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Foreign direct investment (FDI) involves a private investor from one state (the home state) investing in another state (the host state). Foreign investors may also engage in private activities that have a negative impact on the residents, locals of the area. For instance, mining projects may have long-term environmental effects. Investment protection standards might obstruct the host state from enacting novel regulatory measures to safeguard the public interest in a variety of fields.

United Nations (UN) Guiding Principles on Business and Human Rights^[1]United Nations, ‘Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and Remedy’ Framework’ UN Doc A/HRC/17/31 (2011) Principle 9 (hereinafter … Continue reading have highlighted the need for States to maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives through investment treaties or contracts. Additionally, the UN Working Group on Business and Human Rights submitted a report to the UN General Assembly in October 2021 focusing on how States should negotiate human-rights compatible International Investment Agreements (IIAs) in order to appropriately balance the contrasting interests of attracting foreign investments and protecting locals’ human rights.^[2]OHCHR, ‘Open call for input for Working Group on Business and Human Rights’ report on “Human Rights-compatible International Investment Agreements … Continue reading This legal framework has centered around IIAs, primarily on how to create new IIAs or to modify and update existing ones in order to strike an equilibrium between the need to protect human rights and the need to attract investment by extending rights to foreign investors.

Traditionally, human rights obligations are addressed to states and have been intended principally to regulate the relations between individuals and the state.^[3]John H Knox, ‘Horizontal Human Rights Law’, American Journal of International Law, (2008) 102. The state not only bears a duty to respect the human rights of the individuals on its territory, but also has a duty to ensure that private actors, including foreign investors, do not violate those rights.^[4]Christian Tomuschat, Human Rights: Between Idealism and Realism (OUP 2003) 309. This has been explicitly included in the 1966 International Covenant on Civil and Political Rights (ICCPR), which gives states the obligation “to respect and to ensure to all individuals within its territory and subject to its jurisdiction the rights recognized in the present Covenant”.

HOW HUMAN RIGHTS NORMS CAN INTERACT WITH INTERNATIONAL INVESTMENT LAW?

Human rights norms interact with international investment law in at least five different ways:

1. the investor might commit/ complicit in, violations of human rights.
2. the State might violate the investor’s human rights.
3. the State might adopt a human rights-motivated measure that interferes with the property rights of the investor.
4. the party in the proceedings might invoke the practice of international human rights courts on issues of procedure.
5. the party may invoke international human rights norms in the application or interpretation of investment protection obligations.

Different tribunals have had different ideas as to the applicability and usefulness of interpreting or applying human rights law to an investment treaty dispute. For example, the protection of a human right, for example the right to water, at times may be in conflict with the right to property. As noted by the tribunal in Sempra v Argentina^[5]Sempra Energy International v Argentine Republic, ICSID Case No ARB/02/16, Award (28 September 2007) 332, what is at issue is the ‘complex relationship’ between investment protection and human rights.

Very few would disagree. Whether an investment tribunal can apply human rights law depends both on the relevant jurisdictional clause and the applicable law. The decisive factor in determining the jurisdiction of a given tribunal is the particular wording of an applicable compromiser clause contained in a relevant investment protection treaty or investment contract. For example, the main multilateral investment treaties, the North American Fair-Trade Agreement (NAFTA)^[6]North American Free Trade Agreement (signed 17 December 1992, entered into force 1 January 1994) (NAFTA) and the Energy Charter Treaty (ECT)^[7]Energy Charter Treaty (signed 17 December 1994, entered into force 16 April 1998) (ECT) art 26(6) to name but a few, make no mention of human rights. Thequestion arises whether all parties to such regional treaties must also beparties to a given human rights treaty for it to be relied upon. There is nouniform answer to this question.

A further possibility for taking human rights into consideration when deciding whether an investment obligation has been breached are the principles of treaty interpretation as provided for in the Vienna Convention on the Law of Treaties (VCLT)^[8]Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331 (VCLT 1969), art 31(3)(c) .  Article 31(3)(c) VCLT requires that in the interpretation of a treaty ‘[t]here shall be considered, together with the context: … any relevant rules of international law applicable in the relations between the parties’

HOW INTERNATIONAL HUMAN RIGHTS CAN BE EXPRESSED ITS REFERENCES?

Human rights became part of international law. International treaties were adopted, including the Universal Declaration of Human Rights in 1948, the European Convention on Human Rights in 1950, the International Covenant on Civil and Political Rights in 1966, the InterAmerican Convention on Human Rights in 1969, and the African Charter on Human Rights and People’s Rights in 1981.

Some investment treaties contain provisions that are in harmony with protections afforded by human rights law, including also the right to public health, protection of the environment, labour standards and corporate social responsibility, for instance:

Article 14(b) of the 2017 Intra-MERCOSUR^[9]Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331 (VCLT 1969), art 31(3)(c) . Investment Facilitation Protocol, investors and investments have a best-effort obligation to uphold the human rights of all those concerned by their business activity in a way that is consistent with the host State’s human rights obligations under international treaties.

• Preamble of the 2018 EU-Singaporean Free Trade Agreement^[10]EU-Singapore trade and investment protection agreements, 19 October 2018, … Continue reading provides that parties must have regard to the principles set forth in the Universal Declaration of Human Rights adopted by the General Assembly of the United Nations. So, it may be difficult to conclude that international human rights norms can be considered directly applicable to the investment dispute (for purposes other than the interpretation of the investment treaty provisions). Indeed, that preamble simply states that the parties have entered into the treaty ‘having regard to’ the principles set forth in the Universal Declaration of Human Rights of 1948 (UDHR).
• Article 5(2) of the 2012 U.S. BIT Model^[11]U.S. BIT Model, 2012 https://ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf indicates that access to justice and due process are part of the host State’s obligation to provide fair and equitable treatment: “fair and equitable treatment” includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world.
• Article 17 of the Canada-Cameroon BIT^[12]Canada-Cameroon BIT,2014 https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/3163/download for example, provides that “each of the Parties may adopt or enforce a measure necessary: (i) to protect human, animal or plant life or health”. Thepreamble to the US Model BIT (2012) provides that the parties would enter into the agreement ‘Desiring to achieve [its] objectives in a manner consistent with the protection of health, safety, and the environment, and the promotion of internationally recognized labor rights’ (emphasis added). In a second sort of cases, references to human rights-related notions can be found in treaty provisions setting out specific investment protection standards such as the obligation to accord fair and equitable treatment or the prohibition against expropriation without compensation.
• Article 18(2) of the Reciprocal Investment Promotion and Protection Agreement between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria of 2016 (Morocco–Nigeria BIT)^[13]Morocco–Nigeria BIT, 2016, https://investmentpolicy.unctad.org/international-investment-agreements/treaties/tips/3711/morocco—nigeria-bit-2016-, investors and investments ‘shall uphold human rights in the host state’, and it makes relevant human rights norms directly applicable to the investor.

For instance, in Urbaser v. Argentina^[14]Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v Argentine Republic (ICSID Case No ARB/07/26) Award (8 December 2016) (Urbaser S.A. v Argentine Republic). … Continue reading ICSID Case No. ARB/07/26, the tribunal upheld jurisdiction over the host State’s counterclaim for alleged violation of human rights by the foreign investors under the Spanish-Argentine Bilateral Investment Treaty (BIT). While Argentina’s main argument was that the foreign investors had violated the principles of good faith and pacta sunt servanda by failing to comply with the Concession Contract, the tribunal addressed, for the first time, Argentina’s considerations on the basic human right of access to water services.

HOW SYSTEM INTEGRATION APPROACH WORKS?

Another possible ground for the application of international human rights law to investment treaty disputes may be the principle of systemic integration. This principle finds expression in article 31(3)(c) VCLT^[15]Vienna Convention on the Law of Treaties (adopted 23 May 1969, entered into force 27 January 1980) 1155 UNTS 331 (VCLT 1969), art 31(3)(c) . According to that provision, in interpreting a treaty one should consider ‘any relevant rules of international law applicable in the relations between the parties. Thus, the interpreter must place the relevant treaty in the general framework of international law, of which the treaty is part.

For instance, “systemic integration” mandates that courts take into account additional pertinent, applicable principles of international law when construing a treaty. Arbitral tribunals have acknowledged that investment treaties are a component of a broader international law and, in certain cases, have used systemic integration to take human rights into consideration.

One of the most significant authorities in this respect is the decision of the ICSID ad hoc Committee in Tulip v Turkey^[16]Tulip Real Estate v. Turkey  Tulip Real Estate Investment and Development Netherlands B.V. v. Republic of Turkey (ICSID Case No. ARB/11/28), 2011 … Continue reading. In that case the ad hoc Committee concluded that, based on the principle of systemic integration- international human rights norms applicable to both parties, and related case law, are relevant to the interpretation of the notion of fundamental rule of procedure under article 51(1)(d) of the ICSID Convention national law, of which the treaty is part systemic integration certainly makes human rights norms applicable as interpretative tools in investment treaty disputes.

CONCLUDING REMARKS

In the international investment system, human rights are becoming progressively more important. Case law pertaining to human rights has played a significant role in providing substance to international legal norms governing the shielding of property rights, including the right to redress, the right to a fair trial, and the protection of economic and social interests.

As part of States’ increasing effort to protect their regulatory space, there are now a number of new-generation international investment agreements and model bilateral investment treaties (BITs) that make express reference to human rights.

International law creates obligations for states and offers redress for violations, enabling non-state actors to mobilize the language of international law when attempting to influence public authorities. Recourse to international law in natural resource disputes has also resulted in actual legal proceedings aimed at holding states accountable for alleged violations, including human rights litigation and investor–state arbitrations.

Aida Bektasheva

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Aida Bektasheva has over 10 years of international development experience (UN -FAO, UN-RCO, UNDP Search for Common Ground, International Alert, and others) in the field of governance, law, and peacebuilding. Her knowledge of policy decisions, rule of law, conflict transformation, democracy combined with her skills in research, analysis, and project management make her well qualified to serve in this position. She has worked in Central Asia, Russia, Sweden countries and is fluent in Russian and English.

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