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)
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)
United Nations Human Rights Office of the High Commissioner, Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework, 2011; OECD Guidelines for Multinational Enterprises, 2011; International Labour Organization, Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy, 2017; Ten Principles of the UN Global Compact.
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.
Compania de Aguas del Aconquija S.A. and Vivendi Universal S.A. v. Argentine Republic (I), ICSID Case No. ARB/97/3, Award, 20 August 2007, para. 6.5.1(iii); Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v. Argentine Republic (II), ICSID Case No. ARB/03/19, Decision on Liability, 30 July 2010, para. 262; Saur International v. Argentine Republic, ICSID Case No. ARB/04/4, Decision on Jurisdiction and Liability, 6 June 2012, paras. 330–331; Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, ICSID Case No. ARB/05/22, Award, 24 July 2008, para. 434; Azurix Corp. v The Argentine Republic, ICSID Case No. ARB/01/12, Award, 14 July 2006, para. 261.
Urbaser S.A. and Consorcio de Aguas Bilbao Biskaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award, 8 December 2016, paras. 1143-1155.
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
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
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.
Urbaser S.A. and Consorcio de Aguas Bilbao Biskaia, Bilbao Biskaia Ur Partzuergoa v. Argentine Republic, Award, 8 December 2016, para. 1195; David R. Aven, Samuel D. Aven, Carolyn J. Park, Eric A. Park, Jeffrey S. Shioleno, Giacomo A. Buscemi, David A. Janney and Roger Raguso v. The Republic of Costa Rica, ICSID Case No. UNCT/15/3, Final Award, 18 September 2018, para. 738.
In many cases, host States have accused the investor of violating human rights on their territory. Such rights include:
Burlington Resources, Inc. v. Republic of Ecuador, ICSID Case No. ARB/08/5, Decision on Counterclaims, 07 February 2017, paras. 52, 104, 112, 878-879, 1075; Perenco Ecuador Limited v. Republic of Ecuador (Petroecuador), ICSID Case No. ARB/08/6, Interim Decision on the Environmental Counterclaim, 11 August 2015, paras. 34, 36, 611; David R. Aven, Samuel D. Aven, Carolyn J. Park, Eric A. Park, Jeffrey S. Shioleno, Giacomo A. Buscemi, David A. Janney and Roger Raguso v. The Republic of Costa Rica, ICSID Case No. UNCT/15/3, Final Award, 18 September 2018, paras. 720, 745-747.
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)
De Brabandere, E., Human rights and international investment law, in Krajewski, M. and Hoffmann, R. (ed.), Research Handbook on Foreign Direct Investment, 2019, pp. 619-645.
De Nanteuil, A., Counterclaims in Investment Arbitration: Old Questions, New Answers?, The Law & Practice of international Courts and Tribunals, 2018.
Ng, M., Can Human Rights Counterclaims Succeed in Investment Treaty Arbitration?, Transnational Dispute Management, 2018.
Shao, X., Environmental and Human Rights Counterclaims in International Investment Arbitration: at the Crossroads of Domestic and International Law, Journal of International Economic Law, Vol. 24, Issue 1, March 2021.
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