Editors
See all

Human Rights Counterclaims

I. Definition

1.

Counterclaims based on alleged human rights violations by foreign investors emerge as a legal tool for host States when human rights abuses occur by the investor under the scope of an investment project. Human rights counterclaims are a nascent theoretical and doctrinal development in order to attempt to make foreign companies accountable for human rights violations in the course of the operations in the host country. (See also Human Rights in Investment Claims and Corporate Social Responsibility)

II. Theoretical background

2.

International human rights law and international investment law are different areas of international law, but the interaction of these different areas of law is increasing.

3.

Historically, investment treaties made no reference to human rights, even though at the time of their making, guarantees for the respect of human rights already existed in other international legal instruments.1 These instruments do not contain direct human rights obligations for corporations. However, certain non-binding instruments are slowly providing for human rights obligations.2 (See also Human Rights in Investment Claims, Section II)

III. Practice in investment arbitration

A. General

4.

Although human rights arguments in investment arbitrations proceedings have become increasingly common3 and some tribunals have recognized that international investment law cannot be interpreted in isolation of public international law or other rules,4 the use of human rights counterclaims in investment arbitration is still exceptional.

5.

Urbaser v. Argentina5 is the first known case in which an arbitral tribunal accepted jurisdiction over a human right counterclaim.

B. Jurisdictional issues

6.

Although ICSID6 and UNCITRAL7 rules grant the possibility for counterclaims under certain circumstances, the jurisdiction of arbitral tribunals is limited to the consent of the parties. A broad formulation of the investor-State arbitration clause is one of the key factors to accept jurisdiction over a human right counterclaim.8 Such is the case for the DR-CAFTA treaty.9

IV. Merits

1. Absence of direct obligations towards foreign investors

7.

Currently, there is no obligation imposing direct responsibility for human rights violations by foreign investors10 in international law. However, the possibility of establishing these obligations for companies may depend on the inclusion of substantive obligations in binding instruments for these non-State actors. Still, arbitral tribunals consider that investors are no longer fully immune to international policies in case of human rights violations.11

8.

Other possibilities to address the absence of human rights obligations in the treaty may rely in the applicable law, for example, if the treaty refers to national or international law12 as applicable law13 or by virtue of systemic interpretation14 of human rights by resource to Article 31(3)(c) of the VCLT.

2. Alleged violations by foreign investors

9.

In many cases, host States have accused the investor of violating human rights on their territory. Such rights include:

  • The right to clean water/access water impaired by investment activity: the arbitral tribunal took this allegation into account in its damages and costs reasoning,15 or rejected for lack of legal grounds that entail such an obligation towards the investors.16 In any case, such right does not deprive the investor from the treaty protection.17
  • Environmental rights when the investment activity harms the nature,18 (See further Environmental Issues in ISDS)
  • The right to health and access to healthcare when the investment activity is related to hazardous substances,19 and
  • Cultural rights; i.e. when investments harm cultural artefacts registered20 or not21 in the World Heritage List.

V. New generation treaties

10.

The future success of a human rights counterclaim could be bound to human rights obligations imposed to the foreign investor. New generation treaties contain substantive provisions related to human rights obligations for corporations. For example, some of these provisions contain direct human rights obligations on foreign investors,22 while others intend to consider human rights compliance of the foreign investor when deciding the amount of compensation.23 (See further Human Rights in Investment Claims, Section II)

Bibliography

Select a key word :
1 /

Instantly access the most relevant case law, treaties and doctrine.

Start your Free Trial

Already registered ?