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Human Rights Counterclaims

I. Definition


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


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.

III. Practice in investment arbitration

A. General


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

B. Jurisdictional issues

IV. Merits

1. Absence of direct obligations towards foreign investors


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.

2. Alleged violations by foreign investors


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


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)


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