Human rights can boast universal acceptance and a well-developed system of specialized courts and tribunals. Although there does not seem to be objections to human rights being relevant to all spheres of life and deserving of consideration, there is criticism regarding their effectiveness.1 The system of investment protection has, in recent years, become increasingly intertwined with other areas of international law – mostly with human rights and environmental law.
II. Legal framework of human rights in investment arbitration
Lately, with the rise of a new generation of model BITs, the investors’ community seem more keen to accept restrictions on investment protection if such restrictions are determined by the protection of human rights.3 Clauses providing for a respect of human rights were progressively introduced in the new generation of BITs. Some of these additions are:
B. Investment contracts
Investment contracts are not unfamiliar with human rights considerations.12 On one hand, parties to contracts can decide to exempt health, safety and environment regulations from the application of stabilisation clauses to allow the State to regulate in favor of human rights.13 On the other hand, parties can include clauses explicitly providing for human rights obligations towards investors.14 More specifically, some clauses include obligations relating to forced labor,15 as well as to the safety and health of employees.16
C. Soft law
Elaborated provisions on corporate social responsibility are contained today in soft law instruments. The initiative came from companies, States and international organizations. These instruments were recently considered by arbitral tribunals in ISDS disputes suggesting that investors are no longer “immune from becoming subjects of international law”.17 Some of these instruments were mentioned in Urbaser v. Argentina18 and Tulip Real Estate v. Turkey:19
A new set of arbitration rules were developed to provide for a procedure suitable for cases with complex chains of distribution, in which different companies from different jurisdictions can be involved. The Hague Rules on Business and Human Rights Arbitration can be used as the applicable law to an arbitration under certain conditions.
III. Mechanisms in arbitration
A. Claims by investors
Where the BIT is sufficiently broad, some tribunals have allowed investors to advance claims of violations of human rights based on general international law within the scope of the dispute before the arbitral tribunal.21 On the other hand, where the applicable BIT does not allow for such expansion of the scope of the dispute, tribunals refused to consider these claims within their jurisdiction.22
As standards of protection from international investment agreements (IIAs) provide more specific rules than those of protection of right to property, to life, to health and physical security, the latter are not usually claimed, and are instead secured in the framework of investment protection standards.23 Some tribunals even refused to recognize incompatibilities between human rights and BIT obligations.24 (See also Full Protection and Security, Minimum Standard of Treatment, Expropriation and Fair and Equitable Treatment).
Nonetheless, claimants have relied on the standards of treatment contained in the BIT while incorporating references to human rights in their allegations and tribunals took them into consideration to properly assess and interpret BIT provisions, such as for the nationality of investor,25 expropriation26 and fair and equitable treatment.27 Others have been more reluctant.28
B. Counterclaims by the host State
C. Amicus curiae
Investment tribunals accept third-party view on the dispute to ensure just resolution.30 In October 2003, the NAFTA Free Trade Commission issued guidelines on non-disputing parties (amici curiae).31 Although third party interventions cannot always be justified due to the consensual nature of arbitration,32 many interventions were possible since the issues involved in the dispute are of public interest, can “have the potential, directly or indirectly, to affect persons beyond those immediately involved as parties in the case”33 or are relevant to the dispute at hand.34
IV. Current issues
There are still a number of unresolved concerns presented by the insertion of human rights issues into investment arbitration. Human rights provisions are still absent in most applicable BITs and MITs and there is still a lack of coordination between investment arbitration and human rights jurisprudence in terms of the application of a human rights concept or in awarding damages.35
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