Inverting the Paradox: Empowering Natural Resource Management in the Foreign Investment Regime in Sri Lanka

Abstract

Foreign investments, often serve as major catalysts in economic development. For a developing country like Sri Lanka rich with natural resources, such resources can be used as key means of attracting huge inflows of foreign investments. However, unplanned and unsustainable natural resource exploitation at foreign investor hands would give rise to a range of environmental, economic and social issues thereby creating drastic impacts on sustainable national development. The objective of this research is to evaluate the comprehensiveness of the existing Sri Lankan foreign investment regime in facilitating optimal use of natural resources and put forward recommendations for further development of law in this field in the light of relevant international standards. Research will be qualitative based on books with critical analysis, journal articles, conventions, statutes, hanzard reports, case laws and data collected from legal experts, policy making authorities and civil society victims. Multi-lateral investment and trade instruments such as GATT and GATS encourage sustainable and optimal use of natural resources in the context of international investments. Given the geophysical characteristics of Sri Lanka this paper analyses how optimal use of natural resources would fuel national development. Although the Sri Lankan foreign investment regime provides substantive safeguards to mitigate environmental pollution caused by foreign investment projects, it has failed to address optimal use of natural resources by foreign investors. This research proposes a mechanism to integrate natural resource management into the legal regime governing foreign investments in Sri Lanka. Accordingly, the study examines how international environmental law principles i.e. inter-generational and intra-generational equity, public trust doctrine and precautionary principle can be incorporated into domestic legal framework in terms of policy decisions and judicial activism. Further, ensuring foreign investor compliance into these standards and monitoring such compliance is required. Hence, proposed mechanism proves that if effectively managed, optimal use of natural resources by foreign investors would boost Sri Lankan national development. In absence of much legal authority in this regard, this research can be used as a guideline for multi disciplinary professionals like policy makers, lawyers, judges, investment consultants and engineers to enhance professionalism in the respective professions.