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 doctrinal1 development in order to attempt to make foreign companies accountable for human rights violations in course of the operations in the host country.
II. Theoretical background
International human rights law and international investment law are different areas of international law, but interplay in these different areas of law is increasing. Historically, investment treaties made no reference to human rights, despite fundamental Human Rights instruments containing provisions2 that ensure respect to human rights. These instruments do not contain direct human rights obligations for corporations. However, certain non-binding instruments are slowly providing for human rights obligations.3 (See further Human Rights in Investment Claims)
III. Practice in investment arbitration
Although human rights arguments in investment arbitrations have become increasingly common4 and some tribunals have recognized that international investment law cannot be interpreted in isolation of public international law or other rules,5 the use of human rights counterclaims in investment arbitration is still exceptional. Urbaser v. Argentina6 is the first known case in which an arbitral tribunal accepted jurisdiction over a human right counterclaim. Counterclaims based in environmental damages7 are also a recent development.
Currently, there is no obligation imposing direct responsibility for human rights violations by foreign investors11 in international law. However, the possibility of establishing these obligations for companies may depend on the establishment of substantive obligations in binding instruments for these non-State actors.
Other possibilities to address the absence of human rights obligations in the treaty may rely in the applicable law, for example, if the treaty referred 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.
VI. New generation treaties
The future success of a human right 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 investors15, while others intend to consider human rights compliance of the foreign investor when deciding the amount of compensation.16
Ng, M., Can Human Rights Counterclaims Succeed in Investment Treaty Arbitration?, Transnational Dispute Management, 2018.
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