The article analyses how the investment legal regime accommodates exogenous environmental and sustainable development demands through the legal tools at its disposal, examining how tribunals respond to claims of regulatory expropriation. The article shows that some investment tribunals have either adopted the ad hoc balancing characteristic of the United States Supreme Court’s approach to regulatory takings claims, while others have attempted the proportionality analysis derived from European constitutional traditions.

The article aims to assess if either of these approaches is more conducive than the other to due consideration being given to sustainable development’s objectives, offering the new practice of clarification and expansion of indirect expropriation clauses as the best guarantees for ‘sustainable investment protection.’