‘covered agreements’. The reference to the preambular
manifestation of sustainable development was enough for the Appellate Body
in US–Shrimps to use the principle – referred to as an ‘objective’ – as a means
of importing contemporary concerns of the community of nations on the pro-
tection and conservation of the environment into the interpretation of the term
‘natural resources’ in Article XX(g) GATT.1 This application of the principle

has the consequence that it no longer can be set aside as a ‘nebulous goal’.2
Listed in the Preamble it must be put into legal practice by requiring to ‘add
colour, texture and shading‘ to the interpretation of the agreements annexed to
the Agreement Establishing the WTO. This role of the Preamble in interpreta-
tion was confirmed by Judge Tanaka as follows:
The preambular parts [of the UN Charter] constitute the moral and political basis for
the specific legal provisions thereafter set out.3
The inclusion of sustainable development in the preamble of the WTO Agree-

ment, however, is not limited to having legal effect in interpretative processes
only. The application of the principle is possible independent of giving mean-
ing to WTO terms.
In particular, as a conflict principle its application is providing a welcome,
effective and practical solution to the so far unsettled issue of the relationship
between the WTO treaties and MEAs.4
15.2 Applicability as a General Principle of Law
Second, as a general principle of law, the applicability of sustainable develop-

ment is generally independent of its reference in the preamble in the WTO
Agreement, though such reference eases the argumentative requirements. If
1
2
So Brownlie in an earlier edition of ‘Principles of Public International Law’, though in
the latest (6th) edition, 2003, he included a section on sustainable development as an
emergent legal principle, 276–277.
3
Dissenting Opinion by Judge Tanaka, in South West African Cases, ICJ Report 1966,
298.
4
See also T. Broude, ‘Elements of the Principle of Integration in WTO Jurisprudence:
Another Look at the Shrimp Case. A Comment prepared for the International Law As-
sociation’s Committee on the Law of Sustainable Development’ in International Law of
Sustainable Development, ILA, 2006 Toronto Conference, Annex II, 25–31. Broude com-
ments: ‘In most of its aspects, the Shrimp I Report and its follow–up in Shrimp II can be
read as stimulating, pragmatic applications of the Principle of Integration in the context of
trade.’(29). He notes further ‘the Principle of Integration may be both a rule of interpreta-
tion and a more general rule of implementation at the same time. Moreover, …, additional
thought needs to be given to the question of whether the Principle of Integration qualifies
as a rule of conflict – determining which norm prevails in case of conflict – or a rule
of incorporation – injecting environmental protection as an interpretative consideration
even when it is not expressly incorporated.(30).
Chapter 15 – Applicability of the Principle of Sustainable Development 319
the principle of integration had not been ‘written in’ to WTO law, it can defi-
nitely be ‘read in’.5
In this context Broude marks succinctly
In other words, it [the Principle of Integration] may not need to be expressly incorpo-
rated into a given body of international law to be valid, just as other second/order rules,
such as rules of interpretation or responsibility, need not be specifically incorporated,
given their general and persuasive nature.6
International law remains applicable as long as WTO law has not overtly
contracted out the rules or principles that shall not apply. In the case of sus-
tainable development, the WTO agreement not only did not contract it out, it
positively and expressly contracted it in. This alone is a strong argument for
its applicability.
15.3. Mandatory or Permissive Application?
Once the applicability of the principle of sustainable development as a prin-

ciple of both, interpretation – injecting the protection of ecological functions
as an interpretative consideration even where it is not expressly incorporated
– and of conflict resolution – determining which norm prevails in case of con-
flict – has been established, it is necessary to consider whether the principle
is of mandatory or permissive nature. In other words, does the principle of
sustainable development require the integration of various components within
certain ecological limitations or does it merely allow for it?
Various arguments speak for its mandatory character.
First, as a general principle, it is generally binding on all States, whether in-
corporated into any particular treaty language or not. However, in those cases,
where sustainable development is expressed in an international treaty, specific
commitment has been made to its requirements. The particular reference to
sustainable development, e.g., in the preamble to the WTO Agreement, indi-
cates the acceptance of its legal mandate. The practice of the WTO Appellate
Body in US–Shrimp indeed supports the view that integration of ecological
concerns into other disciplines is not merely permitted, rather it is required.7
Second, as a general principle, even in the absence of explicit mentioning
in treaty law, it exerts a strong normative force. Whether it amounts to a juridi-
cal imperative in international law is still contentious. However, given the in-
5
Broude, 2006, 29.
6
Ibid., 30.
7
Ibid., 30.
creasing normative density in international law, the importance of sustainable

development in reconciling the conflicting demands of – at least – development
and the environment can scarcely be overstated.8 The mandatory character in
thus closely linked to the necessity of employing such a principle. Because
no adequate alternatives exist, the principle is the only means to approach the
situation of normative conflict between diverse interests. This necessity has
already been forcefully expressed in part I.9
In this context, Lowe notes:
[i]f, for example, sustainable development is declared to be the reconciling principle

that establishes the relationship between development and environment, it is highly
unlikely that any other principle will be employed to effect that reconciliation, at least
until sustainable development is displaced. The concept effectively ‘occupies the
field’, to borrow from European Community law. Further, any shifts in emphasis that
may be necessitated by the accidents of case law will be tested for their coherence
with sustainable development. In these senses, the principle exercises an immense
gravitational pull.’10
In WTO law, however, both, the inclusion of sustainable development in the

preamble of the WTO Agreement, the practice of the dispute settlement sys-
tem, and the status as a legal principle together could sum up to the conclusion
of the principle’s mandatory character.
While such a conclusion might be somewhat premature, it could, in ef-
fect, mean that sustainable development might be developing into a binding
principle in dispute settlement procedures of the panels and the Appellate
Body. In case of normative conflict, it would then not lie within the judiciary
discretion of the panels and the Appellate Body to apply the principle. They
would, by law, be required to apply the principle of sustainable development
8
Lowe, 2000, 217
9
In this sense, Judge Weeramantry argued: ‘The problem of steering a course between the
needs of development and the necessity to protect the environment is a problem alike of
the law of development and the law of the environment. Both these vital and developing
areas of law require, and indeed assume, the existence of a principle which harmonizes
both needs. To hold that no such principle exists in the law is to hold that current law
recognizes the juxtaposition of two principles which could operate in collision with each
other, without providing the necessary basis of a principle for their reconciliation. The
untenability of the supposition that the law sanctions such a state of normative anarchy
suffices to condemn a hypothesis that leads to so unsatisfactory a result. Each principle
cannot be given free reign, regardless of the other. The law necessarily contains within
itself the principle of reconciliation. That principle is the principle of sustainable develop-
ment.’; Gabčikovo Nagymaros, ICJ Reports 1997, 90.
10
Lowe, 2000, 217.
as a normative principle in order to examine WTO claims and to decide the

case before them.
15.4 Dispute Settlement Authority and ‘Judicial Activism’
The application of sustainable development as a legal principle of integra-

tion points to a fundamental dilemma in international trade law and prob-
ably other economic law as well. On the one hand, WTO rule-based tests
of trade-discrimination are seen as inefficient in fighting protectionism while
allowing for appropriate exceptions. Too many protectionist measures escape
appropriate judicial consideration and too many legitimate justifications are
overlooked.11 On the other hand, a balance-test, such as the one based on the
principle of sustainable development, would make the panels or the Appellate
Body largely responsible for defining the appropriate (sustainable) policy.12
Does such judicial behaviour exceed the authority of the panels or the Appel-
late Body?
Still, resolving a dispute by applying and interpreting WTO treaty and other
norms is a highly political act, closely watched from diverse political wings.
For every rule or principle applied, it has been warned, there will always be a
counter-rule or opposing principle.13 Thus, the interpretation and application
of norms will always have to be considered within the political context they
are carried out. As Klabbers notes ‘Whoever controls the interpretation of
a treaty controls the scope of rights and obligations. And control over the
process often presupposes control over the methods to be used: the rules of
interpretation’14 (and application, one might add).
The reliance of the judicial process on the political rationale underlying the
legal reasoning may indeed be what renders quasi-judicial organs capable of
breaking new ground. Political priorities shift over time and orient themselves
toward new developments in the international community. In 1947, when the
GATT was drafted, sustainable development arguably played no role whatso-
ever in international politics. In 1993, when negotiating the WTO Agreement,
the situation was very different. Attention was turning towards sustainable
development as an objective for international law and later WTO law. Given
11
See, for example, M. Poiares Maduro, We, the Court: the European Court of Justice and
the European Economic Constitution, 1997, 53.
12
Ibid., 59. See also L. Bartels, ‘The Separation of Powers in the WTO: How to Avoid
Judicial Activism’ (2004) 54 ICLQ, 861.
13
See Koskenniemi, From Apology to Utopia, 1989, and McNair, 1961, 365
14
Klabbers, 2005, 427
the emergence of this concept as a principle of international law during the last
decade, a process we examined above, it plays an even stronger role today. In
the absence of a clear political decision on this (stronger) role, judicial meth-
ods offer a means of acknowledging these developments and building them
into the WTO system. In other words, the political nature of dispute settlement
and judicial authority are securities against petrifaction of WTO law.
This situation is quite different from the charge that the quasi-judicial or-
gans exceed their authority by engaging in ‘expansive judicial lawmaking’.15
It is a necessity for the development and flexibility of the WTO to adapt to
contemporary needs, if only (or mainly) via judicial decisions.
But what would the consequences be? This question raises two issues: the
precedental significance of such application and the practical implications of
the application of the principle. While the former has already been briefly
elaborated, the latter will be subject to closer examination in chapter 16.
15.5 In Sum
It can be stated that the principle of sustainable development is applicable to

settlement of disputes over WTO claims.
Because the relationship between the WTO and other non-WTO treaties,
in particular MEAs, has remained subject to political debate; it is especially
in this context the principle of sustainable development could significantly
advance the issue’s resolution. Its integrative character, combining the major
objectives of international agreements, i.e. economic freedom, human free-
dom and welfare and environmental protection, within the limitations set by
the protection of basic ecological conditions, allows conflicting interests and
respective norms to be accommodated in a way that ensures a ‘sustainable’
result.
A submission from the EC regarding the relationship of WTO rules and
MEAs points in the same direction. The EC argued that:
MEAs and WTO are equal bodies of law. WTO rules should not interpreted in ‘clinical
isolation’ from other bodies of international law and without considering other com-
plementary bodies of international law, including MEAs. In those rare cases, in which
interpretation is not sufficient to avoid a potential conflict, there is a need to determine
– under rules of public international law – which is the applicable body of law.16
15
See Bartels, 2004, 894.
16
Multilateral Environmental Agreements (MEAs): Implementation of the Doha Develop-
ment Agenda, Submission by the European Communities, para. 31(i), 21 March 2002,
(TN/TE/W/1).
The application of the principle of sustainable development will eventually

determine the applicable law, according to which law best serves the princi-
ple’s objective. While a complaining Party cannot see its rights diminished
by a defence informed by a rule by which it is not bound, e.g. non-WTO
treaties to which the complainant is not a Party, its rights can be defined by
reference to the general principle of sustainable development which applies to
it independent of any treaty membership.
The principle is a ‘pointer’ of ‘sustainable law’. Both the violated WTO
norm and the conflicting non-WTO (treaty) provision need to be ‘calibrated’
against the principle of sustainable development. That means that not all
non-WTO law, e.g. MEAs, equally and non-critically could be a successful
defence against a claim of WTO incompatibililty, but only those norms that
pass the principled requirements of sustainable development. Non-WTO and
WTO norms will necessarily have to be scrutinized to ascertain their ‘sustain-
able integrity’. A norm must prove its conduciveness to the principle, i.e. it
must be able to recognize certain absolute ecological limits, and it must take
account of wider societal circumstances. Equally the principle could establish
a valid defence of human or other social rights protection where they come
into conflict with WTO norms.
Such norms as pass this ‘sustainability test’ would have a stronger norma-
tive status, thus overriding and setting aside other norms.
It needs to be remembered, at this juncture, that a rule or principle that is
part of the applicable law does not necessarily prevail over WTO law. In the
case of sustainable development, however, the principle itself would deter-
mine the priority of norms within the applicable law and, thus, the outcome of
a dispute. If the conflicting provision in question is a clear affirmation of the
objective of sustainable development and the measure is applied in a manner
that supports this objective, the conflicting norm prevails over the WTO rule
in question, which then cannot be applied.
Chapter 16
Application of the Principle of Sustainable Development:

Practical Consequences
16.1 The Aim of Creating Coherence
We have finally come to the point at which we need to ask what the conse-
quences of the application of the principle of sustainable development in the
context of climate and trade norm conflicts would be. In order to provide a
meaningful answer to this question, we have to be mindful of the objective of
applying the principle of sustainable development.
In the relationship between climate law and international trade law con-
flicts could arise, whose resolution based solely on interpretation of WTO law
would seem unlikely or unsatisfactory. Unlikeness is based on the inherent
limitations of the process of interpretation. While some conflicts could be
‘interpreted away’; others might not easily be dealt with by giving meaning to
the terms of the WTO agreements’. In such a situation of genuine normative
conflict, certain conflict clauses or conflict principles would usually define
the prevalence of norms. However, in the context of climate and trade law,
no such conflict clauses in the traditional sense exist or to guide a meaningful
solution.
Therefore, as it has been suggested in this book, the principle of sustainable
development as a legal principle of integration of social and environmental
provisions into international trade law could provide an appropriate means of
dealing with the (so far) unresolved issue of the relationship between WTO law
and MEAs, exemplified in this study by international climate law, contained
in or deriving from the agreements and legal documents of the international
climate regime.
The application of the principle of sustainable development is, in my view,
a possible way of addressing the intersection between the rules of trade trea-
ties and the environmental and social values inherent in the climate agree-
ments. This suggestion is based on the understanding that in a complex and
interdependent world, no single, simple solution can adequately address the

variety of issues and interests at stake.
Still, certain situations, e.g. legal disputes, demand solutions. In these
situations, the final result needs to derive its legitimacy from two criteria:
first the affected interests must be balanced, and, second, the result must not
jeopardize common interests and concerns of the global community. In these
situations, a principle-based approach (as opposed to a strict rule based solu-
tion) is appropriate, which provides a framework within which the two criteria
just mentioned can be addressed. This is where unifying principles such as
sustainable development come into the picture. And it is where the theoreti-
cal commitment to sustainable development in different areas of law, such as
world trade law, human rights law, development law and environmental law
will be tested.
It precisely in this context that George Abi-Saab’s statement gains signifi-
cance:
In a world characterized by deepening economic interdependence and the growing

complexity of international rules reflecting common concerns about human rights,
human development, and the human environment, there is a great need for unifying
concepts and principles to guide decision-makers – be they national or international,
including the judges of the diverse international fora – through the huge maize of
seemingly overlapping international rules and commitments. Sustainable development
has emerged as one such concept.1
By applying the principle of sustainable development, the coherence of the

international legal order is eventually aspired. This coherence means that the
aspects of the international legal systems can be aligned to issues that are of
common interest and concern. By applying the principle of sustainable devel-
opment, it is hoped, the norms of the international legal system can be founded
on a ‘common denominator’, which, in Justice Weeramantry’s words, is ‘a
sense of common responsibility for the increasingly interdependent societies
and economies, for our shared environment and natural resources, and for the
condition of humanity.’2
What this specifically means for WTO Dispute Settlement Procedure has
yet to be assessed in detail by legal scholarship and judicial practice. Still, the
1
George Abi-Saab, Member and former Chairman of the WTO Appellate Body, Foreword,
in Gehring and Cordonier-Segger, Sustainable Development in World Trade Law, 2005,
xxxiv.
2
Weeramantry and Cordonier-Segger, Introduction to Sustainable Justice: Implementing
International Sustainable Development Law, in Weeramantry and Cordonier-Segger
(eds.), Sustainable Justice, 2005, 2.
Chapter 16 – Application of the Principle of Sustainable Development 327
importance of the principle of sustainable development for WTO adjudication

has been observed in the following way:
The WTO Dispute Settlement Procedure has a particular importance for the develop-
ment of the concept of sustainable development. It is the most likely place in which
to find evidence of States actively pursuing the goal of sustainable development by
the imposition of trade restrictions, and also the most likely location of careful and
authoritative analysis of the compatibility of such restrictions … with a State’s inter-
national trading obligations.3
In the course of WTO dispute settlement it is therefore necessary to translate

generalities like these into specific procedural and substantive requirements.
16.2 Nature of a Legal Test for Sustainable Development
How can trade law promote sustainable development? And how do we ensure
complementarity between trade and climate measures? Public international
law, which includes international trade and climate law, can and should en-
sure that both areas are geared to facilitating sustainable development. It is
therefore necessary to employ a balanced, integrated legal analysis towards
this common end.4
But is there any judicial reasoning tool – a ‘legal test’ – embodied in the
principle of sustainable development, by which competing social, economic
and environmental claims can be accommodated, reconciled and integrated?
This seemingly essential question has only rarely and certainly not comprehen-
sively been addressed in legal literature. Also judicial practice, in addressing
the proliferating number of disputes relating to conflicts between environ-
mental, economic or developmental norms, has yet to establish a coherent
and coordinated approach to the adjudicability of sustainable development
as an integrative principle.5 Cordonier-Segger and Justice Weeramantry note
poignantly
When cases involving sustainable development arise, tribunals will often find them-
selves called upon to apply a broad general approach, the detailed implications of
which have not yet been considered by scholars and regulators. It is very much the situ-
ation of common law judges, who with only the broadest of general guiding principles,
3
V. Lowe, ‘Preface to Does the WTO Dispute Settlement Understanding Promote Sustain-
able Development?’ in Cordonier-Segger and Gehring (eds.) 2005a, 257.
4
Cordonier-Segger and Gehring, ‘Introduction’ in Cordonier-Segger and Gehring (eds.)
2005a, 4.
5
See Boyle, 2008.
fashioned an intricately nuanced system of law to meet a myriad situations which the
formal law giver had not and could not have anticipated. In short, justice systems are at
the cutting edge of the development of this concept. Both domestically and internation-
ally, judges will need to show imagination, initiative and vision in handling a matter so
deeply fraught with implications for the global future. Only this imagination, initiative
and vision can move us toward ‘sustainable justice’.6
It is thus timely to move beyond the ‘mere invocation’ of a principle of inte-

gration, and to develop a more substantive – more methodologically defined
– judicial approach to sustainable development as a tool for integration.
The difficulty and complexity of such an approach has led some to reject-
ing its desirability. The ILA Committee on International Law on Sustainable
Development, for example, notes critically
Promoting the development of integration as a judicial reasoning tool should allow a

judicial body to act in a more integrated manner than is currently the case. Perhaps, and
in line with and in light of the constraints of the judicial model, courts and tribunals,
rather than developing a reductionist approach to problems through the judicial ap-
plication of some kind of formula or methodology in which rules are modified and
misshaped, should instead recognise the complexity of the system of which they form
part and seek to use the law sensibly and rationally to provide a coordinated answer;
not so much integration for its own sake, but rather using integration as a lens through
which synergies are found and then built upon.7
However, rather than reducing the scope of legal analysis by the applica-
tion of an integrative tool, the opposite – an actual expansion – is purported.
Conflicting norms are considered against the substantive requirements set by
sustainable development. This leads to ‘taking stock’ of their supportiveness
of ecological processes and functions and their flexibility to account of wider
societal interests.
Neither is integration attempted for its own sake. In fact, a plain principle
of integration – if severed from sustainable development – arguably lacks
any substance and meaning of its own.8 For that reason, sustainable develop-
ment as judicial a tool is necessary for providing direction to the process of
integration.
The challenge is to conceive a legal reasoning framework for sustain-
able development the purpose of which is to integrate environmental, social
and economic considerations while observing certain ecological limitations.
6
Weeramantry and Cordonier-Segger, in Weeramantry and Cordonier-Segger (eds.) 2005,
2.
7
Toronto Conference 2006, 21 (emph. add.)
8
So also K. Meesen, ILA, 2006 Toronto Conference, International Law on Sustainable
Development, 19, comment in fn. 104.
While this involves some kind of methodological model, it needs to stay clear
of the mechanistic application of facts to readily-determined law.9 Not only
is such rigid rule undesirable, it might simply be impossible to offer a single,
all-applicable judicial test, given the great diversity of conflicts, the complex
nature of the issues at stake and the global character of the task.
In this thesis only a preliminary proposal for a broad judicial framework
can be advanced, the elements of which a international court or tribunal might
take into account in the specific situation of applying the principle of sus-
tainable development to normative conflicts, such as climate and trade law
conflicts.10 This proposal, it is hoped, will encourage further legal discussion
and research.
This framework is first and foremost based on a ‘principled’ test. This
means in other words that it is impossible to predict a given solution at the
outset. The result will depend on the application of the abstract and general
requirements of the test to the facts and the circumstances of the particular
case.11 Given the range of likely conflicts between climate and trade law rules,
the test needs to be able to accommodate as wide a range of ‘constellations’ as
possible. It therefore aims at identifying those climate measures which, despite
their trade restrictive – and maybe even protectionist – effect ought to prevail
over trade rules by reason of their compliance with sustainable development.
Second, the test could be applied independently of normative reference
to environmental measures in the treaty text, e.g. in exception clauses in the
WTO treaties. The principle of sustainable development as a general principle
of law could constitute the framework in which the environmental, social and
trade norms and interests can be equal and integral parts.12 When a measure
prescribed or permitted under an international climate agreement, e.g. Kyoto
Protocol, comes into conflict with rules of international trade, the principle
functions as a legal test that properly balances interests in trade liberalization
with other common interests, chief among them the protection of the Earth’s
atmosphere.13
9
See ILA report, 2006, 20 for similar conclusion.
10
Cordonier-Segger, 2004, 592.
11
See for a similar suggestion of a ‘juridical sustainability test’: M.C. Cordonier-Segger,
2004a, 591.
12
Brown-Weiss, 1992a, 728.
13
See for an earlier proposal of such a ‘balancing test’: J. Dunoff, ‘Reconciling Interna-
tional Trade with Preservation of the Global Commons: Can we Prosper and Protect?’,
49 Wash & Lee L. Rev. 1407. Without explicitly referring to sustainable development,
Dunoff noted ‘[t]he world community needs a conceptual framework that will enable it to
reconcile the various international interests at stake in the conflict between environment
and trade. This framework should include principles that permit a harmonization of the
use of trade measures to protect the global commons with the strong interest in liberalized
Still, this test could also be useful in the interpretation of treaty terms. The
importance of general international law including the principle of sustainable
development as an integrative principle to the interpretation of treaties has
been pointed out.
The following proposal consists of two steps. First, I will outline an ap-
proximation of the various elements that such a test could entail, before, sec-
ond, the specific case studies (assessed in Part II) of climate-trade law conflicts
will be examined in the light of this test.
16.3 Possible Elements of a Legal Test for Sustainable Development
The framework provided by the principle of sustainable development would

allow for the examination of issues of common concern as an integral part
of trade law. As a starting point, it would mean that trade norms and trade-
restrictive measures that promote sustainable development would not stand as
alternatives but as mutually reinforcing elements in this legal test. Only where
a particular measure is better equipped to protect common concerns might the
principle of sustainable development be invoked in support of this measure
and to the detriment of the norm promoting liberalized trade.
It is therefore suggested that a legal sustainability test includes the fol-
lowing components: (1) identification of the affected interests, (2) primary
sustainability of the measures (the type and strength of the interest protected
by the trade restrictive measure), (3) secondary sustainability of the measure
(broader sustainability), (4) proportionality of means and ends, and (5) proce-
dural aspects.
16.3.1 Identification of Affected Interests
The court or tribunal would need to identify the interests at stake. These in-
volve not only the rights and duties of the Parties to a particular dispute but
also the interests of the broader community. Here, interests in protecting es-
sential natural and ecological functions need to be identified as well as wider
social, economic and environmental interests. Interests of the domestic and
international community and of present and future generations would need
to be taken into consideration. Cordonier-Segger suggests in the context of
trade.’ (Ibid., 19). See also: R. Stewart, ‘International Trade and Environment: Lessons
from the Federal Experience’ (1992) 49 Wash. & Lee L. Rev., 1349.
this test special attending to the needs of the most vulnerable, from an inter-
generational and an intra-generational perspective.14
16.3.2 Primary Sustainability: Type and Strength of Interests Protected by

the Measure
The strength of interests protected by the measure needs to be identified. Does

the measure aim at protecting issues of common importance or of purely do-
mestic concern? With regard to sustainable development as defined in Part I, a
starting point here is to determine whether the measure aims at protecting – or
at least not threatening – a fundamental ecological function (primary sustain-
ability). As suggested by Dunoff, one way of determining whether a measure
is designed to protect global interests would be to see whether the specific
environmental interest is protected by customary or treaty law. With regard to
treaty law, the determination needs qualification. Not all interests dealt with
in international treaties can be considered to represent issues of common im-
portance. Here, the number of Member States and specific clarification in the
treaty texts on the kind of interest would be necessary to establish the ‘weight’
of the protected interest.
One indication of an issue’s global importance is the use of the concept
of ‘common concern’ in the respective multilateral treaty. As regards climate
change, the 189 Parties to the UNFCCC consider change in the Earth’s climate
and its adverse effects being a common concern of humankind.15 Not only does
this allow concluding the (almost) universal recognition of the importance of
protecting the climatic system, it means that the vast majority of States have
a legal interest in protecting the climate system, and a legal responsibility
to prevent damage to it.16 The atmospheric system is thus treated as a global
unity insofar as injury in form of global warming or climate change may affect
the community of States as a whole. As such it is a common resource vital to
the interest of mankind. This means that the protection of the climate system
cannot be treated in the same manner as other environmental issues, e.g. spe-
cies protection or waste management. The protection of the climate system is
truly an issue of common importance upon which societies, economies and
ecosystems depend.
After the type and strength of interest have been identified, the next step
would be to examine the primary sustainability of the measure, that is, the
14
15
UNFCCC, Preamble, para. 1.
16
Yamin and Depledge, 2004, 68; Sands, 2003, 287.
measure’s capacity to fulfil its purpose. The means employed need to be

reasonably related to the ends. Here it would be required that a measure pro-
motes the interest protected. The purpose of the measure must be to protect
the interest supported by the objective. Amongst the legitimate objectives, the
protection of certain essential ecological functions takes a stronger stand. The
measure must thus be apt to achieve this objective.
It is important at this point to note that no ‘effects test’ based on causation
is required. In particular in the field of environmental protection a substantial
period of time, sometimes hundreds of years, may have to elapse before the
effects attributable to the implementation of a given measure can be observed.
Moreover, the observed effect is likely to come about by the sum of measures.
No climate change mitigation measure alone can reduce greenhouse gas emis-
sions to the extent that the resulting gas concentration in the atmosphere does
not dangerously interfere with the climate system. The spatio-temporal scope
of effects of mitigation measures will thus hardly allow the clear determina-
tion of a causational link between a particular measure and its impact on the
protection of climatic stability.
With regard to measures of climate change mitigation, their primary sus-
tainability needs to be defined by their capability to reduce greenhouse gas
emissions.
16.3.3 Secondary Sustainability: Assessment of the (Broader) Sustainability

of the Measure
A ‘sustainable development test’ would further include the assessment of the

‘broader sustainability’ of the measure, that is, the extent to which wider inter-
ests than those represented by the primary objective of the measure are taken
into account. Such wider sustainability focuses on the ability of, for example,
an environmental measure, to take social and economic interests into account.
The assessment of the ‘broader sustainability’ may require certain substan-
tive and procedural elements, such as a Sustainability Impact Assessment
(SIA). Essentially, the court or tribunal would seek to ensure that neither the
economic, nor the environmental, nor the social interests at stake have been
excluded.17 A measure would not be sustainable, if it allows one or more of the
dimensions of sustainable development to be ignored.
It is worth noting here, that this thesis does not suggest a merely procedural
approach to be taken by the dispute settlement organs in their assessment of
the (sustainable) legitimacy of national regulatory measures that aim to protect
17
trade externalities. Procedural criteria, such as, e.g., interest representation,

participation, risk assessment, serious across-the-board international nego-
tiations, or due process considerations in the political process that led to the
adoption of a trade-restrictive measure play an important role in the assessment
of the sustainability of the measure. However, they are only indicative of the
substantive merits of sustainability. Sustainable development as a principle of
integration is a principle of conduct and result; it contains procedural as well
as substantive requirements. Still, it is the outcome of the process that needs to
be sustainable and thus legitimate, rather than the process alone. Diligence of
the process does not necessarily ensure sustainability of the outcome.
The purpose of the assessment is to examine the effect of a certain trade-
restrictive measure on long-term sustainability. The suggested criteria below
cover substantive aspects with regard to social, environmental and economic
effects of a measure.
a) Environmental Interests
In line with the ‘integrated thinking’ approach, the effects of the measure on
the wider natural and biophysical environment have to be considered (‘wider
environmental integrity’). ‘Wider’ in this context means environmental im-
pacts not purported by the measure. Would or could the measure have negative
effects on other environmental assets and ecological functions, e.g. species
protection, wetland protection. And if so, does the measure seek to avoid or
mitigate these negative effects?
An example of such a ‘wider’ environmental impact purview would, for
example, be to investigate the impact on biodiversity of afforestation or refor-
estation projects under the CDM by planting mono-cultural, non-indigenous
tree species or even genetically modified species. Thus, although a measure
is in itself aimed at stabilizing the atmospheric greenhouse gas concentration
by increasing the sequestration of carbon dioxide and has an environmental
objective, it could have a negative impact on biodiversity. Other examples
of climate projects with potentially negative environmental impacts are huge
hydro-dams or even wind parks. What this part of the assessment seeks to
determine is whether such harm is unavoidable, and if not, whether and which
other possibilities have been considered to minimize the impact. In order for
a measure to be sustainable, it needs to minimize its negative impact on the
environment to the greatest extent possible.
b) Social Interests
This part of the assessment links to considerations of social justice as integral
parts of sustainable development. The court or tribunal would need to seek
ways to accommodate between and reconcile competing interests, including
poverty alleviation, security and bridging of the ‘North-South divide’. In this
context, it has been commented that in particular would a court or tribunal
need to consider whether the measure imposes burdens on countries or actors
that traditionally suffered from disadvantages, and have not benefited from
past unsustainable practices.18
When relevant for the respective case the assessment needs therefore to
include social criteria, e.g. health impacts, local air quality, employment, land
rights or titles, indigenous peoples rights and interests, transfer of environmen-
tally sound technology, financial transfers, burden and benefit sharing issues
etc. Here, the assessment would attempt to establish whether the measure sup-
ports social interests and seeks to minimize possible negative social impacts.
Depending on the particular factual circumstances, sustainability of a
measure demands that these – and perhaps other – social criteria are taken into
account in the design and implementation of the measure.
In terms of a trade-restrictive environmental measure, justifiability of such
measure based on the principle of sustainable development would require the
recognition and integration of social interests in the design of the measure
where such interests are at stake or affected by the measure.
c) Economic Interests
Finally, interests of an economic character affected by the design of the meas-
ure and the manner of its application also need to be assessed. If sustainable
development seeks the integration of environmental, social and economic in-
terests, the measure ought certainly not to be ignorant of the latter. In particu-
lar, the question whether a measure would contribute to poverty alleviation
and development in less affluent countries includes means of benefit sharing
or technology or financial transfer to developing countries, or addresses global
disparities in any other effective way is of importance in this respect.
The assessment would thus inquire whether the measure aims at support-
ing economic interests of those affected by it, or, at least, seeks to minimize
economic impacts by, e.g. aiming to increase effectiveness and efficiency,
reducing or avoiding discrimination, avoiding nullification or impairment
18
Cordonier-Segger, 2005, 592, noting that exceptions might need to be created for these
countries or parties based on the principle of common but differentiated responsibilities.
of rights and benefits of others etc.). Still, in some cases the purpose of the
measure or the insurance of its effectiveness may require high economic costs
or a certain degree of discrimination. Here, a balancing of the interests at stake
is necessary.
16.3.4 Proportionality of Means and Ends
There are two levels of proportionality. First, the measure (means) needs to
be proportionate to the primary interest (end) to be protected. Primary pro-
portionality of the measure should focus on the balance between the burden
imposed by the measure, and the potential benefits which may derive from
its implementation. The idea behind such test is that means employed should
be proportionate to the interest to be protected. The doctrine of proportion-
ality acts as a limit on State action. It acts as a check on the protectionist
impulse.19
In terms of trade and environment, the proportionality test should consist
of weighing the expected environmental benefit of the measure against the
burden imposed on trade.20 Here, the more important the protected interest
for the international community, the lower are restrictions which apply to the
burden it causes. Measures that protect fundamental ecological and natural
functions could therefore be considered proportionate even if they cause
considerable economic or social burdens. A measure that aims at reducing
significant amounts of greenhouse gas emissions can thus be proportionate
despite its impacts on the economy.
Second, also each of the mentioned criteria (a-c) will necessarily entail
an element of proportionality where the proposed benefit of the measure is
weighed against its (negative) impacts. A measure, for example, that takes
account of economic interests to the detriment of significant social or environ-
mental interests cannot be deemed sustainable. Essentially, Cordonier-Segger
suggests:
the jurist would seek to ensure that neither the economic, nor the environmental, nor
the social priorities had been completely ignored. While there are few clear bright
lines, and no hard and fast rule, as each factual situation is different, it would not be
‘sustainable’ to allow one or the other dimension of sustainable development to be
excluded (the principle of integration).21
19
Dunoff, 1992, 23.
20
See for a similar suggestion: Montini, 2001, 155.
21
The requirement of proportionality, however, does not include a necessity test

like the one envisaged under WTO jurisprudence so far. An environmental
measure in order to be proportionate to its purported end does not need to
show the absence of any reasonably available less trade restrictive alternative.
This is one of the distinctions between an independent sustainability test and
the legal test utilized by the WTO panels and the Appellate Body. The ‘trade
ethos’ or hierarchical dominance of trade interests over all other considerations
implied in the necessity requirement stands in stark contrast to the integrative
character of the principle of sustainable development. Because, such universal
privileging of trade interests over ecological interests can, in certain instances,
seriously devalue the environmental or social interest at stake, a different ap-
proach needs to be applied.
Rather, as Dunoff suggested, there should be a balancing of the interest in
preservation of the global commons with the interest in economic efficiency,
sovereignty, and political harmony.22 He continues advocating this
balancing framework, rather than rigid rules, because definite rules are inappropriate in
this area. Global environmental protection and liberalized trade are both legitimate and
important values that states can advance. For this reason, one should not – as the trade
regime does – create a hierarchy where one set of interests always trumps the other set.
Some trade measures serve more pressing interests than others do, and different trade
restriction impose different costs upon the global trading order. There should be no a
priori winner in any particular conflict between the interests in liberalized trade and the
interests in environmental protection.23
Another alternative, of course, would be to include the requirement of sustain-

ability into the necessity test under WTO law. This would entail that a trade-
restrictive measure is justifiable as necessary if it can be shown that other, less
trade restrictive alternatives are not sustainable or not ‘reasonably available’
in the sense that unsustainability excludes reasonableness.
A similar adjustment can be conceived to WTO terms like ’arbitrary’ or
‘unjustifiable discrimination’. The application of a sustainability test would al-
low qualifying a measure as non-arbitrary or a justifiable trade-discrimination
if it serves the ends of sustainable development. This might be of particular
importance in situations where a climate measure seeks to offset comparative
disadvantages of the implementing country against the economic advantages
of ‘free riders’. As mentioned above, ‘free riders’ are countries not participat-
ing in the global efforts under the climate regime, and seeking not only to
22
Dunoff, 1992, 24.
23
Ibid.
avoid climate mitigation costs but gaining competitive advantages from their
climate inaction.
Instead of a ‘trade priority’ which is inherent in tests of ‘least trade restric-
tiveness’ or ‘reasonably available alternative’, a sustainability test proposes
balancing of the interest in preserving the stability of the Earth’s climate with
economic interests of non-Members or non-compliers. Rather than merely
balancing the rights and obligations under WTO law of WTO Members, this
balance has to be determined in the context of sustainable development. The
fact that a governmental measure aims at protecting issues of global impor-
tance, and in their wake aims at protecting domestic industries, has to be taken
into account when its negative effects on trade interests of other WTO Mem-
bers is examined.
In the context of the integrating principle of sustainable development, trade
discrimination could under certain circumstances be a legitimate means for
protecting the effectiveness and integrity of the governmental measure as well
as for protecting the international competitiveness of the State or States that
has/have implemented the measure. In other words, even if the measure aims
at offsetting negative economic impacts (e.g. unfair competition advantages
by non-Members or carbon leakage) of implementing and maintaining a cli-
mate measure, this kind of (undisguised) protectionism has to be recognized
as a legitimate and justifiable concern.24
The principle of sustainable development in its capacity of a principle of
integration could thus provide a platform for a holistic assessment of the mass
of matters at stake. Trade and other concerns, such as environmental or social,
could be viewed under the integrating objective of sustainable development
and given proper and adequate consideration. Trade restrictive measures would
be judged by their capacity to facilitate sustainable development. Measures
which pass the test could, for example, not be considered arbitrary or unjustifi-
able precisely because of their ability to advance sustainable development.
16.3.5 Procedurals
The sustainability assessment comes with a number of procedural require-

ments, such as carrying out a SIA,25 access to information, consultation with
24
See also A. Cosbey, Lessons Learned on Trade and Sustainable Development. Distill-
ing Six Years of Research from The Trade Knowledge Network. IISD and ICTSD, 2004,
7–23.
25
Sustainability Impact Assessments have most often been developed in order to analyze
the potential impacts of trade agreements. See, for example, D. Blobel et al., Report on
the public, involvement of civil society, consultation (with decision makers in

the other fields in the other countries/country), negotiation in good faith, and
consultation of all stakeholders. They might also include a risk assessment
where the science behind the trade measure is uncertain. According to the
precautionary principle, which we identified as being part of the principle of
sustainable development, a lack of scientific certainty cannot justify postpon-
ing measures which mitigate climate change. A determination of the accept-
able level of risk will largely depend on the value judgement of the society in
question. Different nations can have different tolerances for risk.
However, with respect to the risk of irreversible ecological damage – the
likely result of global climate change – the precautionary principle demands
positive action of protection and damage prevention. The UNFCCC and
Kyoto Protocol are proof of the consensus of their Member States to engage
in mitigation measures despite remaining scientific uncertainty as to the tim-
ing, extent and regional distribution of climate change impacts. While these
issues are equally relevant to the principle of sustainable development, a more
detailed discussion cannot, however, be pursued in this thesis. The extent to
which these procedural requirements would need to be analysed goes beyond
the scope of the present study. Still, one may hope that future research explores
these issues with the care they deserve.
Finally, the test would need to maintain a holistic and long-term perspec-
tive. It needs to single out and give preference to measures that facilitate last-
ing development. But the ultimate test, as noted by Cordonier-Segger, of this
reasoning would be whether the resolution leads to an improvement in the
collective quality of life that can last over the long term.26
Trade, Environment and Sustainability Impact Assessment, July 2005 (<http://www.cat-e.

org>). See also M. Gehring, Nachhaltigkeit durch Verfahren im Welthandel, Umwelt- und
Nachhaltigkeitsprüfungen und die WTO (Dissertation University of Hamburg, 2005);
M. Gehring and M.C. Cordonier-Segger, ‘Sustainable Development through Process in
World Trade Law’ in Gehring and Cordonier-Segger (eds.) 2005, 204–205; European
Commission, Draft Handbook for Sustainability Impact Assessment, European Commis-
sion, Directorate-General for Trade, 2005; and C. Kirkpatrick and G. Clive, Sustainability
Impact Assessment of Proposed WTO Negotiations. Overall Project Final Report for Sec-
tor Studies: Agriculture, Distribution Services, and Forests. Impact Assessment Research
Centre, Institute for Development Policy and Management, University of Manchester,
2005. In the present study, however, the purpose of the SIA is to determine whether the
trade restrictive measure facilitates sustainable development, rather than the sustainabil-
ity assessment of WTO norms. This is a conscious deviation from the general application
of a SIA. The idea behind this suggested assessment is to discover the sustainability of
a measure against a wider array of criteria than is normally used. If, however, the SIA
of the trade restrictive measure gives evidence of its sustainability, an argument for the
justification of the measure can be made.
26
16.3.6 Legal Effect
According to this test, sustainable development should function as a guide

in determining how to handle conflicting norms. If sustainable development
is facilitated by interpreting the conflicting provisions in a harmonious way,
no question of norm priority arises. Where such reading is not possible, the
‘sustainability test’ outlined here could be used to determine norm priority.
In this sense, the application of the ‘sustainability test’ is inherently different
in its legal force than the conflict avoidance technique of interpretation. It is
also different from existing conflict resolution principles in that it not only
determines norm priority technically ratione temporis or ratione materiae, but
because the determination is contextual (ratione contextuūs). The norm that
(best) facilitates the objective of sustainable development should eventually
prevail.
What are the implications of the proposed test for the climate and trade
issues highlighted in Part II? The ‘juridical sustainability test’ – performed
either separately from WTO treaties’ exception clauses or as an integral part
of them, e.g. when interpreting terms like ‘necessary’, ‘arbitrary’ or ‘unjustifi-
able’ discrimination in Article XX GATT or Article XIV GATS – means that
instead of following the strict rule-based test(s) included in WTO law, the
analysis of a trade-restrictive climate measure needs to answer whether the
climate measure promotes sustainable development in a better way than fol-
lowing the dictates of the trade rule.
If it does, the climate measure has to be given priority over trade concerns
by virtue of its compliance with the objective of sustainable development. If
sustainable development in itself is the end goal of the WTO, then a climate
measure which is found being a tool for promoting sustainable development
is essentially compliant with the WTO legal system and the common objec-
tive of the WTO. Therefore no problem of legitimacy of setting aside ‘non
sustainable’ trade norms arises. In order to identify whether a climate measure
promotes sustainable development or not, it has to be measured against the
requirements of this principle. Such measurement can, in effect, necessitate
changes, improvements or modifications of the climate measure. The principle
of sustainable development seeks to determine the measure most appropriate
for promoting sustainable development and can thus function as a corrective
to both, WTO norms and climate measures.
In other words, not all and every climate measure would simply be justified
by virtue of aiming at reducing GHG emissions, but only those measures that
in themselves comply with the mandate of sustainable development, i.e. meas-
ures that aim at reducing the emission of greenhouse gases while not being
ignorant of the interrelationship between economic, social, and environmental

factors.
If a measure does not subscribe to those requirements, it might still be
possible to ‘save’ it according to the narrow criteria of WTO law. A principled
justification on the grounds of sustainable development (and its integrative
character) would, however, be precluded.
Chapter 17
‘Case’ Studies: CDM and Emissions Trading
At this final stage, we shall attempt to identify some criteria that need to be in
place for a climate measure to promote sustainable development according to
the test established in the previous chapter. We in turn look at the CDM and
emissions trading scheme.
17.1 Clean Development Mechanism
In the case of conflicts with multilateral trade norms, the ability of the CDM
to serve as an instrument of sustainable development will be decisive. In other
words, the extent to which the trade impact, i.e. differentiation in eligibility to
participate between non-Member States to the Kyoto Protocol and complying
Members, can be justified will need to be determined by the contribution of
the CDM to sustainable development. In this context, the exclusion of non-
Member States and their legal entities to participate in the CDM will have to
relate to the ‘sustainable integrity’ of the CDM.
Which interests would be affected directly or indirectly by a dispute arising

over a CDM issue will depend on the particular circumstances of the case.
They could be the interests of authorized private companies carrying out a
CDM project or of an investor State to which the resulting CERs are to be ac-
credited; a private entity or State which is not a Party to the Kyoto Protocol but
is interested in investing in the CDM; the host State; local or indigenous com-
munities; NGOs; private non-commercial entities and many more. However,
issues concerning the CDM, as with all climate measures, affect a wider set of
interests, global and intertemporal, which demand the integrity and efficacy of
a climate measure as a means to protect the stability of the global climate.
17.1.2 Strength of the Protected Interest
Next, the relationship between the climate measure and the protection of an
essential ecological or natural function or condition needs to be assessed. The
protection of such a function is the ‘outer frame’ (primary sustainability) for
an assessment of the measure’s sustainability and will determine the relation-
ship to other affected interests (secondary or broader sustainability). Here, the
question arises whether the CDM aims at protecting such function or condi-
tion. Recognizing that the stability of the global climate is essential to human
life and welfare, in order to pass a ‘sustainable development test’, it needs
to be shown that the measure promotes the stabilization of greenhouse gas
concentrations in the atmosphere at a safe level.1
The important criterion in this context is whether the project at stake can
result or has resulted in reductions in emissions that are additional to any that
would occur in the absence of the certified project activity.2 As said above, the
additionality requirement is a crucial aspect of the climate impact of the CDM.
Not only is additionality a requirement set out in the Kyoto Protocol/Marrakesh
Accords; its contribution to the overall reduction of greenhouse gases is con-
ditio sine qua non of a CDM project’s sustainability. CDM projects must show
that the emissions reductions achieved are ‘additional’ to a counter-factual
baseline scenario. This is measured by comparing the CDM project’s emis-
sions reductions with an emission scenario that likely would have occurred
in the absence of the project.3 If emissions reductions are not additional, the
overall cap of Annex I countries will become unduly inflated as emissions will
rise without corresponding reductions elsewhere. Such a scenario would stand
in strong contrast to the demand of environmental integrity of the CDM4 and
the entire Kyoto system as it would not help achieve the ultimate objective of
the Convention.
1
See C. Voigt, ‘Is the Clean Development Mechanism Sustainable? Some Critical As-
pects’, 8 Sustainable Development Law and Policy (SDLP), 2008, 15–21.
2
Art 12.5(c) Kyoto Protocol, Marrakesh Add.2, Art 43.
3
Yamin (ed.) 2005, 30.
4
Meijer and Werksman define environmental integrity almost solely in terms of additional-
ity: ‘Environmental integrity is the demonstrated ability of the CDM to approve projects
and to certify emissions reductions that are widely perceived as additional to what would
otherwise have occurred, and support projects that contribute to long-term reductions in
concentrations of GHGs in the atmosphere.’ Meijer and Werksman, 2005, 192.
Chapter 17 – ‘Case’ Studies: CDM and Emissions Trading 343
It is, however, not the only requirement. In order to survive a ‘sustainability

check’ a CDM project would need to prove that its additionality does not slow
climate change mitigation efforts elsewhere. The additionality criterion in its
present state despite being crucial to the environmental integrity of the CDM
can create adverse policy incentives to climate change mitigation. The poten-
tial of CDM projects to generate much-needed investment flows into a host
country has led some developing countries to back off from more progressive
energy or climate policies and respective legislation. These policies and laws,
if integrated into the baseline, would disqualify CDM projects that aim at
meeting these new standards or thresholds.5 In order to promote sustainable
development, a solution to and safeguard against this disturbing situation must
be found within the climate regime.
Another critical concern is that GHG emission reductions by a CDM
projects could in fact lead to increased emissions elsewhere (so-called carbon
leakage). The design of the CDM has therefore to prevent that the project leads
to such increase in emissions elsewhere, whether that is in the same sector, in
other sectors, in other regions of the same country or in other countries.
17.1.3 Contribution to Sustainable Development in a Broader Context
The contribution of the CDM to sustainable development also needs to be

seen in terms of host country development, as expressed in the first goal of
the CDM mentioned above. Given the reference to the objective of the Con-
vention and the role that climate change mitigation itself plays in sustainable
development, any assessment of the CDM’s contribution must also recognize
the wider role projects and the mechanism itself can play as catalysts for sus-
tainable development of host States.6
CDM’s contribution to sustainable development was subject to consider-
able debate during the negotiations of the Kyoto Protocol and the Marrakesh
Accords. In particular, host countries were concerned about their sovereignty
and largely unwilling to accept externally determined sustainable develop-
ment priorities imposed on them.7 This led to only marginal references to
5
For examples in Ecuador, Mexico, Colombia, see C. Figueres, 2006, Sectoral CDM.
6
See M. Kenber, ‘The Clean Development Mechanism: a Tool for Promoting long-term
Climate Protection and Sustainable Development?’ in Yamin (ed.) 2005, 265. See also C.
Sutter, Sustainability Check-Up for CDM Projects – How to Assess the Sustainability of In-
ternational Projects under the Kyoto Protocol, 2003, Berlin, WVB; and French, 2005a, 273.
7
C. Figueres, ‘Sectoral CDM: Opening the CDM to the yet Unrealized Goal of Sustainable
Development’, 2006, International Journal of Sustainable Development Law and Policy,
draft, 2.
sustainable development in the Marrakesh Accords, which do not define what

is meant by ‘sustainable development’. Rather, under the climate regime it
remains the host country’s sovereign prerogative to determine whether a par-
ticular CDM project helps it achieve this goal.8 A project is (in the absence
of any alternative) considered to contribute to sustainable development if it
is congruent with existing national (development) policies.9 This ‘subjective’
approach to sustainable development translates into curtailing and challeng-
ing the potential of the CDM.
Designing the CDM and meeting CDM project eligibility requirements
present significant challenges because host countries have different economic
conditions, natural resources and development priorities. Thus, they have
different perceptions about what is required to achieve sustainable develop-
ment. Selecting sustainable development criteria and assessing the sustainable
development impact can therefore differ significantly from one host country
to another.
In spite of several ideas about indicators of sustainable development,10
which provide some guidance on what should be taken into account, ultimately
it remains the host country’s sovereign decision to ascertain whether a CDM
project activity promotes its sustainable development targets.11 The Designat-
ed National Authorities (DNAs) in developing countries are therefore tasked
with issuing a Letter of Approval attesting to the project’s contribution to their
countries’ sustainable development.12 A CDM project can only be registered if
such affirmation is provided to the CDM Executive Board.
8
UNEP, Legal Issues Guidebook to the Clean Development Mechanism, 2004, 49.
9
See C. Figueres, Institutional Capacity to Integrate Economic Development and Climate
Change Considerations: An Assessment of DNA’s in Latin America and the Caribbean,
InterAmerican Development Bank, 2004.
10
See, for example, S. Thorne and E. Larovere, Criteria and Indicators for Appraising
Clean Development Mechanism (CDM) Projects, 1999, Paris, Helio International;
SouthSouthNorth Network; WWF The Gold Standard: Quality Standards for CDM and
JI Projects, Final Draft for Consultation and Draft Technical Appendices, 2002; UNEP
CDM Information and Guidebook, 2nd edition, 2004, 16–28 (“Examples of major sus-
tainability indicators that can be used in relation to CDM projects”).
11
The rationale behind this requirement is that the host State is free to explore the main
linkages between the CDM projects and impacts on social, environmental and economic
dimension of their national policies. Thus, host countries can select CDM projects that
bring about the largest developmental benefits.
12
17/CP.17, FCCC/CP/2001/13/Add.2 Modalities and Procedures for a Clean development
Mechanism as defined in Art 12 of the Kyoto Protocol (Marrakesh), see also Decision 17/
CP.7, Annex, paragraph 40(a).
While there is, without doubt, a strong potential for synergies between
addressing environmental problems and advancing social goals,13 there is
also the danger that requiring congruency with existing national development
policies may not in fact lead to change of benefit to sustainable development
as defined above since most existing sectoral and national policies lead to
increasing GHG emissions.14 The congruency requirement is thus not a high
threshold in terms of sustainable development.15
a) Which Path to Follow?

From the point of sustainable development, a low energy path would be the
optimal way.16 However, most development paths are likely to lead to increas-
ing energy demands and depend on the availability of energy resources to
meet these demands. It is unrealistic to assume that developing countries,
or even developed countries for that matter, will in the near future change
to development strategies that are based on constant or declining levels of
energy consumption. Energy is fundamental to advancing the economic and
social dimensions of sustainable development.17 But sustainable development
13
See, for example, UNEP’s suggested range of co-benefits, such as reduction in air and
water pollution through reduced fossil fuel use, extended water availability, reduced soil
erosion and protected biodiversity, creation of employment opportunities in target regions
or income groups, promotion of local energy self-sufficiency, CDM Information and
Guidebook, 2nd edition, 2004, 15. For a positive example see Costa Rica’s national defi-
nition: ‘CDM projects should be compatible with and supportive of Costa Rica’s national
environmental and developmental priorities and strategies, including biodiversity conser-
vation, reforestation and forest preservation, sustainable land use, watershed protection,
air and water pollution reduction, reduction of fossil fuel consumption, increased utiliza-
tion of renewable resources and enhanced energy efficiency. Projects should enhance the
income opportunities and quality of life for rural people, transfer technological know-
how, and minimize adverse consequences’, quoted in C. Kelly and N. Helme, Ensuring
CDM Project Compatibility with Sustainable Development Goals, Center for Clean Air
Policy, Washington, D.C., 2000.
14
See C. Figueres, ‘Sectoral CDM: Opening the CDM to the yet Unrealized Goal of Sus-
tainable Development’, 2006, International Journal of Sustainable Development Law
and Policy, draft, 2.
15
Kenber, for example, notes that in practice it is unlikely that projects will be made sub-
ject to stringent approval criteria as governments, especially countries short of foreign
investment, will be reluctant to risk losing inflow of funds and the opportunity to build a
portfolio of projects. Kenber, 2005, 266.
16
WCED, 1987, 201.
17
OECD Contribution to the United Nations Commission on Sustainable Development
(CSD 14) On the Themes of Climate Change, Energy and Industry, OECD Secretary-
General, 2006, 9.
requires that, different from the scenario outlined in Figure 1, meeting increas-
ing energy demand must not go along with increasing CO2 emissions.
Figure 1: Energy-related CO2 emissions in million metric tonnes18
20 000
16 000
12 000 OECD
8 000 Developing countries
4 000
Transition economies
0
1970 1980 1990 2000 2010 2020 2030
The WCED noted that it is essential that demands are met by energy sources
that are dependable, safe, and environmentally sound.19 In particular, the latter
– but arguably all three criteria for such ’sustainable energy supply’ – require
decoupling of energy supply from increasing greenhouse gas emissions.
Achieving sustainable development in developing (and developed) coun-
tries, thus, depends on more efficient energy use, reduction of energy con-
sumption and, importantly, the decarbonisation of their economies.20
The question is whether developing countries should be accorded a privi-
leged position when considering their sustainable development paths. The
WCED, in promoting the transition to a sustainable energy era, suggested that
traditional fossil fuel use should be accepted in developing countries in order
to realize their growth potential, while developed countries should seek to
limit their uses of fossil fuels.21 This recommendation is problematic. Sustain-
able development does not require increased fossil fuel consumption in devel-
18
World Energy Outlook (IEA 2005).
19
Ibid., 168.
20
Figueres, 2006.
21
WCED, 1987, 201.
oping countries. What it requires are equal development opportunities. These,

however, depend on the availability of energy resources in general, not only
fossil fuels. To grant developing countries a preferential ‘right’ to use fossil
fuels would also burden them with an obligation to reduce emissions. Rather,
sustainable development requires avoiding such a burden from the outset.
Sustainable development of developing countries means to enable them to
achieve higher levels of (economic) development with much reduced levels of
greenhouse gas emissions and environmental damage. Emulating the negative
example of industrialized nations is not sustainable.
Energy security cannot be achieved without recognition of the environ-
mental consequences of energy consumption, ‘especially our currently over-
whelming and deeply entrenched reliance on fossil fuels’. This inconvenient
truth has clearly been addressed by former UN Secretary Kofi Annan.22 He
said ‘the need to increase energy supplies in order to fight poverty could entail
a vicious circle’ but added that ‘this does not need to happen, because energy
supplies do not depend on fossil fuels only’.23
In order to move toward sustainable development, also developing coun-
tries must decrease the carbon intensity of their economic development
through renewable energy systems, enhanced energy efficiency, and introduc-
tion of clean technologies, with the financial and technological assistance of
industrialized countries.
With respect to developing countries, the purpose of the CDM can thus be
understood as assisting them in the transformation of their economies. Thus,
the CDM is a crucially important global financial vehicle to catalyze national
transitions toward sustainable development in host countries by increasing
‘green investment’ flows into energy supplies, transportation and other indus-
trial sectors.24 In this sense it is evident, as the head of the UN Climate Change
Secretariat stated, ‘that the Kyoto Protocol is making a significant contribu-
tion towards sustainable development of developing countries’.25
b) Safeguards
It requires, however, that the goal of sustainable development is clearly
defined and seriously and actively pursued through the CDM. Ensuring the
22
UN Press release ‘Annan stresses energy security and its environmental consequences
ahead of G-8 Summit’, 10.07.2006.
23
Ibid.
24
See D. Esty and B. Gentry, ‘Foreign Investment, Globalization and Environment’, in
Globalization and Environment, 1997.
25
UNFCCC Secretariat, Press Release, 9 June 2006.
integrity of the CDM – also with regard to the sustainable development paths
of host countries – demands strong safeguards. While an ‘impressive set of
safeguards’ already exists providing clear and consistent standards for the
environmental performance of CDM projects,26 no such safeguards exist for
ensuring sustainable development. Despite the above proposed relatively
straight-forward definition of sustainable development in a climate context,
i.e. where economic growth is decoupled from GHG emission growth, the
climate regime has yet to embrace this understanding.
To meet the requirements of ‘sustainability, a CDM project with adverse
trade ramifications will need to demonstrate an ability to overcome the still
existing obstacles and shortcomings of the Kyoto system.
The legal review of CDM projects, whether it takes place under the com-
pliance system of the Kyoto Protocol,27 an international tribunal28 or the WTO
Dispute System, will supposedly establish a definition of sustainable develop-
ment requirements under the CDM. But it is important that climate law and
practice construe a coherent understanding of sustainable development. While
searching for the conceptualization and definition of sustainable development
as an external tributary into international climate, the converse normative flow
might be at least as valid and probable, and perhaps more significant in the
long run.29
The trade regime could, thus, help discipline and mature the climate re-
gime. If support to the goal of sustainable development is a requirement for
‘surviving’ trade law conflicts, there, apparently, is a good reason for progress-
ing work on safeguards for sustainable development within the climate regime
before they are determined elsewhere.
Article 12.5(b) of the Kyoto Protocol calls for long-term benefits related
to the mitigation of climate change. The contribution of a CDM project to
sustainable development should consequently encompass a wider variety of
emissions and non-emissions related issues. This requirement relates to the key
finding made above in Part I, chapter 2 where we concluded that the overall
goal of the climate regime is not only the stabilization and reduction of green-
26
These are primarily the CDM procedures and modalities on additionality, baselines and
leakage. See Meijer, and Werksman, 2005, 191.
27
See, for an overview, Wang and Wiser, 2002, 181–98. The text of the Kyoto Compliance
System is contained in the Annex to Decision 24/CP.7, FCCC/CP/2001/13/Add.3.
28
See D. Ratliff, ‘Arbitration in “Flexible/Mechanism” Contracts’ in Freestone and Streck
(eds.) 2005, 377 et.seq.
29
Similarly Broude, 2006, 26, who notes in the context of WTO law, that WTO law and
practice of sustainable development as a principle of integration gives evidence of State
practice and of a legal obligation, thereby contributing to the establishment of the prin-
ciple as a general principle or even customary law.
house gases and the enhancement of emission sinks, but that it encompasses
the broader purpose of sustainable development. Its global nature, economic
focus and the elements of distributive justice make it clear that the climate
regime is an important attempt to integrate global environmental concerns
into a wider set of considerations.30
The reality of CDM projects has so far been quite different.31 As has been
noted, the primary focus of almost all proposed and approved projects to date
has been on maximizing the generation of CERs instead of being sustain-
able development projects.32 Three contentious issues in this respect relate
to carbon dioxide capture and storage (CCS), HFC 23 projects and forest
conservation.33
First, the consideration of including CCS projects that aim at capturing CO2
emissions from industrial sources and subsequently store the gas underground
or in the sub-seabed of the oceans, into the scope of CDM rises not only
complicated technological questions with regard to ensuring permanence and
monitoring and legal question as to whether the injection of CO2 in geologi-
cal formations should count as a non-emission, emission reduction or carbon
sequestration.34 It also raises more fundamental points as to the contribution to
sustainable development of such projects. Criticism addresses the fact that this
kind of technological advance channels substantial research and development
into end-of-pipe technological fixes without contributing to long-term benefits
to low-carbon intensive technological development. In fact, it might actually
delay the transition from fossil fuels to more sustainable energy systems.35 So
far, no final decision has been taken and the MOP1 requested the Secretariat
to organize a workshop on this issue which shall enable the EB to prepare
30
See French, 2005a, 275. French states: ‘The adoption of the Climate Convention and
subsequent developments is a real attempt by the international community to try to move
beyond compartmentalization and take a much more holistic approach to an issue, as is,
in any event, mandated by sustainable development.’, 275.
31
Projects have been concentrating in a few countries only and project types that are most
likely to contribute to host country sustainable development, such as renewable energy,
energy efficiency and transport projects are not competitive in the CDM Market and are in
danger of becoming marginalized. See W. Sterk, B. Wittneben, Addressing Opportunities
and Challenges of a Sectoral Approach to the Clean Development Mechanism, Wup-
pertal: Wuppertal Institute for Climate, Environment, and Energy, JIKO Policy Paper
1/2005.
32
See Figueres, 2006, 5 and 7; and Kenber, 2005, 268.
33
See Wittneben et al, 2006, 13–14, 19.
34
See for an overview of this kind of technology: IPCC, Carbon Dioxide Capture and
Storage, Summary for Policymakers and Technical Summary, 2005.
35
Ibid., 14.
recommendations on how to approve CCS projects.36 It is therefore timely and

necessary to place a wider assessment of CCS and sustainable development on
the research agendas.
Second, another challenge to the promotion of sustainable development,
i.e. long-term climate benefits, by the CDM concerns the proposed inclusion
of HFC-23 projects. HFC-23, a greenhouse gas listed in Annex A of the KP
is a by-product in the production of Hydrochloroflorocarbons (HCFC-22),
an ozone-depleting gas regulated under the Montreal Protocol. Incineration
of HFC-23 at existing production sites is already accepted and practiced as
CDM, generating low cost CERs (c. 0,50 US$ per tCO2 equiv.). Expanding
the scope of CDM projects to new incinerations sites could create the perverse
incentive to increase the production of HCFC-22 to generate larger amounts of
HFC-23. The contribution to sustainable development is further undermined
by the fact that HFC-23 projects provide no technology transfer to develop-
ing countries and the low costs CERs from these projects could actually lead
to outpacing other high-quality projects. Again, no final decision has been
taken in this issue and the Subsidiary Body for Scientific and Technological
Advice (SBSTA) was asked by the MOP1 for further elaborations.37 Also here
it is recommended that the discussions around this issue seriously consider
sustainable development impacts of the extension of such projects.
Third, one of the major omissions of the current design of the climate re-
gime, however, is the issue of reducing emissions from deforestation in devel-
oping countries and accounting forest conservation activities. A proposal by
Papua New Guinea and Costa Rica submitted to COP11/MOP1 in 2005 seeks
to include forest conservation activities under the CDM or, alternatively, sug-
gests elaborating an optional Protocol to the Climate Convention. The COP
decided to submit the issue for further deliberations to the SBSTA.38 Forest
conservation, avoided deforestation and accounting for both will thus be dealt
with as part of the post-2012 package. Still, the inclusion of forest conserva-
tion projects could bring about the win-win situation envisaged by sustainable
development, where economic value is attached to the protection of ecological
assets. For developing countries, CDM benefits from ‘avoided deforestation’
could bring about social, economic improvements (via the transfer of environ-
mentally sound technologies – in this case not directly linked to the project) as
well as wider environmental benefits (biodiversity protection).39
36
FCCC/KP/CMP/2005/L.1.
37
FCCC/SBSTA/2005/L.27/Add.1.
38
FCCC/CP/2005/L.2.
39
See for a further discussion of protecting forested areas and the CDM: C.M. Pontecorvo,
‘Interdependence between Global Environmental Regimes: The Kyoto Protocol on
If sustainable development is to be seriously pursued, CDM projects will

need to provide those ‘long-term benefits’ required by Article 12.5 of the Kyoto
Protocol beyond more immediate impacts. However, those immediate benefits
are equally necessary. No long-term benefits can be attributed to the CDM if is
does not lead to real, measurable and additional emission reductions.40
The benefits generated by CDM projects may lessen reliance on carbon-
intensive development. An analysis of sustainable development benefits ac-
cruing from CDM projects has identified the following advantageous impacts:
direct financial incentives for proving the competitiveness of new technologies
for energy reduction, renewable energy generation and increase of energy ef-
ficiency (sustainable energy technologies); development of supporting policy
initiatives; increased understanding and acceptance of the importance and
application of sustainable energy technologies; dissemination of best-practice
techniques; strengthening of local institutional, financial and technological
capacity; increased (sustainable) foreign investment; and increased access to
sustainable energy services.41
Arguably, the most sophisticated analytical methodology for identifying
sustainable CDM projects is the proposed Gold Standard, though other ap-
proaches exist.42 The Gold Standard aims to ensure that CDM projects deliver
real, additional emissions reductions and a clear contribution to sustainable
development. The criteria established are divided into three screens: the project
type; additionality and baselines; and sustainable development. In particular,
regarding the latter, the Gold Standard sets up sustainability matrix, in addi-
tion to an environmental impact assessment and stakeholder consultation. The
matrix aims at assessing a project’s contribution to sustainable development
based on its environmental social and economic impacts.43 The key variables
Climate Change and Forest Protection’ (1999) 59:3 ZaöRV 709–749; D.M. Goldberg,
Carbon Conservation: Climate Change, Forests and the Clean Development Mechanism
(Washington D.C.: Center for International Environmental Law, 1998).
40
Art 12.5(b) Kyoto Protocol.
41
Kenber, 2005, 268.
42
Ibid., also see: <http://.cdmgoldstandard.org>.
43
The list on key indicators for the sustainability performance of a project: Local/regional/
global environment (Water quality and quantity, Air quality (emissions other than GHGs),
Other pollutants: (including, where relevant, toxicity, radioactivity, POPs, stratospheric
ozone layer depleting gases), Soil condition (quality and quantity), Biodiversity (species
and habitat conservation) Social sustainability and development (Employment (including
job quality, fulfilment of labour standards), Livelihood of the poor (including poverty
alleviation, distributional equity, and access to essential services), Access to energy serv-
ices, Human and institutional capacity (including empowerment, education, involvement,
gender) Economic and technological development (Employment (numbers), Balance of
payments (sustainability), Technological self reliance (including project replicability,
are assessed on the basis of on site measurement, existing data and stakeholder
consultation and can score negative or positive. If the overall contribution is
positive and non-negative in all key components, a project is considered as
contributing to sustainable development.
While the Gold Standard, certainly, is laudable, its success will, of course,
depend on its acceptance by project developers, host, buyer and investor
countries and, not least, by the multilateral climate regime, in particular
by the Executive Board. What it so far acquired, is a closer and more spe-
cific understanding of sustainable development. The Gold Standard, together
with other approaches to identifying ‘sustainable’ CDM projects,44 helps to
clarify the substance of sustainable development in the particular context of
CDM projects, but also beyond this mechanism. The identified criteria and
components – if they are accepted and used to guide further project develop-
ment – would reflect the understanding of the international community, both
‘North’ and ‘South’, on sustainable development. This understanding could be
decisive if compliance with WTO norms were at stake.
17.1.4 Proportionality
In order to assess the proportionality between the purpose of the CDM and its
possible negative effects on international trade, the relationship between the
exclusion of non-member participants and the sustainability of the CDM as a
climate measure needs to be examined.
Having discussed the general relationship between the CDM as a climate
mitigation measure and sustainable development, we move on to the par-
ticipation requirements in the CDM and whether the exclusion of non-Kyoto
participants is related to and proportionate to ensuring the environmental
integrity of the CDM.
CDM is intended to provide to Annex I Parties a cost-effective means
to reduce greenhouse gas emissions on a global level. Reducing economic
impacts is yet another aspect of sustainable development. Annex I parties are
enabled to meeting their targets by investing in emissions reduction projects
in developing countries. By introducing the CDM, economic interests of An-
nex I Parties were integrated into the structure of climate change mitigation
under the Kyoto Protocol. States that have committed themselves to concrete
hard currency liability, skills development, institutional capacity, technology transfer).

See: <http://www.cdmgoldstandard.org/uploads/file/DeveloperManual_GS-CER.pdf>.
44
Helio International’s Criteria; SouthSouthNorth Network’s work on projects in Brazil,
South Africa, Indonesia and Bangladesh; Sutter, Sustainability Check-Up.
obligations to reduce their greenhouse gas emissions receive support to shoul-

der the economic burden of these obligations.
This point would be partly – if not completely – lost if States that are
not Members to the Kyoto Protocol were allowed to participate in the CDM.
Emissions reductions achieved by non-Party CDM projects will not offset ris-
ing emission in the territories of these States. Instead, when sold on the global
carbon market, the overall volume of tradable units for Annex I Parties would
rise, thus rendering their reduction obligations less ambitious. Furthermore,
due to the recent growth in the CDM market additional investments from non-
Parties – if they were allowed – could eventually saturate the market, thus
diminishing the potential for CDM projects from Annex I Parties. Article 12
of the Kyoto Protocol provides that CER’s accruing from CDM projects shall
be used to contribute to compliance with part of quantified emission reduction
or limitation commitments of Annex I Parties under the Protocol and not for
commercial interests and speculative trading only.
In order to protect environmental integrity, i.e., the ability to contribute
to the ultimate objective of the Convention, CDM participation and the use,
acquisition and transfer of CERs are limited to Annex I Parties to the Kyoto
Protocol. CERs, the new legal right created by the CDM, are created for use
by Parties to the Kyoto Protocol.45 The restriction of effective State partici-
pation follows from the Kyoto Protocol in combination with the Marrakesh
Accords.46
A non-Party company wishing to participate in the CDM needs to become
a ‘project participant’. A Party to the Kyoto Protocol may thus give private
entities permission to participate in the CDM. However, any Kyoto Party that
authorizes CDM participation of private or public entities remains bound to its
obligations under the Kyoto Protocol. Authorized private entities thus rely on
the continued compliance of the Party.47 If the Kyoto Party is not in compli-
ance, all foreign authorized and domestic entities will also lose their eligibility
to participate.
Moreover, if domestic policies of Kyoto Parties exclude the authorization of
non-Party entities, they would generally be excluded from CDM participation.
The proportionality of such measure depends on the circumstances of the
actual case. What is clear, however, is that Annex I Parties need to establish
45
See the examination in Part 2, chapter 5.5.
46
FCCC/CP/2001/13/Add.2, Annex, para. 31 and para. 2. See the more detailed discussion
on participation in CDM above in Part II. Private entity participation includes entities
from Annex I Member States. (Art. 12.9) Entities from non-Parties can be excluded only
if they have been authorized by a Party or the non-Party gives its consent to be bound by
the Kyoto Protocol. (Vienna Convention on the Law of Treaties, Arts. 34 and 35).
47
See Wilder, 2005a, 253.
national emissions trading registries, where national companies are able to

hold their accounts for buying and selling CERs.48 If entities from non-Parties
were authorized to participate in the CDM, it would amount to giving these
companies a ‘free ride’ vis-à-vis domestic companies faced with the cost of
compliance with national emission levels.49 Accordingly, Annex I Parties may
therefore not only have a legitimate interest in excluding non-Party companies
from CDM participation,50 such exclusion could also be required by sustain-
able development. Sustainable development mandates the appeasement of
economic burdens arising from measures that promote an environmental
objective. The alleviation of economic costs is therefore contingent upon the
implementation of the environmental measure – and should not be granted for
its own sake, i.e. for the pursuit of merely economic or speculative interests.
In other words, those who are not implementing an environmental, e.g. cli-
mate, measure and internalizing its costs, cannot claim a share of its economic
advantages, let alone to profit from them.
Moreover, the comparative disadvantage of Annex I Kyoto Parties derives
from the internalization of costs of climate mitigation. Therefore, proportion-
ality eventually relates to balancing their interest in protecting their economic
sectors covered by reduction obligations against the economic interest of
non-Parties in having free access to a market and profit from the flexible
mechanisms without incurring the costs of binding obligations to reduce their
emissions; a market which was created for other purposes and participants.
Given that Annex I Parties have to incur the costs of complying with their
climate obligations in the first place, exclusion of entities from those States
that are not willing to commit to a binding emissions reduction target appears
proportionate.
In the context of the CDM, ensuring the environmental integrity of the
CDM – and the climate regime per se, by avoiding the inflation of the overall
emission cap – provides further ground for excluding non-Parties and entities.
In cases where the exclusion of non-Party entities is motivated by a need to
protect the environmental integrity of the CDM, it must be considered propor-
tionate to the harm it causes.
48
Marrakesh Accords, FCCC/CP/2001/13/Add.2, Modalities and Procedures for a CDM.
49
See, for example, New Economic Foundation, Free Riding on Climate, 2003, <http://
www.nef.org>; also Bodansky, 2003.
50
See, for example, European Union, cited in Bodansky, 2003; Government of New Zea-
land, National Interest Analysis: Kyoto Protocol to the UN Framework Convention on
Climate Change, available at: <http://www.climatechange.govt.nz/about/kyoto/html>.
Similarly, a consortium of environmental groups strongly discouraged the participation
of non-party entities, see: <http://www.cdmwatch.org/quality-restrictions.php>.
17.1.5 Procedural Requirements
As procedural safeguards of direct contribution of CDM projects to sustain-

able development in developing countries, more specific requirements on sus-
tainable impact assessment, public consultation and participation and benefit
sharing51 have yet to be included in the CDM regime.52
a) Impact Assessment
As with the response to sustainable development indicators, the idea of a man-
datory environmental and sustainable impact assessment for all CDM projects
was seen as an infringement of the sovereignty of potential host States. As a
result the final language of the agreement is weak, requiring nothing more
than an ‘analysis of environmental impacts only if the host country makes it
mandatory for the project to be approved’.53 The CDM Modalities and Pro-
cedures do not provide for the situation that the host country does not have
any laws on environmental impact assessment. If stakeholders have concerns
about the local environment or social impact of a CDM project, it should be
evaluated under the highest international environmental and social assessment
procedures and standards.54
However, the more stringent the rules on environmental and sustainable
impact assessment are, the more costly might CDM projects become. Since
a host country benefits from a CDM project, the absence of harmonized in-
ternational rules may create an incentive for the host country to refrain from
insisting on a thorough impact assessment, in order to make its own market at-
tractive for CDM projects. ‘The CDM’s geographical flexibility,’ warn Meijer
51
See discussion infra, part II. The most straight-forward component of benefit-sharing is
the 2% levy on CDM projects investor countries must pay into a ‘Clean Development
Fund, to cover administrative expenses and help particularly vulnerable developing coun-
tries adapt. Art. 12.8 KP; Decision 15/CP.7, paragraph 15 (Marrakesh Accords).
52
The Decisions Related to Clean Development Mechanism (CDM) adopted by COP/MOP
(Dec. 2/CMP.1 to 7/CMP.1) (‘Kyoto Rule Book 2005’) contain no specification on sus-
tainable developments indicators or requirements.
53
Annex, Decision 17/CP.7, paragraph 37(c) and Appendix B, Art. 2(e).
54
UNEP, CDM Information and Guidebook, 2nd edition. 2004, 61–2. However, the identi-
fication of international standards provides additional challenges. It has been suggested
that existing international or regional standards, such as the Convention on Environmental
Impact Assessment in a Transboundary Context (30 ILM 802; Espoo, 28 February 1991)
or the World Bank’s operational procedures on environmental assessment (World Bank
Operational Policy/Bank Procedures 4.01) could be useful in this context. See Meijer and
and Werksman, ‘should not become a means of channelling projects to host

countries with the lowest environmental standard.’55
Internationally harmonized rules on impact assessment of a CDM project
would counter such a perverse incentive. In order for a CDM project to pass a
‘sustainability test’, they might, indeed, be necessary. Still, such a test would
evaluate the circumstances of a particular CDM project. In this case, it needs
to be shown that the environmental and sustainable impacts were thoroughly
assessed.
b) Public Participation
Involvement of stakeholders, defined as ‘the public, including individuals,
groups or communities affected or likely to be affected’ by the CDM project,56
gives an opportunity to a wider circle to comment on CDM projects at various
stages of the project cycle. The modalities of the CDM require certain types
of information to be made public. There are benefits that could arise from
public participation as regards sustainable development. Local communities
and NGOs could influence project design; their knowledge of local condi-
tions might be of particular value, making it easier for project developers to
recognize community needs and gain public support, avoid delays, financial
risks, local unrest or legal action.
So far, stakeholder involvement requirements are only of procedural char-
acter. Comments from the public must be invited and compiled and form an
official input as part of the validation and registration process of a project.
The concerns of stakeholders are, however, not required to be substantially
reflected in the project development.57 Again, these restrictions on direct pub-
lic involvement resulted from the unwillingness of countries with different
approaches to public participation to agree on harmonized standards.58
However, the requirements of sustainable development may demand a
stronger commitment to stricter and harmonized standards for and more direct
influence of public involvement.59 The reference to international standards for
public participation would prevent a ‘race to the bottom’ toward countries
with low or no regulation on public involvement.
55
Meijer and Werksman, 2005, 210.
56
Decision 16/CP.7, Annex, paragraph 1(e) and Decision 17/CP.7, Annex, paragraph 1(e).
57
Stakeholders, in particular NGOs, have a kind of ‘watchdog’ function. See, for example,
the information made accessible by CDM Watch: <http://www.cdmwatch.org>.
58
Kenber, 2005, 267.
59
Reference could be made, for example, to the UN/ECE Convention on Access to Informa-
tion, Public Participation in Decision-making and Access to Justice in Environmental
Matters (38 ILM 517, Aarhus, 25 June 1998).
17.1.6 In Sum
Despite the fact that it is the stated goal of the CDM to assist non-Annex I
countries to achieve sustainable development, the present regulatory frame-
work remains somewhat rudimentary in identifying and standardizing essential
substantial and procedural requirements for meeting this goal. Yet, confronta-
tion with international trade rules may demand a much stronger institutional
guarantee for the CDM’s direct contribution to sustainable development. The
rather pragmatic and fragmented approach taken so far to ensure the CDM’s
environmental and sustainable integrity will need to be replaced by a stronger,
harmonized regulatory framework. In a trade conflict, where the principle
of sustainable development can be applied as a conflict tool, it will have to
be proven that the CDM as a climate measure is systematically promoting
sustainable development. This should not depend on a ‘hit and miss’ basis of
every single project.
In those cases, where the promotion by a CDM project of sustainable de-
velopment – in both its narrower and wider understanding – can be shown, its
violation of trade norms can be justified.
17.2 Emissions Trading
When assessing a possible trade-discriminative effect of emissions trading

under the ‘sustainability test’, the main question is whether emissions trad-
ing – as a tool to implement mitigation obligations – promotes sustainable
development.
According to Article 17 of the Kyoto Protocol and subject to the modalities
agreed in the Marrakesh Accords, Annex I countries may trade or transfer
assigned amount units and other Kyoto units between themselves and acquire
these units in order to fulfil their commitments under Article 3.1 of the Kyoto
Protocol. The purpose of emissions trading is to provide a flexible and cost-
effective means to achieve a pre-set environmental constraint. An emissions
trading scheme has been recognized as the most cost-effective and efficient
market-based measure to attain emissions reductions. It is, however, impor-
tant to keep in mind that emissions trading as such does not reduce greenhouse
gas emissions. Still, the integration of achieving an environmental goal – the
absolute emissions cap – and economic considerations make obvious the ad-
herence to sustainable development in the context of emissions trading.
As discussed in Part II, tensions could theoretically arise to GATT if the
holding of Kyoto units were a requirement for import, sale or distribution
of energy products and services in Annex I Kyoto States to offset emissions
during the production process60 or where the trade in emission units is con-
sidered to fall within the purview of GATT.
We identified in Part II two possibilities to allow the import of electricity
from non-Kyoto Member States: first, the importer is obliged – and permit-
ted – to purchase allowances on the emissions trading market or, second, in
case the exporting non-Kyoto State has established a mandatory greenhouse
gas emissions trading scheme capping absolute emissions, the tradable rights
under this scheme are recognized in the importing State.61 Both possibilities
either require agreements between the importing and exporting State or an
extension of the existing emissions trading scheme envisaged under the Kyoto
Protocol.
Either alternative entails several challenges. In the first scenario, the obli-
gation to purchase emission units could lead to a reduction in market liquid-
ity in these rights. Such strain on the emissions trading market could have
the effect of fewer allowances being available for domestic entities, thereby
reducing their ability to make use of cost-effective means to fulfil their com-
mitments. Moreover, the requirement of emission allowances for import will
amount to a trade barrier where importers are obliged – and authorized – to
purchase allowances but purchasing of allowances is not easy due to, i.e., lack
of liquidity.62
The second possibility requires that exporting States have in place an
absolute emission cap, the likelihood of which is still rather minimal in non-
Kyoto Member States. Yet, if such cap were implemented, it would have to be
examined whether emission units under that system can be recognized under
the Kyoto-based emissions trading system as a ‘reasonably available alterna-
tive’ to exclusively recognizing AAUs, CERs and ERUs. Here, problems arise
regarding monitoring, reporting of emissions and accreditation and verifica-
tion of emission units from non-Kyoto States. In order to recognize ‘outside’
60
See also: W. Spieth, Europäischer Emissionshandel und deutsches Industrieanlagenrecht
(Berlin, 2002) 63 et seq. Spieth argues that this could affect treaties of the EC with third-
party States regarding mutual recognition of emission allowances.
61
This possibility is envisaged under the EU ETS Linking Directive (2004/101/EC): Fol-
lowing entry into force of the Kyoto, the Commission should examine whether it could be
possible to conclude agreements with countries listed in Annex B to the Protocol which
have yet to ratify the Protocol, to provide for the recognition of allowances between the
Community scheme and mandatory greenhouse gas emissions trading schemes capping
absolute emissions established within those countries (para. 18).
62
De Cendra, 2005, 34. A similar situation arises where instead of emission allowances
a border tax adjustment (BTA) with a tax equalling the price of allowances is imposed
on imported products to offset competitive disadvantages of those firms or industries
covered by the emissions trading scheme. In this case, however, no absolute trade barrier
arises.
rights, the emissions systems would need to be compatible, meaning that they
need to be harmonized and streamlined. By the end of the day, it means that the
non-Kyoto Party were required to implement a similar regulatory scheme as
envisaged under the Kyoto Mechanisms. Such requirement, despite its strin-
gency, might however be necessary to ensure the environmental effectiveness
of emissions trading under the Kyoto Protocol.
The effect such requirements could have is to submit non-Kyoto Parties
under a similar emissions cap as implemented under the Kyoto Protocol,
thereby expanding the actual scope of the scheme despite missing ratifica-
tion and avoiding the problem of ‘free riding’ and competitive advantages of
certain emissions intensive industrial sectors of non-Kyoto States.
The scope of interests affected by emissions trading is certainly much wider

than merely the interests put forward by the two parties of a dispute. Account
has to be made of the interest of the global community in moving toward
climate stability, the interest of the group of Kyoto Parties in the environ-
mental integrity of the climate regime, i.e., the ability of the system to reduce
greenhouse gas emissions, the interests of those Parties in maintaining carbon-
constrained, but competitive domestic industries, the interests of citizens and
consumers in the correction of market failures by internalizing ‘climate costs’,
alongside interests in non-discriminatory treatment and trade liberalization.
17.2.2 Strength of the Protected Interest
At least, two kinds of interests in trade-restrictive components of emissions

trading can be discerned: interests in the protection of competitiveness of
domestic industries and in securing the environmental integrity of climate
regulation against carbon leakage.
First, the requirement of Kyoto units for the import, sale and distribution of
energy products or services is motivated by the wish to create a ‘level playing
field’ for producers and service providers with regard to the internalization
of costs accruing out of compliance with the obligations under the KP. This
requirement aims at protecting economic interests of domestic industries by
offsetting the competitive disadvantage of having to internalize the costs of
emissions reductions in comparison with businesses based in non-abating
States (non-Parties), which are under no obligation to internalize the costs of
meeting Protocol targets.
Furthermore, the inclusion (in the scope of the measure) of greenhouse gas
emissions that have occurred elsewhere by manufacturers of products which
are consumed domestically is based on the interest of Kyoto Parties in the
environmental effectiveness of the climate regime. The ‘climate impact’ of
products is properly mirrored in the price of a product when all, including
external – here extraterritorial – greenhouse gas emissions are accounted for.
Second, excluding non-Parties and respective private entities from the in-
ternational emissions trading market could be viewed as a means of securing
the environmental integrity of the emissions trading system. The most impor-
tant requirement of such integrity is the existence of a strong cap on emissions.
This cap would be watered down, were emission credits from non-capped
States allowed to enter the carbon market. Any inflation of the cap would
jeopardise the environmental integrity of the emissions trading market.
All participants need to stay within this cap. Here, the administrative
control of the trading system, and environmental safeguards, such as report-
ing and monitoring requirements etc. are of crucial importance. Accuracy of
measurement and reporting by Annex I Parties are critical to the successful
implementation of the Protocol’s target obligations.63 Administrative control
of foreign entities might be more difficult, with less transparency creating
an opportunity to circumvent these safeguards. The exclusion of non-Party
entities is a means to prevent circumvention of these crucial administrative
requirements.
According to the principle of sustainable development, the strength of the
interests in an effective climate mitigation system and in competitive domestic
industries, on the one hand, need to be weighed against the strength of the
interest in upholding a liberalized international trading system, on the other.
Here, the inherent value hierarchy of the principle of sustainable development,
which puts the protection of natural and ecological functions on a higher hi-
erarchical level, comes into play and must eventually determine the outcome.
17.2.3 Sustainable Development in a Broader Context
Affected interests extend to those of the wider society. The aim to reduce
compliance costs by means of emissions trading would also ease the economic
burdens that industries and citizens of Kyoto Parties including consumers of
the affected products and services would otherwise have to bear. Emissions
trading can thus be seen as a kind of ‘burden sharing’ where those with a
63
FCCC/CP/1998/MISC.7.
commitment to a carbon constrained economy share the social and economic

costs of that commitment.
Creating cost-effective GHG emission reduction mechanisms by way of
integrating economic considerations into the climate regime, as systematically
done by emissions trading, provides a prime example of how to integrate en-
vironmental, social and economic interests in one measure. From the outset,
emissions trading as such is not supposed to have any adverse environmental
effects. Trading serves to reallocate existing assigned amount units (AAUs)
among Annex I Parties, with the aggregate obligation of Annex I Parties
remaining constant. The contribution of emissions trading to environmental
protection is probably still the greater for having enabled Parties to adopt to
more ambitious targets than otherwise would have been the case. The inclu-
sion of emissions trading encouraged Parties to adopt the Protocol and enables
them to cost-effective compliance with Article 3 commitments.
Further, the commitment of industrialized countries to take the lead in
climate mitigation would probably not have been made in the absence of eco-
nomic instruments such as emissions trading. This has to be considered along-
side the willingness of developing countries to consider mitigation measures
which is contingent upon the proof of such lead.
Emissions trading has come to be a – maybe the – central pillar of the
mitigation strategy of Annex I Parties. It therefore has a direct bearing on
the ability of these States to ‘take the lead’ – while indirectly affecting future
commitments of developing countries. The minimization of economic – in
particular competitive – advantages that would accrue to non-Parties as a
result of not taking measures to abate climate change is therefore an aspect
deeply interwoven with the success of the present and future international
climate regime.
The broader relationship between emissions trading and sustainable devel-
opment includes aspects of proportionality, equity and the affect of interests
other than purely economic ones. Emissions trading cannot be severed from
the guiding principles of the Convention and the Kyoto Protocol. This means
that efficiency should not come at the expense of equity or sustainability.64
Therefore, considerations of equity ought to lie at the heart of the emissions
trading scheme. The assigned amounts in the Kyoto Protocol were negotiated
so as to reflect enhanced developed countries’ responsibilities (in that they do
not apply to developing countries) and equity (in that they are differentiated
in light of various equitable considerations).65 As mentioned above, emissions
trading only reallocates assigned amounts and does not change the overall
64
Cullet, 1999, 174.
65
FCCC/CP/1998/MISC.7, 38.
amount assigned to Annex I Parties. It will, thus, not alter the equitable bal-
ance between developed and developing countries that was established by the
Kyoto Protocol.
In order to ensure this balance, a number of safeguards need to be in
place.
Here lies a critical point of the assessment. For it to justify exclusion or
discriminatory treatment of foreign products or services (either directly or
indirectly), emissions trading needs to prove that it is more than just a cost-
effective means of meeting the Kyoto targets. In terms of sustainable develop-
ment, emissions trading also needs to prove its environmental integrity and
effectiveness. In other words, it needs to contribute to climate strategies that
seek to ensure long-term climate benefits.
Environmental integrity concerns exist because, unlike domestic trading
schemes which rely on domestic regulation, including high penalties and strict
enforcement to deter non-compliance, the international monitoring, tracking
and verifying GHG emissions is far more complex.
On this note, Yamin and Depledge express concern because
accurate and timely self-reporting by governments in the absence of an international

authority enforcing compliance does not have a good track record. Because under the
Convention many Annex I Parties had failed to keep pace with their reporting com-
mitments, these considerations fuelled concerns that trading mechanisms that required
governments to keep tabs on thousands of emission sources would prove too taxing
for many governments and might give rise to fraudulent transactions. Additionally, the
lack of stringent Kyoto targets for a number of EITs, such as the Russian Federation
and Ukraine, gave rise to concerns that such countries might sell their surplus allow-
ances. Such surplus allowances, which bore no relation to climate mitigation policies,
were known as ‘hot air’ or ‘paper tonnes’, and could be used by richer buyer countries
to avoid making politically unpopular domestic reductions.66
Therefore, the constituents of environmental integrity need to be ensured.

Some safeguards were incorporated in the design of the international
carbon market based on the Kyoto Protocol’s flexible mechanisms to en-
sure consistent standards of environmental integrity. These environmental
safeguards, however, where they exist, are still rudimentary at best. Judging
from their vulnerability to circumvention they constitute the ‘Achilles heel’ of
‘trade justification’. As long as legal safeguards are not implemented which
can systematically guarantee environmental integrity of the trading scheme, it
may be difficult to ward off a trade challenge. In the interest of a more robust
66
defence against a claim of violation of WTO law, it is timely and necessary to

develop and consolidate environmental safeguards for emissions trading.
As elaborated above, a strong, long-term emissions cap is the crucial vari-
able in determining the environmental integrity of emissions trading. But once
the cap has been set, it is equally important that emissions actually remain
below the set limit. Here monitoring, reporting, tracking, and verifying re-
quirements play a significant role. Certain safeguards will also need to be in
place to make sure emissions reductions primarily happen in the territories of
States with reduction obligations (usually referred to as supplementarity) and
to avoid surplus units that do not correspond to any emissions reductions or
emissions reduction based on climate policies. Moreover, emissions trading
needs to systematically provide incentives for technological change and the
development of low-carbon societies.
These three components, referred to as (a) supplementarity, (b) ‘hot air’,
and (c) technological potential, will now be briefly explored before finally
discussing the importance of accountability and liability of participants in an
emissions trading scheme (d).
a) Supplementarity
Article 17 of the Kyoto Protocol requires governments to give precedence
to domestic climate action.67 The Marrakesh Accords say that the ‘use of the
mechanisms shall be supplemental to domestic actions and domestic action
shall thus constitute a significant element of the effort made’ by each Annex I
Party in meeting its obligation under Article 3.1.
This supplementarity requirement has a direct connection with sustain-
able development. By requiring the priority of domestic action, it implicitly
demands a de-carbonizing and restructuring of domestic industry. Reducing
harmful emissions by, for example, promoting better means of public, collec-
tive transport, alternative energy sources and more energy efficient vehicles
has the triple benefit of reducing local air pollution and thus creating better
living conditions, creating new employment opportunities and mitigating cli-
mate change. This is an illustration of the fact that climate change cannot be
tackled as an environmental problem only.
However, the exact extent of supplementarity for the use of flexible mecha-
nisms to domestic policies is not legally defined. The word ‘significant’, used
in the Marrakesh Accords, does not carry any quantitative connotations and
67
“Any such trading shall be supplemental to domestic action for the purpose of meeting
quantified emission limitation and reduction commitments under that Article.” Article
17(3).
was chosen in preference to words such as ‘primary’ and ‘principal’, which

did.68 While certain restrictions exist on the use of credits from land use and
land use change (LULUCF) activities under CDM projects,69 emissions trad-
ing has not – as yet – been subject to such quantitative restraints.
So far, the only aspect Annex I countries were able to agree on was proce-
dural qualifications. To meet the supplementarity requirement, these countries
have to submit information about their use of the mechanism and domestic
action as part of the general information required by Article 7, to be reviewed
by expert review teams according to Article 8. The reporting requirement of
Article 3.2 of the Kyoto Protocol whereby Annex I Parties must report ‘de-
monstrable progress’, is also relevant for assessing supplementarity.
Justifying the exclusion of foreign participation in emissions trading (or
the requirement that foreign energy, energy- or carbon-intensive products
may be accompanied by emissions allowances), would however require proof
that the defending Annex I Kyoto Member has an effective domestic climate
policy in place and that the use of the flexibility mechanism is an additional
and supplemental means of reducing the cost of greenhouse gas emission
measures. Emissions trading should not be the only means of implementing
climate mitigation strategies, of course, and must not lead to postponing the
implementation of other, maybe more effective, climate measures.
Were a dispute to arise concerning the exclusion of a country from emis-
sions trading, the legal situation would need to be explored from the per-
spective of sustainable development. Whether domestic action in the country
implementing a trade-restrictive climate measure constitutes a significant ele-
ment of the climate policy of that country would have to be considered in this
context. It would therefore be sensible to set up a measurable, harmonized,
multilaterally agreed rule on supplementarity, preferably with a clear quanti-
tative constraint.
As with the CDM, the ability of the present international regulatory
framework for emissions trading to standardize substantial and procedural re-
quirements for sustainability and supplementarity remains undeveloped. Yet,
confrontation with international trade rules may also here demand a much
stronger systematic guarantee of the direct contribution to sustainable devel-
opment of emissions trading.
68
69
The total additions to a Party’s assigned amount resulting from LULUCF activities under
the CDM shall not exceed 1 per cent of base-year emissions of that Party, times five.
Decision 11/CP.7, Annex, para. 14.
b) Hot Air
Another critical element of emissions trading is to ensure that tradable allow-
ances reflect real, measurable and long-term emission reductions based on the
implementation of a climate mitigation policy. ‘Hot air’ or surplus allowances
bear no relation to such policies and – if they enter the carbon market – could
undermine the credibility and environmental effectiveness of the climate re-
gime. The issue of ‘hot air’ arises on two levels: first on the State level and
second on the level of allocation of allowances to national entities.
First, regarding State obligations, allowances vastly in excess of antici-
pated needs were agreed under the present climate regime for most Central
and Eastern European States. Due to political and economic changes in these
countries their targets exceed their projected emissions quite considerably.
The challenge is to exclude such ‘paper allowances’ from being traded on the
emissions trading market where other countries might purchase them to avoid
politically unpopular domestic reductions.70 Hot air could easily compromise
incentives to make emission reductions that otherwise would exist under a
stronger cap.
From a legal point of view, all AAUs are the same – whether ‘excess’ or
‘normal’ – and can be traded if the conditions for trading are met under Article
17 of the Kyoto Protocol.
So far, public and NGO pressure on governments has been the only feasible
channel open to discourage the trading of such AAUs.71 It might be time to let
these considerations take their place in the legal framework and adopt some
sort of mechanism to restrict trading to allowances directly related to domestic
climate mitigation policies of the selling country.
Second, with respect to allocation to national entities, the total quantity of
allowances is decisive. Here, it is important to avoid allocating hot air (AAU)
allowances – where they exist – to legal entities, e.g. industrial installations.
The EU ETS, while not preventing the introduction of hot air into the
scheme,72 does attempt to avoid the allocation of hot air to legal entities. An-
nex 3 to the Directive states:
70
71
See Climate Action Network Europe (CAN-E) reaction to the EU – Emissions trading
proposal: ‘Emissions trading in the EU: Let’s see some Targets!’, 20 December 2001,
available on the internet at: <http://www.climnet.org/EUrenergy/ET.html>.
72
See: J. Anderson and R. Bradley, ‘Joint Implementation and Emissions Trading in CEE’
in Yamin (ed.) 2005, 223–224. They note that the introduction of hot air into the EU ETS
through the allocation of allowances would allow the use of this free resource under the
guise of what is seen as a ‘domestic policy’, 224.
The total quantity of allowances to be allocated shall not be more than is likely to
be needed for the strict application of the criteria of this Annex. Prior to 2008, the
quantity shall be consistent with a path towards achieving or over-achieving each
Member State’s target under Decision 2002/358/EC [Burden Sharing Agreement] and
the Kyoto Protocol.
However, it is primarily up to the discretion of each Member State to set up

a National Allocation Plan stating the total quantity of allowances and how
they propose to allocate them, to be reviewed by the Commission. Annex 3
itself contains several provisions that could be used as an excuse for over-
allocation. These include, for example, accommodation of early action, taking
into account technological potential (clean technologies and energy efficient
technologies), treatment of new entrants, and unavoidable increases in emis-
sions resulting from new legislative requirements.73 Providing an opportunity
for early action is particularly vulnerable to open for the importation of hot air
into the EU ETS. The decline in emissions in Central and Eastern European
Countries was almost entirely in the industry sector, most of which is covered
by the ETS. The significant decline (giving rise to hot air) could very well be
seen as ‘early action’.74
Although these countries are not expected to exploit these opportunities to
allocate hot air to their legal entities, no legal requirement exists to prevent
such allocation. If arguments of environmental effectiveness and integrity are
to justify the exclusion of non-Party entities in international emissions trading,
preventing hot air from entering the carbon market must rely on more than
the mere willingness of State participants. Rather, it is necessary that robust
legal security measures are in place that aim at preventing the use of hot air
allowances.
Another form of ‘additional hot air’ could arise not from the ordinary al-
location of hot air allowances to legal entities, but the over-allocation of al-
lowances (even where they are not hot air). Too generous an allocation would
compensate for the required emission reduction effort and create also here a
disincentive to technological change. These concerns are related– but exist
in addition – to the issue of subsidising a particular industry or installation
elaborated in Part II. Over-allocation is thus not only a WTO concern with
regard to subsidy rules, it also harms the environmental effectiveness of emis-
sions trading.
73
See for an overview: Mehling, 2005, 143–151.
74
See Anderson and Bradley, 2005, 224.
c) Incentives for Technological Innovation

In the long-term, a critical element for meeting the climate change challenge
will be the development and diffusion of new carbon-constrained technolo-
gies. Ultimately, any climate strategy will have to be measured against its
capacity to foster the development and investment in new low-carbon tech-
nologies.75 One of the main criticisms with regard to the EU ETS has been
that it discourages rather than encourages investment in new and low-carbon
technologies in the long-term.
Sequential, short-term allocation periods and unpredictability as regards
future emission caps create investment uncertainties. In the absence of a
longer and stronger emission cap emissions trading will not be capable to
provide sufficient incentives to develop and bring to the market new technolo-
gies.76 Neuhoff et al. note that price signals need to be much higher and more
credible in the long-term to generate a significant amount of private resources
for research and development.77 Moreover, current allocation periods provide
certainty for only three (2005–2007), and then five years (2008–2012) – peri-
ods that are far shorter than those associated with investment cycles.78
In addition, certain allocation methodologies and rules on new entrants and
closure rules create perverse incentives for CO2-intensive plants to remain in
operation in order to receive free allocations, even if closure or replacement is
environmentally more effective. In addition, firms might operate more carbon-
intensive technologies if they anticipate that future allocations of allowances
will be proportional to current emissions. This implies higher overall abate-
ment costs in the long term to meet the cap.
To a large extent this is the result of international indecision, which in
return reduces predictability. Therefore, a much stronger, long-term cap, cou-
pled with longer allocation periods, stable baseline years, allocation certainty
which derives future allocation from past allocation and includes stringent
technology requirements, for example, based on Best Available Technology
(BAT) or long-term efficiency targets and efficiency indicators for industrial
sectors are necessary as safeguards for technological change.79
75
CEPS, The EU Emissions Trading Scheme: Taking Stock and Looking Ahead, 2006, 13.
76
Matthes, F., Graichen V., and J. Repenning, Power Switch: The Environmental Effective-
ness and Economic Efficiency of the European Union Emissions Trading Scheme, Report
to WWF, Öko-Institut (2005).
77
K. Neuhoff et al., ‘Allocation, Incentives and Distortions: the Impact of EU ETS Emis-
sions Allowance Allocations to the Electricity Sector’ (2006) 6 Climate Policy, 73–91,
74.
78
CEPS, 2006, 14.
79
See for specific recommendations with regard to the EU ETS second allocation round:
WWF, Power Switch: The Environmental Effectiveness of the EU ETS: Analysis of Caps,
Critical precondition is however that efficiency targets at sector or installa-

tion levels are in line with effective long-term climate change targets and that
such targets are accompanied by long-term allocation periods and methods
that include technology standards and efficiency indicators.80 Particular at-
tention should be paid to the power sector as the principal investment sector
relevant to climate change.81
d) Accountability, Responsibility, and Liability

Finally, issues of accountability and responsibility play into the integrity of
emissions trading. The engagement of private entities triggers the application
of rules under domestic as well as private international law. The Kyoto Proto-
col is silent about the law applicable to emissions trading and the transfer and
acquisition of Kyoto units. The interplay of various legal systems, which may
entertain a different concept of rules for transfer, trading and liability, could
lead to confusion.
Trading between private entities is based on contractual agreements. These
private commercial contracts are not covered by the Kyoto Protocol. The ap-
plicable law to these contractual relations depends thus on the existence of a
choice of law clause in the international contract or, in the absence of such a
clause, on the application of conflict of law rules. A court or international tri-
bunal then has to consider the applicable law. The conflict of law rules may be
based on an applicable treaty or on the national law of the adjudicating body.
With many potentially applicable rules, dispute resolution is likely to produce
dissimilar, maybe conflicting outcomes on issues of ownership, liability or
compensation. To ensure the effectiveness of the ETS, some kind of standard
contract should be considered.
While trading between private entities on a multinational level becomes
an important component of international emissions trading schemes, their
engagement can cloud the responsibility of the State Parties concerned under
public international law.
Trading, acquisitions and responding transfers of AAUs between private
entities shall be recorded in national registries. These national registries shall
October 2005. For more details, see also: Egenhofer, C. and Fujiwara, N., Reviewing the
EU Emissions Trading Scheme – Priorities for Short-term Implementation of the Second
Round of Allocation, CEPS Task Force Report, No. 57 – Part II, Centre for European
Policy Studies (Brussels, March 2006).
80
CEPS, The EU Emissions Trading Scheme: Taking Stock and Looking Ahead, 2006,
13–15.
81
Ibid 15.
ensure accurate accounting of the issuance, holding, transfer, acquisition,

cancellation, and retirement of Kyoto Units.82 Transfers between national reg-
istries are in general governed by Article 17 Kyoto Protocol and the provisions
of Marrakesh Accords (Decision 18/CP.7). However, it is important to note
that all transfers will have to be made through the national registries, includ-
ing transfers between legal entities. A transfer of Kyoto units by a legal entity
in Party A to a legal entity in Party B is, at the same time, a transfer of Kyoto
units from Party A to Party B.
As private entity trading may affect the obligations of State Parties under
an international agreement, the Parties nevertheless remain responsible for
the transfer between national registries. Compliance and emissions trading
under the Kyoto Protocol are closely linked. An efficient and reliable registry
system is crucial to ensure compliance with emission limitation and reduction
commitments. At the same time, such system is crucial for the success of the
emissions trading market.83
Still, the linking of national registries on an international plane needs to be
seen.84 So far, only the EU ETS links the various registries of the EU Member
States. As said in Part I, linking registries will be at the heart of IET by making
the holding, accounting, and transfer of Kyoto units a reality. Liability of reg-
istries – if they are endowed with legal personality – or of registry operators
and administrators is therefore an important issue. Questions of liability will
have to be resolved under relevant domestic laws.
Under certain circumstances, legal issues of international law may be
raised. As Hobley and Hawkes note, of particular interest here is the situation
where a foreign private entity, authorized to hold an account at the registry,
suffers a loss by termination of transfer because the State Party in whose reg-
istry the allowances are held does not fulfil the eligibility requirements under
the Kyoto Protocol for emissions trading. This potentially may amount to
‘creeping’ or ‘indirect’ expropriation and raises issues of liability and eventu-
ally compensation.85
Under international law, deriving from the right of individuals to hold
property, foreign investors may claim compensation from the host State where
the State has deprived the investor of the value of his investment. In the above-
mentioned situation, the Kyoto Member State, however, has a direct obligation
82
Decision 19/CP.7.
83
See A. Hobley and P. Hawkes, ‘GHG Emissions Trading Registries’ in Freestone and
Streck (eds.) 2005, 154.
84
The International Transaction Log (ITL) under the auspices of the UNFCCC Secretariat is
to be launched in April 2007. See Global Carbon Exchange to Launch on Time, 9 August
2006, <http://www.planetark.com>.
85
Ibid., 150.
under the Kyoto Protocol to refrain from emissions trading until eligibility has
been reinstalled. It is suggested that in this case, where an international obliga-
tion leads to property losses, the State may be given wider latitude to interfere
with the property rights of the account holder.
The compliance system of the Kyoto Protocol is one of the critical means
of ensuring the Protocol’s integrity. If a State restricts the movement of Kyoto
units in its own territory, the State can thus be seen as acting in the public
interest and therefore as not amounting to an expropriation. The law will take
into account the legitimacy of the obligations of the Kyoto Member State in
imposing limitations on property rights.86
However, foreign legal entities can only hold a registry account if they are
authorized by a Kyoto Member State. As suggested above, in the interest of
the integrity of the emissions trading scheme, this should be avoided where
the foreign entity seeks to participate for reasons of speculation. Not only
would one avoid the potential complexities of liability and compensation for
losses in situations where no transfer of emission rights can be made, it would
also ensure that emissions trading eases the economic burdens only of enti-
ties which are actually paying climate mitigation costs. As a consequence this
would ensure that emissions trading remains what it always was meant to be:
an economic means to an environmetal end.
17.2.4 In Sum
Emissions trading may be having a trade-discriminatory effect. In case of con-

flict with WTO norms, it needs to be shown that emissions trading supports
the objective of sustainable development by integrating environmental, social
and economic considerations.
As was discussed, the ability of emissions trading to stay within the set
(strong) emissions cap is crucial for its environmental effectiveness, which, in
86
This situation, however, raises complex questions which cannot adequately be addressed
at this point. Under the European legal system, investment protection has been enshrined
in Article 1 of Protocol 1 to the European Convention on Human Rights. Here, recent case
law indicates that a State is granted wider discretion (or wide margin of appreciation)
to interfere with an individual’s property rights in situations where it acts in the public
interest. See for example James and others v. United Kingdom, Series A98 (1986), where
the ECHR by finding ‘it natural that the margin of appreciation available to the legislature
in implementing social and economic policies should be a wide one, will respect the leg-
islature’s judgment as to what is ‘in the public interest’ unless that judgment be manifestly
without reasonable function’ (para. 46). See for further discussion: M. Emberland, The
Human Rights of Companies (Oxford: Oxford University Press, 2006) 188–189.
itself, is a requirement for sustainable development and essential for ‘passing’

the proposed ‘sustainability test’.
Environmental effectiveness depends on environmental performance safe-
guards, such as monitoring, reporting requirements under the Kyoto Protocol,
the requirement of supplementarity, of avoidance of excessive allowances,
and of supporting – and not impeding – the development of low-carbon tech-
nologies. Compliance with the cap is closely linked to accountability of the
participants and the efficient functioning of registries at the heart of the sys-
tem. Here, certain liability issues do remain.
While not all aspects could be elaborated here, those that have been elicited
show that there remains potential for the legal design of emissions trading to
establish more robust environmental safeguards. Not all facets of emissions
trading are yet designed in a way that would defeat the circumvention of one
or some of its environmental parameters. To survive a WTO claim, however,
this is a quality they must exhibit.
17.3 Summary
Part III elaborated the application of the principle of sustainable development

to conflicts between climate change mitigation measures and WTO norms. In
this way, it brought the findings of Part I and II together.
An adequate solution, taking into account the collective interest in the
protection of the climatic system, cannot be found by relying on the legal
reasoning of text interpretation only. The limitations of interpretation are such
as to demand openness towards other modes of legal reasoning.
Under the applicable law, we suggested the use of the principle of sustain-
able development as a principle of integration to determine the correct bal-
ance of interests and values in such a situation. We argued for the principle’s
application in WTO dispute settlement as a general principle of law, already
expressly incorporated as part of WTO Law.
Finally, we showed that a climate change mitigation measure must satisfy
certain criteria to pass the ‘sustainability test’, were such test to be applied to a
potential conflict between WTO norms and a climate change mitigation meas-
ure. This test can modify and supplement norms of multilateral trade where
they do not account of common interests, such as the protection of a stable
global climate system. From the perspective of sustainable development these
interests must be given priority.
However, as suggested at the outset, the test could also help to ‘discipline’
and ‘correct’ climate measures. In our example, we showed that despite their
integration of environmental, social and economic considerations as mandated
by sustainable development, the Clean Development Mechanism and Interna-

tional Emissions Trading are not yet sufficiently robust to safeguard environ-
mental effectiveness and, thus, the environmental integrity of the global carbon
market.
The threat of a WTO claim is not only a challenge to climate measures – it
is also an opportunity. The requirement of complying with the objective of
sustainable development is a call to make them better, stronger, more effective
and environmentally sound.
Chapter 18
Final Conclusions
18.1 Sustainable Development in Climate Change and International

Trade Law
Sustainable development at its core demands the maintenance of ecological

conditions for human life, welfare and development. It implies limitations
on State activities where they threaten these conditions including the natural
processes on which they depend. Sustainable development requires the needs
of present and future communities to be adequately met while safeguarding
the Earth’s capacity to sustain life and support human welfare.
There is an intrinsic link between sustainable development and the protec-
tion of the global climatic system. The global climate system is a complex
ecological system which is fundamental to human survival and all life on
Earth. A stable climate is essential to human welfare and development. The
stability of the global climate system is threatened by human-induced changes
to ecological systems and the accumulation of anthropogenically caused
greenhouse gases in the atmosphere. Protection of the global climate system
thus becomes a precondition for any development to be sustainable. At the
same time, climate measures must accord with the requirements of sustainable
development to be effective.
This reciprocity has started to take form in the design of the global cli-
mate regime. Structures are in place which give evidence of simultaneous
integration of environmental, social and economic interests as mandated by
sustainable development. They are based on: (i) the common but differenti-
ated responsibilities of industrialized countries and countries with developing
economies, (ii) the recognition of the precautionary principle, and (iii) the
possibility of using flexible and cost-effective mechanisms when implement-
ing and complying with quantified emissions limitation and reduction com-
mitments.
At the same time, the international trade regime under the WTO embraces
the concept. The legal texts and dispute settlement show that sustainable de-
velopment has been incorporated as a guiding objective into the WTO system.
Liberalization of multilateral trade is thus no end in itself. It means that the
purpose of the WTO is the liberalization of international trade in pursuance of
the common policy of sustainable development.
If it is accepted that such a common policy underlies the WTO legal frame-
work, it helps to determine the substantive content of WTO norms as well as
the outcome of dispute settlements. As a consequence, measures that other-
wise violate WTO norms could be justified as ‘necessary to ensure sustainable
development’. Sustainable development is thus the framework under which
a balance must be struck between the obligations under WTO legal texts and
other measures supporting the objective of sustainable development.
We also argued that sustainable development needs to be understood as the
meta-objective of both the international climate regime and the international
trade regime of the WTO. Neither free trade nor climate protection can be
treated as goals in themselves. Both are means to the same end, the sustain-
ability of human societies. Sustainable development is the guiding concept
in the effort to realize this ideal. It is the framework within which the whole
plurality of priorities must be addressed, including climate and trade law rules
and their interrelationships. Sustainable development can be seen a ‘concep-
tual bridge’ linking these priorities and the background against which accom-
modation, reconciliation and integration of diverse and sometimes conflicting
interests need to be addressed.
18.2 Sustainable Development as a Legal Principle of Integration
The most important aspect of sustainable development is integration. Integra-

tion in its legal sense means the simultaneous consideration of social, eco-
nomic, and environmental aspects of a subject in a ‘normative continuum’,
i.e. in the negotiation process, the provisions of the final treaty texts, their
implementation and eventually in the decisions of international courts and
tribunals.
In the context of sustainable development, the integration of these diverse
priorities needs to be carried out within the ultimate limits set by the resilience
of essential natural (biotic and abiotic) processes. When accepting certain
ecological thresholds a hierarchy of priorities arises.
Sustainable development may serve as a norm in its own right where it
requires and facilitates a balance and reconciliation between conflicting le-
gal norms relating to environmental protection, social justice and economic
Chapter 18 – Final Conclusions 375
development. As a general principle of law it can be invoked by courts and

tribunals to interpret and even modify the application of other norms. The
classification of sustainable development as a general principle is based on
(i) its normative value, (ii) the collective interest in sustainable development
supported by general acceptance by the international community – forming
an opinio juris communis, and (iii) its capacity to facilitate interaction and
integration between a set of diverse factors (i.e. economic, environmental,
social). Moreover, its use in foro domestico and international jurisprudential
practice supports the conclusion that sustainable development is a general
principle of law.
State practice and opinio juris would most likely support the claim of a
customary manifestation of the principle. However, the application of the gen-
eral principle of sustainable development as an ‘arbiter’ in conflicts between
treaties is (widely) independent from a customary status. By serving the func-
tion of a conflict resolution tool it is applied as a principle for decision, rather
than a principle for conduct.
18.3 Areas of Conflict between Climate Measures and WTO Law
Due to the dynamism of the international climate system, it is difficult to clearly

mark the exact points of normative conflict with the WTO legal system. To ac-
count for the climate regime’s dynamic element the analysis therefore looked
at the possible scope of flexibility measures allowed under the Kyoto Protocol
and their likely development.
In spite of a general assumption that international emissions trading does
not fall under the rules of the WTO, such result cannot be supported with
absolute certainty. Excluding non-Kyoto Parties from trading might under
certain circumstances therefore be considered an infringement of the market
access and national treatment provisions of Articles II, XVI GATT.
Where the design of emissions trading requires emission rights for the
import of energy-related products (electricity or natural oil and gas), such
requirement can amount to an infringement of substantive non-discrimination
rules contained in GATT if no or few allowances are available on the emis-
sions trading market.
Similar WTO challenges arise with regard to the CDM. Eligibility to host a
CDM project will be granted to developing countries only, while eligibility of
a country to use Certified Emission Reductions (CERs) as a result of a success-
ful CDM project requires the ratification of and compliance with the Kyoto
Protocol. In other words, three types of service providers will be ineligible
for transfer and acquisition of CERs: (1) non-authorized entities from non-
Annex I countries that are not Parties to the Kyoto Protocol, (2) non-authorized
entities from Annex I countries that are not Parties to the Kyoto Protocol, and
(3) authorized project participants where the authorizing country is not in
compliance with its eligibility requirements for participation in the flexibility
mechanisms.
The participation requirements in the CDM therefore establish absolute
restrictions on services and service suppliers from these countries, which
affect trade in services and thus could constitute less-favourable treatment
than accorded to service suppliers authorized by complying Kyoto Parties.
Existing WTO jurisprudence indicates that such discrimination under certain
circumstances is likely to violate the general obligation of the Most Favoured
Nation rule of Article II GATS.
While exception clauses appear applicable to these situations, WTO ju-
risprudence suggests they might not remedy all infringements of WTO law.
Where climate measures cannot be justified under Article XX GATT or Article
XIV GATS a normative conflict exists. Uncertainty remains in particular with
regard to the view of a panel or the Appellate Body on the necessity of such
a measure under WTO law where alternatives include considerably higher
administrative input or constitute a threat to the environmental integrity of the
climate regime in general. In addition, it remains unclear how the importance
of common interests or values incorporated into the design of IET and the
CDM (and the accompanying impact on imports or export) would be balanced
in the settlement of a dispute, in particular where concerns of competitiveness
of members to the Kyoto Protocol are at stake.
After all, while a panel or the Appellate Body could decide in favour of
a trade-restrictive climate measure, there is no certainty as to whether it in-
deed would. The WTO dispute settlement body has so far failed to provide
a consistent method of interpretation and application of the developed legal
methods. This situation creates legal uncertainty as regards the specific re-
quirements where trade and other rules must be balanced. This situation is
further aggravated by:
– the lack of a rule of precedence in the jurisprudence of the Appellate
Body or panels,
– inherent limitations to interpretations that may render it difficult, if
not impossible, to widen the narrow ‘trade view’ that has so far been
applied to the interpretation of WTO norms in order to include other
non-trade objectives and respective values,
– the political character of interpretation.
In conclusion, a number of uncertainties can be said to exist as to how a panel

or the Appellate Body would view a trade restrictive climate measure. This
applies in particular where the design of an emissions trading system affects

non-Kyoto Members’ sovereign interests. Even after the course of interpreta-
tion a certain friction between the two sets of norms remains.
18.4 Application of the Principle of Sustainable Development in the

Context of Climate and Trade Law Conflicts
An adequate solution, taking into account the collective interest in the protec-
tion of the climatic system, cannot be found by relying on the legal reason-
ing of text interpretation alone. Furthermore, there is a general conceptual
inadequacy. By approaching the tension between climate measures and trade
provisions via interpretation of trade law exceptions, environmental issues are
forced to fit into the framework of trade law. The traditional approach leads
to viewing the relationship through a ‘trade lens’. As a result, environmental
concerns are not given comparable weight to those of trade. The limitations of
interpretation demand openness towards other modes of legal reasoning.
To give adequate weight to environmental concerns, a neutral balancing
perspective is needed, where both environmental norms and international
trade norms are equal and integrated parts.
In the trade and environment nexus the most significant legal instrument
in this regard is the principle of sustainable development, which seeks to link
and balance environmental protection with economic and social interests and
encompasses the concepts of intra- and intergenerational equity. The applica-
tion of the principle is possible because of its explicit recognition in WTO law
and as a principle of general international law. General international law is
applicable to WTO law because of the presumption that general international
law continues to apply to a treaty unless explicitly or implicitly contracted
out. Although the WTO treaty has contracted out some parts of international
law, it has not contracted out all of them. The applicable law, in general,
includes all relevant norms of international law binding on the disputing par-
ties, even if the jurisdiction of panels is limited to claims under the WTO
covered agreements.
The application of the principle entails a balancing of interests independ-
ently of WTO exceptions. It requires a ‘holistic’ approach to the resolution of
conflicts by taking into account the ‘mass of matters’ and recognizing their
integrated function rather than focusing on isolated narrow legal issues. From
a systematic perspective, sustainable development essentially requires differ-
ent streams of international law to be treated in an integrated manner.
The difference with the present approach used by the dispute settlement
system is that the purpose of sustainable development is included in the judicial
reasoning. Necessity and proportionality need be determined against the objec-

tive of sustainable development.
This thesis suggests the inclusion of the following components in the
general framework of WTO law as provided by the principle of sustainable
development:
– The identification of affected interests,
– Determination of the ‘primary sustainability’ of the trade-restrictive
measure dependent on the type and strength of interests protected
by the measure. In the context of climate measures this approach
needs to take into account the following criteria: (i) the objective and
purpose of the climate regime: to prevent dangerous anthropogenic
interference with the climate system (Article 2 UNFCCC) and (ii)
the commitments under the Kyoto Protocol, which are considered an
affirmation of sustainable development in international law.
– Determination of the ‘secondary sustainability’ including an assess-
ment of the measure’ s impact on other interest, such as
– Environmental interests
– Social interests and
– Economic interests
– Proportionality of means and ends, and
– Certain procedural requirements (e.g. SIA).
This test can modify and supplement norms of multilateral trade where they
do not account for common interests, such as the protection of a stable global
climate system, thereby creating a level-playing field. From the perspective of
sustainable development these interests must be given priority.
This thesis therefore proposes the following understanding of sustainable
development in a climate-trade context: The protection of the global climate
system is a precondition for any development to be carried out in a sustainable
manner. In case of conflict between climate and trade rules, the rule more
favourable to the protection of the global climate, given its environmental
integrity, shall prevail.
The reasons for such an argumentation are based on the integral, non-
reciprocal nature of climate obligations, which reflect a global responsibility
for the protection of the climate system. Warming up of the atmosphere will
adversely affect the global community of all states. It can therefore be assumed
that taking measures to protect the global climate system is of the common
interest of all states.
In case of conflict between climate and trade rules, the application of the
principle of sustainable development allows for a legal argument that the
community interest in a stable global climate prevails over the economic and
welfare interests of single states protected by the international trade regime.
Moreover, the application of the principle in this sense might exert a ‘po-
litical chill’ to free riders and remedy unfair advantages of non-Kyoto Parties.
It might in effect set aside the argument that no party can see its WTO rights
diminished on the basis of a rule of international law by which it is not bound,
e.g. Kyoto Protocol. By applying the principle of sustainable development, the
non-WTO treaty becomes incorporated into the substantive law applied in the
dispute settlement. Thereby it might as well provide a mode to unlock global
climate negotiations and help overcome the obstacles of non-participation.
A climate change mitigation measure must, however, satisfy certain criteria
to pass the ‘sustainability test’, when such test is applied to a conflict between
WTO norms and a trade restrictive climate change mitigation measure. The
test can thereby help to ‘discipline’ climate measures.
In our example, we showed that the Clean Development Mechanism and
International Emissions Trading are not yet sufficiently robust to safeguard
environmental effectiveness and thus the integrity of the global carbon market
– despite their integration of environmental, social and economic considera-
tions as mandated by sustainable development.
Despite the fact that it is the stated goal of the CDM to assist non-An-
nex I countries to achieve sustainable development, the present regulatory
framework remains somewhat rudimentary in identifying and standardizing
essential substantial and procedural requirements for meeting this goal. Yet,
confrontation with international trade rules and the application of the prin-
ciple of sustainable development may demand a much stronger institutional
guarantee for the CDM’s direct contribution to sustainable development. The
rather pragmatic and fragmented approach taken so far to ensure the CDM’s
environmental and sustainable integrity will need to be replaced by a stronger,
harmonized regulatory framework. In a trade conflict, where the principle of
sustainable development can be applied as a conflict tool, it will have to be
shown that the CDM as a climate measure is systematically promoting sus-
tainable development.
Emissions trading may be having a trade-discriminatory effect. In case of
conflict with WTO norms, it needs to be shown that emissions trading sup-
ports the objective of sustainable development by integrating environmental,
social and economic considerations. A strong emissions cap and the ability
of entities covered by emissions trading to stay within this cap is crucial for
its environmental effectiveness, which, in itself, is a requirement for sustain-
able development and essential for passing the proposed ‘sustainability test’.
Environmental effectiveness depends on environmental performance safe-
guards, such as monitoring, reporting requirements under the Kyoto Protocol,
the requirement of supplementarity of ET, of avoidance of excessive allow-

ances, and of supporting – and not impeding – the development of low-carbon
technologies. Compliance with the cap is closely linked to accountability of
the participants and the efficient functioning of registries at the heart of the
system.
It has been show that there remains potential for more robust environmental
safeguards in the legal design of emissions trading. Not all facets of emissions
trading are yet designed in a way that would defeat the circumvention of one
or some of its environmental parameters. To survive a WTO claim, however,
this is a quality they must exhibit.
Finally, the application of the principle of sustainable development as a
principle of ‘integration’ would have a harmonizing impact on the effects of
fragmentation of international law, as exemplified here by climate rules and
international trade norms.
The principle of sustainable development needs first and foremost to be
understood as giving priority to the protection of fundamental life-sustaining
natural processes, such as those supporting a stable global climate system.
When applied accordingly to dispute resolution, such a principle-based ap-
proach introduces a certain value hierarchy into the issue of resolving conflicts
between treaties. The value aspect lies in respecting essential natural functions
as supreme preconditions for economic development and international trade
and human activity in general.
In a more systematic perspective, such value hierarchy approach can be
seen as a countertendency to fragmentation and as a modality to ensure sys-
tematic coherence in accordance with those same values. The principle, ap-
plied in this sense to the resolution of conflicts, would enhance the capacity of
international law to become a coherent and purposive system to sustain human
life, welfare and development, now and in the future.
Table of Cases
PCIJ/ICJ
Aegean Sea Continental Shelf (Greece v. Turkey) ICJ Reports 1978, 1
Barcelona Traction, Light and Power Company Limited (Second Application) (Bel-
gium v. Spain) ICJ Reports 1970, 3
Certain Phosphate Lands in Nauru (Nauru v. Australia) ICJ Reports 1992, 240
Chorzów Factory (Merits), (Germany v. Poland) PCIJ Series A, No. 17 (1928)
Corfu Channel (UK v. Albania) (Merits) ICJ Reports 1949, 4
Eastern Greenland, 1933, PCIJ Series A/B. No. 53
Fisheries Jurisdiction (Spain v. Canada) ICJ Reports 1998, 432
Gabčikovo Nagymaros Project (Hungary v. Slovakia) ICJ Reports 1997, 7
Interpretation of Peace Treaties With Bulgaria, Hungary and Romania (Second
Phase) Advisory Opinion, 1950, ICJ Reports 221
Kasikili/Sedudu Island (Botswana v. Namibia) ICJ Reports 1999 (II), 1045
Legal Consequences for States of the Continued Presence of South Africa in Namibia
(Advisory Opinion), ICJ Reports 1971, 31
Legal Consequences of the Construction of a Wall in the Occupied Palestinian Terri-
tory (Advisory Opinion) A/ES-10/273 and Corr. 1, ILM, vol. 43 (2004), 1009
Legality of the Threat or Use of Nuclear Weapons (Advisory Opinion) July 8 1996,
ICJ Reports 1996, 66 (request by WHO), 226 (request by the UN General Assembly)
Lockerbie-Cases: Questions of Interpretation and Application of the 1971 Montreal
Convention Arising from the Aerial Incident at Lockerbie (Libyan Arab Jamahiriya v.
US and UK), Provisional Measures, ICJ Reports 1992
Mavrommatis Palestine Concessions, PCIJ Series A, Nr.2 (1924)
Mosul Boundary Case, PCIJ Series B, No. 12, 32
Nicaragua (Military and Paramilitary Activities In and Against Nicaragua) (Nicara-
gua v. United States) (Merits) ICJ Reports 1986, 14
North Sea Continental Shelf (Federal Republic of Germany v. Denmark) (Federal
Republic of Germany v. Netherlands) ICJ Reports 1969, 3
Nuclear Tests (New Zealand v. France)/(Australia v. France) ICJ Reports 1974,
457/253
Oil Platforms (Iran v. US) (Merits) ICJ Reports 2003, 161
Pulp Mills on the River Uruguay (Argentina v. Uruguay) 2006 (contentious)

Right of Passage (Portugal v. India) (Preliminary Objection) ICJ Reports (1957), 142;
(Merits) ICJ Reports 1960, 6
River Oder Commission (Territorial Jurisdiction of the International Commission of
the River Oder) (Czechoslovakia, Denmark, France, Germany, Great Britain, Sweden,
Poland) PCIJ Series A, No. 23, 27 (1929)
South West African cases (Second Phase), ICJ Reports 1966, 5 (Ethiopia v South
Africa; Liberia v. South Africa, ICJ Reports, 1966, 34)
Sovereignty over Pulau Ligitan and Pulau Sipadan (Indonesia v. Malaysia) ICJ Re-
ports 2002, 625
SS Lotus (France v. Turkey) PCIJ Series A, No. 10 (Sept 7 1927)
Territorial Dispute (Libyan Arab Jamahiriyal v. Chad) ICJ Reports 1994, 6
International Arbitral Awards

Amoco International Finance Corporation v. Iran, 1987-II, 15 Iran-US C.T.R. 222
Dispute Concerning Access to Information Under Art. 9 of the OSPAR Convention,
Final Award (Ireland v. the United Kingdom) 2 July 2003, PCA, ILM vol. 42 (2003)
Esphahanian v. Bank Tejarat, 1983-I, 2 Iran-US C.T.R. 157
Fabiani Case (896)10 RIAA 83
Gentini Case (Italy v. Venezuela) MCC 1903, Venice Arbitration
La Bretagne Arbitration (1986) 90 RGDIP 716
Lac Lanoux Arbitration (France v. Spain) 24 ILR 101 (1957)
Maritime Boundary Arbitration (Guinea-Bissau v. Senegal) (Award of 31 July 1989
[1990]) 83 ILR 1
MOX Plant (ITLOS), (Ireland v. United Kingdom) Arbitral Tribunal under Annex VIII
of the Convention on the Law of the Sea, Case 10, Order on Provisional Measures (13.
November 2001), (Merits) 3 December 2001, 5
MOX Plant (PCA), (Ireland v. United Kingdom) OSPAR Arbitral Tribunal Constituted
Pursuant to Article 287, and Article 1 of Annex VII, of the United Nations Conven-
tion on the Law of the Sea for the Dispute Concerning the MOX Plant, International
Movements of Radioactive Materials, and the Protection of the Marine Environment
of the Irish Sea (Order No. 4, Further Suspension of Proceedings on Jurisdiction and
Merits), 14 November 2003
Iran-United States (case 18), 1984-I, 5 Iran-US C.T.R. 251
Iron Rhine (“IJzeren Rijn”) Railway (Belgium v. Netherlands) PCA Arbitral Award,
24 May 2005
Island of Palmas Arbitration (Netherlands v. United States) (1928) 2 RIAA 831
Pious Funds of the Californias (The United States of America v. The Republic of
Mexico) PCA Arbitral Award, 14. October 1902, 2 Am. J. Int’l L.Â€893 (1908)
Table of Cases 383
Southern Bluefin Tuna (New Zealand v. Japan) (Australia v. Japan), Arbitral Tribunal
under Annex VIII of the Convention on the Law of the Sea, Order of August 27,
1999, Request for Provisional Measures, Award on Jurisdiction and Admissibility of
4 August 2000, 39 ILM 1359 (2000)
Softwood Lumber (NAFTA): Opinion and Order of the Extraordinary Challenge Com-
mittee, In the Matter of Certain Softwood Lumber Products from Canada, Secretariat
File No. ECC-2004-1904-01USA, 10 August 2005
Swordfish case: Case Concerning the Conservation and Sustainable Exploitation of
Swordfish Stocks in the South-Eastern Pacific Ocean (Chile v. European Commu-
nity), Arbitral Tribunal (ITLOS) under the Convention on the Law of the Sea, Special
Chamber, Case No. 7 – ITLOS Order 2001/1 of 15 March 2001, and Order 2003/2
Trail Smelter Arbitration (United States v. Canada) 16 April 1938, 11 March 1941, 3
RIAA 1907 (1941)
Other Decisions
Al-Adsani v. UK, Judgment of 21 November 2001, ECHR, 2001-XI
Fogarty v. UK, Judgment of 21 November 2001, ECHR 2001-XI
Golder v. UK, Judgment of 21 February 1975, ECHR Series A no. 18, 14, 57 ILR
201
Hatton and Others v. UK (2003) 37 EHRR 28 (Application 36022/97)
James and Others v. United Kingdom, ECHR Series A98 (1986)
Länsman (Jouni) et al. v. Finland (1995) UNHRC, Communication No. 671, 3 IELR,
115–133
Loizidou v. Turkey (Merits) Judgment of 18 December 1996, ECHR 1996-VI
McElhinney v. Ireland, Judgment of 21 November 2001, ECHR 2001-XI
Ominayak and the Lubicon Lake Band v. Canada (1984) UNHRC, Communication
No. 167, 3 IRLR, 26–61
Commission v. Ireland (MOX Plant) ECJ, C-459/03, 30 May 2006
Municipality of Almelo v. NV Energiebedrif Ijsselmij, ECJ, Case C-393/92, 1994
E.C.R. I–1477 (1994)
Prosecutor v. Anto Furundćija (ICTY) Judgment of 10 December 1998, case no. IT-
95-17/1, Trial Chamber II; ILR vol. 121, 2002
GATT 1947 Panel Reports

Canada–Gold Coins: Canada – Measures Affecting the Sale of Gold Coins, Panel
Report, L/5863, 1985 (not adopted)
Canada/European Communities – Article XXVIII Rights, DS12/R, B.I.S.D 37S/80, 26
October 1990 (Arbitrators Award)
Canada–Salmon: Canada – Measures Affecting Exports of Unprocessed Herring and

Salmon, BISD 35S/98, adopted 22 March 1988
Italy–Agricultural Machinery: Italian Discrimination Against Imported Agricultural
Machinery, 23 October 1958, GATT B.I.S.D., 1959
Thailand-Cigarettes: Thailand – Restrictions on Importation of and Internal Taxes on
Cigarettes, GATT Panel Report, 7 November 1990, DS10/R
US–Anti-Dumping Duties on Imports of Stainless Steel Plates from Sweden, GATT
Panel Report, ADP 117, 24 February 1994
US–Auto Taxes, United States – Taxes on Automobiles, GATT Panel Report, 11 Octo-
ber 1994, DS31/R (unadopted)
US–Hot-Rolled Lead: United States – Imposition of Countervailing Duties on Certain
Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in France, Germany,
and the UK, GATT Panel Report, SCM/185, 15 November 1994
US–Section 337: United States – Section 337 of the Tariff Act of 1930, BISD 36S/386,
adopted 7 November 1989
US–Softwood Lumber: United States – Measures Affecting Imports of Softwood
Lumber from Canada, 27, 28 October 1993, GATT, B.I.S.D.
US–Superfund, United Sates – Taxes on Petroleum and Certain Imported Substances,
17 June 1987, GATT Panel report, B.I.S.D. 34S/136
US–Tuna I: United States – Restrictions on Imports of Tuna, 18 February 1992, GATT
BISD 39S
US–Tuna II, United States – Restrictions on Imports of Tuna, 16 June 1994, DS29/R
WTO Panel Reports and Reports of the Appellate Body

Argentina–Footwear: Argentina – Measures Affecting Imports of Footwear, Textiles,
Apparel and other Items, WT/DS56/R, 25 November 1997, WT/DS56/AB/R, 27.
March 1998
Argentina–Poultry: Argentina – Definitive Anti-Dumping Duties on Poultry from
Brazil, WT/DS241/R, adopted 19 May 2003
Argentina–Peaches: Argentina – Definitive Safeguard Measures on Imports of Pre-
served Peaches, WT/DS238/R, 14 February 2003
Australia–Subsidies (also: Australia–Leather): Australia – Subsidies Provided to
Producers and Exporters of Automotive Leather, WT/DS126/R, 15 May 1999
Brazil–Coconut: Brazil – Measures Affecting Desiccated Coconut, WT/DS22/AB/R,
adopted 20 March 1997, DSR 1997:I
Brazil–Measures affecting Imports of Retreaded Tyres, WT/DS332/AB/R (3 Decem-
ber 2007)
Table of Cases 385
Canada–Aircraft: Canada – Measures Affecting the Export of Civilian Aircraft (Com-

plaint by Brazil), WT/DS70; Panel and Appellate Body reports on Implementation
(DSU Art. 21.5) WT/DS70/RW, adopted 4 August 2000
Canada–Automotive Industry: Canada – Certain Measures Affecting the Automotive
Industry WT/DS139/R and WT/DS142/R, 19 June 2000, WT/DS139/AB/R, WT/
DS142/AB/R, 31. Mai 2000
Chile–Alcoholic Beverages (also Chile–Taxes): Chile – Taxes on Alcoholic Bever-
ages, WT/DS87/R, 15 June 1999; WT/DS87/AB/R, 13 December 1999
Chile–Swordfish: Chile – Measures Affecting the Transit and Importation of Sword-
fish, (Complaint by the EC) WT/DS 193, panel established at the DSB meeting of 12
December 2000, proceedings suspended on 23 March 2001
EC–Asbestos: European Communities – Measures Affecting Asbestos and Asbestos-
Containing Products, WT/DS135/R, WT/DS135/AB/R, 12. March 2001, adopted 5
April 2001
EC–Bananas: EC – Regime for the Importation, Sale and Distribution of Bananas
(Complaint by the US) WT/DS27/R/USA; (Complaint by Ecuador) WT/DS27/R/
ECU, 22 May 1997; WT/DS27/AB/R, 9 September 1997, adopted 25 September
1997; Panel report on Implementation, Art. 21.5 DSU (requested by Ecuador) WT/
DS27/RW/ECU (EC–Bananas II)
EC–Bananas III: EC – Regime for the Importation, Sale and Distribution of Bananas,
Recourse to Arbitration by the EC under Art. 22.6 of the DSU, Decisions by the Arbi-
trators on Suspension of Concessions, WT/DS27/ARB/ECU, 24 May 2000 and WT/
DS27/ARB/US, 9 April 1999
EC–Biotech: EC – Measures Affecting the Approval and Marketing of Biotech Prod-
ucts, WT/DS 291–293, INTERIM, 7 February 2006
EC–Export Subsidies on Sugar, Report of the Appellate Body, WT/DS265/AB/R,
WT/DS266/AB/R, WT/DS283/AB/R, 28 April 2005
EC–Hormones: EC – Measures Concerning Meat and Meat Products (Complaint by
Canada) WT/DS48/R, 18 August 1997, WT/DS48/AB/R, adopted 13 February 1998
EC–Hormones: EC – Measures Concerning Meat and Meat Products (Complaint by
the US) WT/DS26/R, 18 August 1997, WT/DS26/AB/R, adopted 13 February 1998
EC–Sardines: EC – Trade Description of Sardines, WT/DS231/AB/R, 26 September
2002
India–Patent: India – Patent Protection for Pharmaceutical and Agricultural Chemical
Products, WT/DS79/R, 24 August 1998 (no appeal)
India–Patent (Complaint by the US): India – Patent Protection for Pharmaceutical and
Agricultural Chemical Products, WT/DS50/R; WT/DS50/AB/R, 19 December 1997,
adopted 16 January 1989
Japan–Apples: Japan – Measures Affecting Agricultural Products (Apples), WT/
DS76/R, 27 October 1998; WT/DS76/AB/R, 22 February 1999
Japan–Film: Japan – Measures Affecting Consumer Photographic Film and Paper,

WT/DS44/R, 31 March 1998
Japan–Alcoholic Beverages (also: Japan–Taxes): Japan – Customs Duties, Taxes,
and Labelling Practices on Imported Wines and Alcoholic Beverages (Complaint
by the EC) WT/DS8/R, WT/DS8/AB/R; (Complaint by Canada) WT/DS10/R WT/
DS10/AB/R; (Complaint by the US) WT/DS11/R WT/DS11/AB/R, 4 October 1996,
Korea–Beef: Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef,
(Complaint by the US) WT/DS161/R, WR/DS161/AB/R; (Complaint by Australia)
WT/DS169/R; WT/DS169/AB/R, 11 December 2000, adopted 10 January 2001
Korea–Dairy: Korea – Definitive Safeguard Measures on Imports of Certain Dairy
Products, WT/DS98/R, WT/DS98/AB/R, 14 December 1999
Korea–Government Procurement: Korea – Measures Affecting Government Procure-
ment, WT/DS163/R, 1 May 2000, adopted 19 June 2000
US–Offset Act (Byrd Amendment): United States of America – Continued Dumping
and Subsidy Offset Act (Byrd Amendment) 2000, WT/DS/217/R/ WT/DS234/R, (16
September 2002); WT/DS217/AB/R and WT/DS234/AB/R, 16 January 2003;
US–Certain Products: United States – Import Measures on Certain Products from
the European Communities (Complaint by the EC), WT/DS165/R, WT/DS165/AB/R,
adopted 10 January 2001
US–Cotton Yarn: United States – Transitional Safeguard Measure on Combed Cot-
ton Yarn from Pakistan, WT/DS192/R, WT/DS192/AB/R, 8 October 2001, adopted
5 November 2001
US–FSC: United States – Tax Treatment for ‘Foreign Sales Corporations (FSC), WT/
DS108/R, WT/DS108/AB/R, 2 February 2000, adopted 20 March 2000
US–(Reformulated)Gasoline: United States – Standards for Reformulated and Con-
ventional Gasoline 1996 (Complaint by Venezuela) WT/DS/2/R, WT/DS2/AB/R
(Complaint by Brazil) WT/DS4/R, WT/DS4/AB/R, 29 April 1996, adopted 20 May
1996
US–Hot-Rolled Steel: United States – Anti-Dumping Measures on Certain Hot-Rolled
Steel Products from Japan WT/DS184/R, WT/DS184/AB/R, 24 July 2001, adopted
23 August 2001
US–Meat: United States – Safeguard Measures on Imports of Fresh, Chilled or Frozen
Lamb Meat from New Zealand and Australia, WT/DS177/R, WT/DS178/R, 21 De-
cember 2000, WT/DS177/AB/R, WT/DS178/AB/R, 16 May 2001
US–Section 301: United States – Sections 301–310 of the Trade Act of 1974, WT/
DS152/R, 22 December 1999, adopted 27 January 2000 (no appeal)
US–Softwood Lumber: United States – Preliminary Determinations with Respect to
Certain Measures Affecting Imports of Softwood Lumber from Canada, WT/DS236/R,
Table of Cases 387
US–Softwood Lumber: United States – Investigation of the International Trade Com-

mission in Softwood Lumber from Canada, Recourse to Article 21.5 of the DSU by
Canada, WT/DS277/RW (circulated on 15 November 2005), WT/DS277/AB/RW
(circulated 13 April 2006)
US–Steel Plate: United States – Anti-Dumping and Countervailing Duty Measures on
Steel Plate form India, WT/DS206/R, adopted 29 July 2002
US–Underwear: United States – Restrictions on Imports of Cotton and Man-made
Fiber Underwear, WT/DS24/R, 8 November 1996, WT/DS24/AB/R; 10 February
1994, adopted 25 February 1997
US–Wheat: United States – Definitive Safeguard Measures on Imports of Wheat Glu-
ten from the European Communities, WT/DS166/R, 31 July 2000, WT/DS166/AB/R,
22 December 2000, adopted 19 January 2001
US–Shrimp: United States – Import Prohibition of Certain Shrimp and Shrimp Prod-
ucts, WT/DS58/R, 15 May 1998, WT/DS58/AB/R, 12. October 1998, adopted 6
November 1998
US–Shrimp (Art. 21.5) (also: US–Shrimp II): United States – Import Prohibition of
Certain Shrimp and Shrimp Products – Recourse to Article 21.5 of the DSU by Ma-
laysia, WT/DS58/RW, WT/DS58/AB/RW, adopted 7 November 2001
National Courts
1. India:
Narmada Bachao Andolan v. Union of India, 2000 (10) SCC 664, AIR 2000 SC 3751,
(Supreme Court of India – SC)
Vallore Citizens Welfare Forum v. Union of India & Others, JT 1996(7) SC, 375–95
M.C. Mehta v. Union of India (Taj Trapezium) AIR 1997 SC 734
State of Himachal Pradesh v. Ganesh Wood Products AIR 1996 SC 149
Indian Council for Enviro-Legal Action v. Union of India (CRZ Notification case)
1996, 5 SCC 281
2. New Zealand:
Aqua Marine Limited v. Southland Regional Council; C-126/97 (Environment Court
– EC)
North Shore City Council v. Auckland Regional Council (1997) NZRMA 59 (EC)
NZ Rail Limited v. Marlborough District Council (1993) 2 NZRMA 449; (1994)
NZRMA 70 (HC)
Marlborough District Council v. Southern Ocean Seafoods Ltd (1995) NZRMA 220
Independent News v. Manukau City Council, A103/2003 (EC)
Ngati Rangi Trust v. Manawatu-Wanganui Regional Council, A067/2004 (EC)

Genesis Power Limited v. Franklin District Council, No. A148/2005, NZRMA 541
(EC)
3. Sri Lanka:
Bulankulama v. Ministry of Indus. Dev., Sup. Ct. Application No 884/99 (FR) (Sri
Lanka 2000) (Eppawala case) available at <http://www.elaw.org/custom/custompages/
resourceDetail.asp?profile_ID=163>
M.M. Ariyaratna and five others v. M.K. Sashidaran, 1(4) S. Asian Env’l L. Rep. 151
(1994)
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Index
A Irreversible Environmental Harmâ•… 42,

Applicable Law; see Conflictâ•… 45, 47, 63, 104-105, 338
Scientific Uncertaintyâ•… 37, 45, 47-48,
63, 105, 231, 338
B
Collective Interest(s)â•… 4, 143, 198, 229,
Brown-Weiss, Edithâ•… 52, 126 282, 371, 375, 377
Common but Differentiated Responsibilitiesâ•…
C 37, 62f., 70, 90, 97-99, 105, 334, 373
Carbon Leakageâ•… 223, 298, 337, 343, 359 Common Concern of Humankindâ•… 57, 62,
Clean Development Mechanism (CDM)â•… 90, 97, 104, 326, 330f.
Additionalityâ•… 73, 83f., 111, 235, 243, Commission on Sustainable Development
251, 342f. (CSD)â•… 18
Adverse Policy Incentivesâ•… 343 Competitivenessâ•… 2, 21, 190, 223, 249,
Art. XIV GATSâ•… 248-254, 339, 376 253f., 257, 298, 337, 351, 359, 376
CCS-Projectsâ•… 349
Conflict
Environmental Integrityâ•… 74f., 83f.,
Applicable Lawâ•… 185, 257, 285, 294,
106-112, 217, 249, 250, 257, 333, 342-
307-309, 323, 368, 371, 377
343, 352-363, 376
Conflict Clauses (also: Savings Clauses)â•…
Environmental Performanceâ•… 109, 348,
141, 198, 293-295, 299, 325
371, 379
Conflict Resolutionâ•… 3, 204, 263f., 292,
Forest Conservationâ•… 349-350
293f., 339
Participantsâ•… 81-82, 233, 239, 243-254,
Jus cogensâ•… 195, 281, 283
352, 354, 380
Lex posteriorâ•… 197, 201, 286, 299,
HFC-23 Projectsâ•… 349f.
301-303
Host State Sovereigntyâ•… 255-257, 343f.,
Lex specialisâ•… 197, 201, 286, 299-301,
355f.,
312
Investment Opportunitiesâ•… 80f., 100f.,
Lex superiorâ•… 195, 284
234, 238, 242-247, 342, 347, 351
Normative Hierarchyâ•… 161, 175
National Development Priorities of Host
Normative (also: Conflict of Norms)â•… 1,
Countriesâ•… 255f.
3, 115, 145, 152, 194, 195-204, 232, 257,
Public Consultationâ•… 355f.
263, 266, 272, 291, 295, 304, 315, 320,
Services under GATSâ•… 235-239
325, 375-376
Service Clustersâ•… 239-241
Same Subject Matterâ•… 198, 299-302
Stakeholder Involvementâ•… 356
Specialityâ•… 300
Unilateral CDMâ•… 234, 245
Resolution Principlesâ•… 3, 265, 292,
Climate Change 293-304, 339
2°C Targetâ•… 42, 60, 104, 224 Rule of Presumptionâ•… 154, 306, 314,
Climate Stabilityâ•… 42f, 97, 104, 226, 377
332, 342, 359, 373
Cordonier Segger, Marie Claireâ•… 48, 161,
Differentiationâ•… 96f., 222
327, 330, 335, 338
Impactsâ•… 1, 15, 42f., 60, 97, 100, 220,
227f., 296, 338 Customary Lawâ•… 147-150, 157-162, 167,
IPCCâ•… 42, 59-60, 113, 227 179, 195, 282-288, 302, 310f., 375
D G
Dynamismâ•… 107, 164, 274f., 375 General Principles; see Principles
E H
Ecological Functions (also: Natural Func- Higgins, Rosalynâ•… 146, 285
tions)â•… 5, 40, 41, 47-50, 54, 128, 143, 184,
186, 272, 317, 319, 328, 330, 332f., 360, 380
I
Ecosystem Servicesâ•… 39, 47
International Law Associationâ•… 28f., 35,
Emissions Trading 328
Allocationâ•… 106-108, 175-177, 211,
Interpretation
221-223, 365-369
Interpretation contra legemâ•… 271
Aviationâ•… 214
Limitationâ•… 263f., 303, 309, 325, 371,
Electricityâ•… 192, 209, 216f., 256, 358,
377
375
Principlesâ•… 136, 266f.â•…
Energy Productsâ•… 193, 216f., 357, 359
Evolutionary Interpretationâ•… 136,
Environmental Integrity of (also:
142, 225, 273f., 289
Environmental Effectiveness of)â•… 74,
Dynamic Interpretationâ•… 267
79, 106, 108f., 217, 249, 255-257, 333,
Outside Norms; Art. 31.3.c VCLTâ•…
359-365, 376, 378
124, 276, 280f.
EU ETSâ•… 76-78, 214, 365-369
Systemic Integrationâ•… 281-290
Global Carbon Marketâ•… 76f., 353, 372,
Teleological Interpretationâ•… 267,
379
275, 277f.
‘Free Rider’â•… 297, 336, 379
Textual Interpretationâ•… 267, 270f.
International Emissions Tradingâ•… 74f.,
207f., 234, 244, 249, 254, 360, 366, 368, Integration
372, 375, 379 Absolute Limits (also: Ultimate Limits)â•…
Liabilityâ•… 108-109, 368f. 3, 5, 9, 14, 38f., 47, 49, 50, 60-61, 91,
Linkingâ•… 76f., 369 186, 323, 374
National Registriesâ•… 74, 77, 86, 249, Creating Coherenceâ•… 25, 91f., 151, 199,
368-369 201, 265, 279, 280, 285, 289, 325f., 380
New Entrantsâ•… 221-222, 366-367 Ecological (also: Environmental
Private Participationâ•… 74f., 210â•… Integrity)â•… 51-53, 74, 79, 83-84, 106,
Protectionismâ•… 222, 255, 279, 321, 337 108f., 111-112, 180, 191, 217, 249, 251,
Sovereign Exchangesâ•… 75, 208f. 257, 333, 342f., 352-354, 359-363, 372,
Supplementarityâ•… 79f., 212, 254, 363f., 376, 378, 379
380 Framework forâ•… 1f., 32, 39f., 46, 49,
Tradable Allowances (also:â•… 71, 106, 133, 142f., 152, 162, 169, 184, 197-198,
108, 190, 207, 212, 326, 328f., 374
Tradable Emission Units)â•… 229, 251, Integrityâ•… 39, 46
353, 358, 365
Technological Innovationâ•… 367f.
J
Ethicsâ•… 4, 50-51, 183
Johannesburg Plan of Implementationâ•…
25-26
F Johannesburg Declarationâ•… 25
Fragmentationâ•… 152, 195f., 280f., 380 Justiceâ•… 3f., 23, 50f., 58, 62, 98, 103f.,
Future Generationsâ•… 14, 23, 50f., 58, 66, 147-151, 157, 162
93, 104f., 178f., 274, 330
Index 425
L Opinio juris communisâ•… 157-160, 167,

Legal Reasoningâ•… 59, 148f., 159, 164, 317, 183, 186, 375
328, 334, 374 Provenanceâ•… 153f.
State Practiceâ•… 23, 147, 149, 156, 160,
Lowe, Vaughanâ•… 162, 166-171, 185, 320
375
Priority Ruleâ•… 3, 40, 46, 54, 170, 285, 286,
M 290, 293f., 302-304, 305f., 323, 339, 371,
Market Based Instruments (also: Market 378, 380
Mechanisms)â•… 1, 37, 73, 83, 190, 249
Cost Effectivenessâ•… 63f., 70, 106, 112,
R
248
Flexibilityâ•… 70f., 106f., 137, 248, 375 Rawls, Johnâ•… 53
Internalization of costsâ•… 250, 297, 354, Resilience
359 Ecologicalâ•… 43, 47, 168, 225, 374
Millennium Development Goalsâ•… 24-25
Millennium Ecosystem Assessmentâ•… 47 S
Multilateral Environmental Agreements Sustainable Development:
(MEAs)â•… 121, 131, 189-190, 202, 229, 253, Basic Needsâ•… 13, 53
271 Differentiationâ•… 96f., 198
Ecological Functions (also: Natural
Functions)â•… 5, 40, 41, 47-50, 54, 128,
N
143, 184, 186, 272, 317, 319, 328, 330,
Natural Lawâ•… 148, 160 332f., 360, 380
Ecological Thresholdsâ•… 5, 38f., 42f., 47,
P 59f., 374
Indeterminacyâ•… 18, 112, 162f.
Pauwelyn, Joostâ•… 200, 209, 276, 303, 310
Intergenerational Justice; see also
Polluter Pays Principleâ•… 37 Intergenerational Equityâ•… 52, 58, 89,
Positivismâ•… 143, 149 104f., 331, 377
Precautionary Principleâ•… 37, 47-48, 63, 101, Intragenerational Justice; see also
105, 141, 311-312, 338, 373 Intragenerational Equityâ•… 52, 58, 89,
96f., 103
Principles Legal Test ofâ•… 327f.
Civilized Nationsâ•… 148f., 155, 157, 159 Legal Theory; Legal Statusâ•… 1, 50,
Foro domesticoâ•… 155-157, 160, 178f., 145f., 169, 174f.
375 Originsâ•… 11f.
General Principles of Lawâ•… 147, 148f., Judicial Activismâ•… 321f.
281f., 286 As a Principle of Justiceâ•… 53
General Principles of Law in WTO Lawâ•… Principle of Sustainable Developmentâ•…
312f. Affected Interestsâ•… 325f., 341f.,
Indeterminacyâ•… 18, 150f., 160 359f., 378
Sourcesâ•… 145f., 156, 167 Applicabilityâ•… 317f.
De lege ferendaâ•… 142, 164 Applicationâ•… 124, 142-144, 165,
De lege lataâ•… 164 172, 185, 260, 265, 317f., 325f., 371,
Lacunaâ•… 286 378f.
Lex posteriorâ•… 197, 201, 286, 299, 301f. Legal Effectâ•… 62, 318, 339f.
Lex specialisâ•… 197, 201, 286, 299f. Legitimacyâ•… 177f., 326, 332
Natual Lawâ•… 148, 160 Normative Force (also: Normativity)â•…
Non Liquetâ•… 292 162f., 319, 375
Norm Creating Characterâ•… 166, 168 World Summit on Sustainable Development

Primary Sustainabilityâ•… 330, 331f., (WSSD)â•… 18f., 24f., 90, 298
342, 378 Weeramantry, Christoffer, G.â•… 11, 161,
Procedural Functionâ•… 337f. 168f., 183f., 327
Proportionalityâ•… 153, 260, 330,
World Trade Organization (WTO)
335f., 352f., 361, 378
Covered Agreementsâ•… 75, 116, 128,
Substantial Functionâ•… 169f.
136, 142-144, 204, 225, 234, 269, 271,
Sustainabilityâ•… 3f., 47, 51f., 60, 65, 93,
288, 294f., 307f., 317, 377
110, 133, 140, 184, 260, 323, 330f., 374
Exception Clausesâ•… 121f., 145, 223f.,
Sustainability Impact Assessmentâ•… 141,
247f., 279, 329, 339, 376
332, 355
Global Governanceâ•… 130
Sustainable Justiceâ•… 328
‘like Products’â•… 117f., 210, 205f., 215f.,
Transgenerational Justiceâ•… 50f.
221
Most-Favoured Nation Ruleâ•… 117f.,
U 191, 212f., 241f., 376
Ultimate Limits; see: Integration National Treatment Ruleâ•… 119f., 212f.,
219f., 238f., 256f., 375
Wider Sustainabilityâ•… 330, 332f., 378
Preambular Reference to Sustainable
UNCEDâ•… 16f., 25 Developmentâ•… 127f., 132, 134, 135f.,
UNFCCC 143, 205, 225, 276f., 298f., 317f.
Art. 2 (also: Ultimate Objective)â•… 40, Preferential Treatmentâ•… 98, 255, 347
59f., 80, 93f., 102, 104, 112, 120, 188, ‘Regulatory Chill’ (also: Chilling Effect)â•…
213, 224, 284, 297, 342, 353, 378 119, 121, 194, 204, 231, 379
Savings Clausesâ•… 141, 293f., 297, 299
‘Self-Contained Regime’â•… 196f., 305,
V
314f.
Value Hierarchyâ•… 360, 380 stare decisis (also: Rule of Precedence)â•…
259, 376
W ‘Trade Lens’â•… 144, 259, 377
Trade Restrictive Measures (also: Trade
World Commission on Environment and Restrictions)â•… 2, 121, 131, 190, 209,
Development (WCED)â•… 14f., 25, 46, 181, 228f., 253f., 279f., 296, 327f., 376, 378
346
Legal Aspects of Sustainable Development
General Editor: David Freestone
1. K. Bastmeijer and T. Koivurova (eds), Theory and Practice of Trans-

boundary Environmental Impact Assessment. 2008
ISBN 978 90 04 16479 6
2. C. Voigt, Sustainable Development as a Principle of International Law:

Resolving Conflicts between Climate Measures and WTO Law. 2009
ISBN 978 90 04 16697 4

Christina Voigt - SD As A Principle

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Sustainable Development as a

Principle of International Law

Resolving Conflicts between

Library of Congress Cataloging-in-Publication Data

Copyright 2009 by Koninklijke Brill NV, Leiden, The Netherlands.

printed in the netherlands

Series Editor’s Preface xv

5.4 Sustainable Development and Trade Law 125

10.3 Participation in CDM Activities and Discrimination 241

17.1.5 Procedural Requirements 355

Table of Cases 381

CPM COP/MOP joint meeting

GDP Gross Domestic Product

RECIEL Review of European Community & International

ZaöRV Zeitschrift für ausländisches öffentliches Recht und

Sustainable Development, International Trade and Climate Change

protection and their relation to trade agreements. Complex questions arise

than reduce its often-noted vagueness. The challenge, therefore, is to clarify

Why Sustainable Development?

If all the challenges of modern society, which are separately addressed by

Sustainable Development: the Challenge of Adopting Form to Function (Cheltenham:

The Ultimate Challenge

There is an ultimate test to the international community to find cooperative

Sustainable Development in International Law

Origins and Development of the Concept of Sustainable

The evolution of the concept of sustainable development has been elaborated

1.1 A Concept with Ancient Roots?

The origin of the concept of sustainable development cannot be exactly dated.

in international relations and international law the concept of sustainable

1.2 Sustainable Development’s Rise in the International Order

In the early 1970s several factors, such as awareness of expanding environ-

Development was no longer regarded in terms of gross national product but

Thus, by the time sustainable development was compellingly defined as “de-

a process of change in which the exploitation of resources, the direction of invest-

Nevertheless, ‘equitable opportunities for all’, including generations to come,

The report is widely viewed as the moment at which sustainable development

By 1992 and the United Nations Conference on Environment and Develop-

already become an important global policy that could no longer be ignored.

Humanity stands at a defining moment in history. We are confronted with a perpetuation

World Trade Organization,33 the Global Environmental Facility (GEF),34 the

1.3 International Treaty Law

International treaty law and non-binding documents are increasingly incorpo-

2, the international climate regime makes particular reference to sustainable

tion of the Global Conference on Sustainable Development of Small Island

1.4 Regional and National Laws

Parallel to embracing sustainable development in an increasing number of

The EU Treaty also embraces the concept in Article 6: ‘Environmental protec-

According to Article 3(5) of the Lisbon Treaty, the EU is committed to pro-

Numerous references in national laws could be added which evidence the

Australia,55 Argentina,56 and New Zealand.57

1.5 The New Millennium

The United Nations Adoption of the 2000 Millennium Development Goals,

Declaration, which reaffirmed the commitment of the organization to the

unsustainable patterns of production and consumption, and protecting and managing

The scope of sustainable development remains controversial and has brought

One indication of the general acceptance of the concept of sustainable de-

1.6 Recent Legal and Political Developments

(ILA) established the Committee on Legal Aspects of Sustainable Develop-

the objective of sustainable development involves a comprehensive and integrated

ILA then created an International Committee on International Law on Sustain-

The principle of integration reflects the interdependence of social, economic, finan-

To achieve the aim of sustainable development the Council adopted a number

When looking at the evolution of the concept of sustainable development it