69 Am. U. L. Rev. 105 (2019).

* Professor of Law, Lewis & Clark Law School. I wish to thank the participants at the 2018 annual meeting of the Environmental Law and Sustainability Section of the Academy of Legal Studies in Business at which an early version of this Article was presented, as well as the participants in the Lewis & Clark Law School Faculty Colloquium Series in which a later version was presented. Special thanks to Michael C. Blumm, Lydia Loren, Thomas Schoenbaum, Shalanda Baker, Frédéric Gilles Sourgens, and Timothy Webster for detailed comments and suggestions. I am also grateful to Wendy Hitchcock, Elizabeth Schmitt, Saskia Mooy, Brittaney Bones, Trevor Eisele, Alison Roth, Arpan Banerjee, and John Mayer for their valuable research assistance.

Within the fraught field of investor-state dispute settlement, no cases are more controversial than those in which an investor seeks damages for the cancellation of a project following an outcry by local communities over potential environmental or social impacts. Tribunals have almost always ruled for the investor in these cases, typically reasoning that the cancellation frustrated the investor’s “reasonable” or “legitimate” expectations. This Article argues that tribunals have often overlooked or downplayed factors that should limit investors’ expectations when undertaking high-impact projects, including specific aspects of domestic environmental law and the host state’s international human rights and environmental obligations. The Article also examines factors beyond investor expectations that may be relevant to liability or quantum in such cases, including local remedies and emerging standards of conduct with which investors should be expected to comply. Finally, the Article shows that the proposed interpretive framework is consistent with the texts of investment treaties and their underlying rationales and could address a number of concerns that threaten these treaties’ long-term viability.