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THE HUMAN RIGHTS DEFENCE IN INTERNATIONAL INVESTMENT ARBITRATION: EXPLORING THE LIMITS OF SYSTEMIC INTEGRATION

  • Johannes Hendrik Fahner (a1) and Matthew Happold (a2)

Abstract

In a variety of investment arbitration cases, respondent States have argued that measures impugned by investors were mandated by that State's human rights obligations. Tribunals have generally been reluctant to engage with such arguments and to interpret the relationship between investment law and human rights in a straightforward manner. This article discusses two other possibilities: harmonious interpretation and prioritization. Harmonious interpretation seeks to read provisions from investment treaties and human rights treaties together, whereas prioritization gives normative superiority to one provision over another. We conclude that harmonious interpretation is facilitated by the discretionary character of common treaty standards in both human rights and investment law, but that the final result is unlikely to be very different from prioritization, because even harmonious interpretation requires that one provision is read in the light of, and thereby subjugated to, the other.

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Footnotes

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The authors would like to thank the anonymous reviewers and editors for their helpful comments.

Footnotes

References

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1 Houben v Burundi, ICSID ARB/13/7, Award of 12 January 2016.

2 ibid, para 177.

3 See eg Dupuy, PM, Francioni, F and Petersmann, EU (eds), Human Rights in International Investment Law and Arbitration (Oxford University Press 2009); Simma, B and Kill, T, ‘Harmonizing Investment Protection and International Human Rights: First Steps Towards a Methodology’ in Binder, C et al. (eds), International Investment Law for the 21st Century: Essays in Honour of Christoph Schreuer (Oxford University Press 2009); Horchani, F, ‘Les droits de l'homme et le droit des investissements internationaux’ in Boy, L et al. . (eds), Droit Économique et Droits de l'Homme (Larcier 2009); Faruque, A Al, ‘Mapping the Relationship between Investment Protection and Human Rights’ (2010) 11 Journal of World Investment and Trade 539; Simma, B, ‘Foreign Investment Arbitration: a Place for Human Rights’ (2011) 60 ICLQ 573; de Brabandere, E, ‘Human Rights Considerations in International Investment Arbitration’ in Fitzmaurice, M and Merkouris, P (eds), The Interpretation and Application of the European Convention of Human Rights: Legal and Practical Implications (Nijhoff 2012); Kulick, A, Global Public Interest in International Investment Law (Cambridge University Press 2012) 269ff; Petersmann, EU, ‘Human Rights, Trade and Investment Law and Adjudication: the Judicial Task of Administering Justice’ in Calamita, N Jansen, Earnest, D and Burgstaller, M (eds), The Future of ICSID and the Place of Investment Treaties in International Law. Investment Treaty Law Current Issues IV (BIICL 2013); L González García, ‘The Role of Human Rights in International Investment Law’ in ibid; U Kriebaum, ‘Foreign Investments and Human Rights: The Actors and Their Different Roles’ in ibid; Karamanian, S, ‘The Place of Human Rights in Investor-State Arbitration’ (2013) 17 Lewis and Clark Law Review 423; Calamita, N Jansen, ‘International Human Rights and the Interpretation of International Investment Treaties – Constitutional Considerations’ in Baetens, F (ed), The Interaction of International Investment Law with Other Fields of International Law (Cambridge University Press 2013); Mouyal, L, International Investment Law and the Right to Regulate. A Human Rights Perspective (Routledge 2016); Balcerzak, F, Investor-State Arbitration and Human Rights (Brill 2017); Steininger, S, ‘What's Human Rights Got to Do With It? An Empirical Analysis of Human Rights References in Investment Arbitration’ (2018) 31 LJlL 33; Brabandere, E de, ‘Human Rights and International Investment Law’ in Krajewski, M and Hoffmann, R (eds), Research Handbook on Foreign Direct Investment (Elgar 2019); see also the TDM special issue edited by U Kriebaum, ‘Aligning Human Rights and Investment Protection’ (2013) 1 TDM.

4 Nelson, T, ‘Human Rights Law and BIT Protection: Areas of Convergence’ (2011) 11 Journal of World Investment and Trade 27.

5 eg Mondev International Ltd v USA, ICSID ARB(AF)/99/2, Award of 11 October 2002, paras 143–144; Técnicas Medioambientales Tecmed SA v Mexico, ICSID ARB(AF)/00/2, Award of 29 May 2003, paras 116–122; Azurix v Argentina, ICSID ARB/01/12, Award of 14 July 2006, paras 311–312; Yukos Universal Limited v Russia, PCA AA 227, Final Award of 18 July 2014, para 765. See for more critical stances, Azurix v Argentina, ICSID Case No ARB/01/12, Annulment Decision of 1 September 2009, para 128; Frontier Petroleum v Czech Republic, UNCITRAL, Final Award of 12 November 2010, para 338; Roussalis v Romania, ICSID ARB/06/1, Award of 7 December 2011, para 312. See for a comprehensive discussion Alvarez, J, ‘The Use (and Misuse) of European Human Rights Law in Investor-State Dispute Settlement)’ in Ferrari, F (ed), The Impact of EU Law on International Commercial Arbitration (Juris 2017). For a critical argument, see Isiksel, T, ‘The Rights of Man and the Rights of the Man-Made: Corporations and Human Rights’ (2016) 38 HumRtsQ 294.

6 Hesham Talaat M Al-Warraq v Indonesia, UNCITRAL, Final Award of 15 December 2014. See the case comment by Cotula, L, ‘Human Rights and Investor Obligations in Investor-State Arbitration’ (2016) 17 Journal of World Investment and Trade 148.

7 Al-Warraq v Indonesia (n 6) para 559. The tribunal did not mention that Saudi Arabia, the investor's home State, was not a party to the treaty, which might have been relevant under art 31(3)(c) VCLT.

9 ibid, para 621. However, the claimant was not entitled to compensation as he had not complied with a unique investor obligations provision found in the applicable investment treaty. ibid, para 648.

10 M Hirsch, ‘Investment Tribunals and Human Rights: Divergent Paths’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3) 107–13.

11 P Dumberry and G Dumas-Aubin, ‘When and How Allegations of Human Rights Violations Can be Raised in Investor-State Arbitration’ (2012) Journal of World Investment and Trade 349; Balcerzak, F, ‘Jurisdiction of Tribunals in Investor-State Arbitration and the Issue of Human Rights’ (2014) 29 ICSIDRev 216; Viñuales, J, ‘Investor Diligence in Investment Arbitration: Sources and Arguments’ (2017) 32 ICSIDRev 346. See generally on corporate accountability for human rights violations McCorquodale, R, ‘Pluralism, Global Law and Human Rights: Strengthening Corporate Accountability for Human Rights Violations’ (2013) 2 Global Constitutionalism 287.

12 Phoenix Action Ltd v Czech Republic, ICSID ARB/06/5, Award of 15 April 2009, para 78. The tribunal gave an ‘extreme example’, concerning ‘investments made in violation of the most fundamental rules of protection of human rights, like investments made in pursuance of torture or genocide or in support of slavery or trafficking of human organs’. The status of the ‘clean hands’ doctrine as an admissibility bar remains controversial. Dumberry, P, ‘State of Confusion: The Doctrine of “Clean Hands” in Investment Arbitration after the Yukos Award’ (2016) 17 Journal of World Investment and Trade 229.

13 Copper Mesa Mining Corp v Ecuador, PCA 2012-2, Award of 15 March 2016, para 6.99, 6.102.

14 Urbaser SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v Argentina, ICSID ARB/07/26, Award of 8 December 2016, paras 1143–1155. The Urbaser tribunal assumed jurisdiction over Argentina's counterclaim based on the human right to water, but rejected it on the merits: ‘the enforcement of the human right to water represents an obligation to perform. Such obligation is imposed upon States. … The situation would be different in case an obligation to abstain, like a prohibition to commit acts violating human rights would be at stake. Such an obligation can be of immediate application, not only upon States, but equally to individuals and other private parties’. ibid, para 1210. See for a different argument Cernic, J, ‘Corporate Obligations under the Human Right to Water’ (2011) 39 DenvJIntlL&Pol'y 303. Generally, see E de Brabandere, ‘Human Rights Counterclaims in Investment Treaty Arbitration’ (2018) [2017] Belgisch Tijdschrift voor Internationaal Recht 591.

15 Houben v Burundi (n 1) paras 86–89.

16 ibid, para 93.

17 ibid, paras 166–167.

18 ibid, para 168. ‘Mr Houben contends … that Burundi has not identified a single occasion in which it used its police powers to expel the squatters’ (all translations from the French are unofficial translations by the authors).

19 ibid. ‘[T]he local authorities actively participated in the acts of usurpation by issuing the necessary authorisations for the usurpers.’

20 ibid, para 179.

21 ibid, para 177. ‘The tribunal also considers irrelevant Burundi's arguments relating to the alleged rights of the squatters. … Burundi argues … that the public prosecutor could not expel the occupiers since they had constructed private dwellings on the disputed land and were therefore protected by Article 17 of the Covenant on Civil and Political Rights. However, the question is not whether Burundi was obliged to expel the usurpers after the latter had come into possession of the land, nor if their expulsion, once the houses were built, would have been contrary to international human rights law, but whether Burundi had taken the necessary measures to prevent, a priori, these usurpers from taking possession of the land. The factual circumstances described above demonstrate that it had not done so.’

22 A controversial case concerning South Africa's positive discrimination policies attracted significant societal and academic attention, but was discontinued. Piero Foresti and Others v South Africa, ICSID Case No ARB (AF)/07/1, Award of 4 August 2010. See eg Wythes, A, ‘Investor-State Arbitrations: Can the ‘Fair and Equitable Treatment’ Clause Consider International Human Rights Obligations?’ (2010) 23 LJIL 241; Adeleke, F, ‘Human Rights and International Investment Arbitration’ (2016) 32 SAJHR 1. Another more recent example is Veolia Propreté v Egypt, ICSID ARB/12/15. Allegedly, the case concerned amongst other issues a change of legislation increasing minimum wages. L Peterson, ‘French Company, Veolia, Launches Claim against Egypt over Terminated Waste Contract and Labor Wage Stabilization Promises’ IA Reporter (27 June 2012). The case was allegedly decided in favour of the State. D Charlotin, ‘Egyptian Official Confirms Victory in Veolia Case at ICSID, as Company Remains Silent’ IA Reporter (30 May 2018). See generally Brabandere, E de, Investment Treaty Arbitration as Public International Law: Procedural Aspects and Implications (Cambridge University Press 2014) 141–7.

23 Similar arguments were made by amici in Biwater Gauff (Tanzania) Ltd v Tanzania, ICSID ARB/05/22, Award of 24 July 2008, paras 379–380, 387. Schreiber, W, ‘Realizing the Right to Water in International Investment Law: An Interdisciplinary Approach to BIT Obligations’ (2008) 48 NatResourcesJ 431; Viñuales, J, ‘Access to Water in Foreign Investment Disputes’ (2009) 21 GeoIntlEnvtlLRev 733; P Thielbörger, ‘The Human Right to Water versus Investor Rights: Double-Dilemma or Pseudo-Conflict?’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3); Marrella, F, ‘On the Changing Structure of International Investment Law: The Human Right to Water and ICSID Arbitration’ (2010) 12 IntCLRev 335; Bray, H, ‘ICSID and the Right to Water: An Ingredient in the Stone Soup’ (2014) 29 ICSID Rev 474; Meshel, T, ‘Human Rights in Investor-State Arbitration: The Human Right to Water and Beyond’ (2015) 6 JIDS 277.

24 Azurix v Argentina (n 5) para 254.

26 Suez, Sociedad General de Aguas de Barcelona, SA and Vivendi Universal, SA v Argentina, ICSID ARB/03/19, Decision on Liability of 30 July 2010, para 252. See also the amicus curiae submissions, mentioned in para 256.

27 SAUR International SA v Argentina, ICSID ARB/04/4, Decision on Jurisdiction and Liability of 6 June 2012, para 328. ‘[T]he obligations emanating from [the bilateral investment treaty] should be interpreted in harmony with the rules on the protection of human rights, and with the human rights to water in particular’. See for a case comment Hamida, W Ben, ‘SAUR International SA c République argentine. Droit national, droit international et droits de l'homme: l'histoire d'un ménage à trois’ (2013) 28 ICSIDRev 241.

28 EDF International SA, SAUR International SA and León Participaciones Argentinas SA v Argentina, ICSID ARB/03/23, Award of 11 June 2012, para 192. See also Sempra Energy Int v Argentina, ICSID ARB/02/16, Award of 28 September 2007, paras 331–332, noting ‘the complex relationship between investment treaties, emergency and the human rights of both citizens and property owners’. The Sempra award was annulled in its entirety by decision of 29 June 2010. See also Choudhury, B, ‘Exception Provisions as a Gateway to Incorporating Human Rights Issues into International Investment Agreements’ (2011) 49 ColumJTransnatlL 670.

29 EDF v Argentina (n 28) para 192.

30 ibid, para 193.

31 ibid, para 194.

32 Azurix v Argentina (n 5) para 261. In the concrete circumstances of the case, the tribunal noted that the provision of water to consumers was not interrupted by the termination of the concession. cf South American Silver Ltd v Bolivia, UNCITRAL, Award of 22 November 2018, para 217: ‘[t]he Respondent also fails to explain how [human rights] rules conflict with the Treaty or why they should prevail over its provisions’.

33 Siemens AG v Argentina, ICSID ARB/02/8, Award of 17 January 2007, para 79.

34 Compañiá de Aguas del Aconquija SA and Vivendi Universal SA v Argentina, ICSID ARB/97/3, Annulment Decision of 10 August 2010, para 57.

35 ibid, para 253.

36 Glamis Gold, Ltd v United States, UNCITRAL, Non-Party Supplemental Submission of the Quechan Indian Nation of 16 October 2006, <https://www.italaw.com/sites/default/files/case-documents/italaw8868_0.pdf>.

37 Glamis Gold, Ltd v United States, UNCITRAL, Award of 8 June 2009, para 8. See for a discussion of the case while it was still pending, J Cantegreil, ‘Implementing Human Rights in the NAFTA Regime – The Potential of a Pending Case: Glamis Corp v USA, in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3). It has been argued that even if the tribunal did not address the human rights issues explicitly, they were instrumental to the respondent's win on the merits: Karamanian, S, ‘Human Rights Dimensions of Investment Law’ in de Wet, E and Vidmar, J (eds), Hierarchy in International Law: The Place of Human Rights (Oxford University Press 2012) 269.

38 Bernhard von Pezold and Others v Zimbabwe, ICSID ARB/10/15, and Border Timbers Ltd and Others v Zimbabwe, ICSID ARB/10/25, Procedural Order No 2 of 26 June 2012, para 2.

39 ibid, para 58.

40 ibid, para 60. See for a comment Leary, T, ‘Non-Disputing Parties and Human Rights in Investor-State Arbitration. Bernhard von Pezold and Others v Republic of Zimbabwe, ICSID Case No ARB/10/15, Final Award, 28 July 2015’ (2017) 18 Journal of World Investment and Trade 1062.

41 P Dupuy, ‘Unification rather Than Fragmentation of International Law? The Case of International Investment Law and Human Rights Law’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3) 59. It has been noted that host States which are critical of human rights discourse may be less inclined to raise a human rights defence, even if relevant. Simma and Kill, ‘Harmonizing Investment Protection and International Human Rights’ (n 3) fn 11.

42 Fry, J, ‘International Human Rights Law in Investment Arbitration: Evidence of International Law's Unity’ (2007) 18 DukeJ Comp&IntlL 77, 100: ‘the tribunals in these cases did not seem to take the argument seriously’. De Brabandere, ‘Human Rights Considerations’ (n 3) 208: ‘investment tribunals thus remain relatively reluctant to take up human rights considerations’. Kube, V and Petersmann, EU, ‘Human Rights Law in International Investment Arbitration’ in Gattini, A, Tanzi, A and Fontanelli, F (eds), General Principles of Law and International Investment Arbitration (Brill 2018) 245: ‘ISDS tribunals are in principle rather reluctant to accept human rights based arguments and have not developed a coherent methodology for evaluating the human rights dimensions of investment disputes’. See also Desierto, D, Public Policy in International Economic Law: The ICESCR in Trade, Finance, and Investment (Oxford University Press 2015) 350–2. For a sociological explanation of ‘the non-receptive approach of investment tribunals towards human rights norms’, see Hirsch, M, Invitation to the Sociology of International Law (Oxford University Press 2015) 128–56; Sornarajah, M, Resistance and Change in the International Law on Foreign Investment (Cambridge University Press 2015) 322–3.

43 Borgen, C, ‘Treaty Conflicts and Normative Fragmentation’ in Hollis, D (ed), The Oxford Guide to Treaties (Oxford University Press 2012) 459-61.

44 ‘Fragmentation of International Law: Difficulties Arising from the Diversification and Expansion of International Law’, Report of the Study Group of the International Law Commission, UN Doc A/CN.4/L.682 (4 April 2006) para 412.

45 eg art 42 ICSID Convention; art 1131 NAFTA; art 26(6) ECT. Kjos, H, Applicable Law in Investor-State Arbitration: The Interplay between National and International Law (Oxford University Press 2013) 222ff.

46 See generally Hofmann, R and Tams, C (eds), International Investment Law and General International Law: From Clinical Isolation to Systemic Integration? (Nomos 2011); Rosentreter, D, Article 31(3)(c) of the Vienna Convention on the Law of Treaties and the Principle of Systemic Integration in International Investment Law and Arbitration (Nomos 2015); Merkouris, P, Article 31(3)(c) and the Principle of Systemic Integration. Normative Shadows in Plato's Cave (Brill 2015); Yotova, R, ‘Systemic Integration. An Instrument for Reasserting the State's Control in Investment Arbitration?’ in Kulick, A (ed), Reassertion of Control over the Investment Treaty Regime (Cambridge University Press 2017).

47 See generally McLachlan, C, ‘The Principle of Systemic Integration and Article 31(3)(c) of the Vienna Convention on the Law of Treaties’ (2005) 54 ICLQ 279; Linderfalk, U, On the Interpretation of Treaties: The Modern International Law as Expressed in the 1969 Vienna Convention on the Law of Treaties (Springer 2007) 177-89; Schreuer, C, ‘The Development of International Law by ICSID Tribunals’ (2016) 31 ICSIDRev 728.

48 ‘Fragmentation of International Law’ (n 44) para 427. See for art 31(3)(c) specifically, Oil Platforms (Iran v United States), ICJ, Judgment of 6 November 2003, para 41.

49 ‘Fragmentation of International Law’ (n 44) para 465. It has been argued that investors should not be the ‘victim’ of incompatible treaty obligations, Ghouri, A, Interaction and Conflict of Treaties in Investment Arbitration (Kluwer 2015) 112–13.

50 Gardiner, R, Treaty Interpretation (2nd edn, Oxford University Press 2015) 320.

51 eg Marfin Investment Group Holdings SA, Alexandros Bakatselos and Others v Cyprus, ICSID ARB/13/27, Award of 26 July 2018, para 827.

52 cf South American Silver v Bolivia (n 32) para 216: ‘this principle must be applied in harmony with the rest of the provisions of the same article and cautiously, in order to prevent the tribunal from exceeding its jurisdiction and applying rules to the dispute which the Parties have not agreed to’.

53 Bhat, S Suresh, ‘A Study of the Issue of “Relevant Rules” of International Law for the Purposes of Interpretation of Treaties under Article 31(3)(c) of the Vienna Convention on the Law of Treaties’ (2019) 21 ICLR 190.

54 cf WTO Appellate Body in United States – Definitive Anti-Dumping and Countervailing Duties on Certain Products from China, WTO DS379, AB Report of 11 March 2011, para 308.

55 Simma and Kill, ‘Harmonizing Investment Protection and International Human Rights’ (n 3) 695–6. For examples where international adjudicators other than investment arbitration tribunals applied art 31(3)(c), see ‘Fragmentation of International Law’ (n 44) paras 433–460. Several of these examples concern rules that arguably have a different subject matter than the treaty that is being interpreted.

56 eg Linderfalk, U, ‘Who Are “the Parties”? Article 31, Paragraph 3(C) of the 1969 Vienna Convention and the “Principle of Systemic Integration” Revisited’ (2008) 55 NILR 343. The position that the relevant parties are the disputing parties which has been advanced in other contexts is untenable in regard to an investor–State dispute, if only because of art 1(g) VCLT which defines ‘party’ as ‘a State which has consented to be bound by the treaty and for which the treaty is in force’.

57 cf South American Silver v Bolivia (n 32) para 217. But see eg Biwater Gauff (Tanzania) Ltd v Tanzania, ICSID ARB/05/22, Amicus Curiae Submission of 26 March 2007, para 96, referring to the African Charter on the Rights and Welfare of the Child, to which Tanzania was a party, but not the United Kingdom. The situation is even more difficult if the treaty being interpreted is a multilateral treaty. cf Philip Morris v Uruguay, ICSID ARB/10/7, Award of 8 July 2016, para 401. Simma and Kill argue that erga omnes human rights obligations should in any case be covered by art 31(3)(c). Simma and Kill, ‘Harmonizing Investment Protection and International Human Rights’ (n 3) 698–702. See also Gardiner, Treaty Interpretation (n 51) 302–4, 310–17.

58 Tulip Real Estate and Development Netherlands BV v Turkey, ICSID ARB/11/28, Decision on Annulment of 30 December 2015. See for the use of art 31 VCLT by tribunals eg Fauchald, OK, ‘The Legal Reasoning of ICSID Tribunals – An Empirical Analysis’ (2008) 19 EJIL 301; Saldarriaga, A, ‘Investment Awards and the Rules of Interpretation of the Vienna Convention: Making Room for Improvement’ (2013) 28 ICSIDRev 197; Bücheler, G, Proportionality in Investor-State Arbitration (Oxford University Press 2015) 86ff; Ascensio, H, ‘Article 31 of the Vienna Conventions on the Law of Treaties and International Investment Law’ (2016) 31 ICSIDRev 366.

59 Tulip v Turkey (n 58) para 65.

60 ibid, para 86.

61 ibid, para 92.

62 cf Urbaser v Argentina (n 14) para 1200. The argument for this approach is even stronger in the case of a (newer) BIT that explicitly refers to human rights. cf the new Dutch Model BIT of 19 October 2018, Article 6(5): ‘[w]ithin the scope and application of this Agreement, the Contracting Parties reaffirm their obligations under the multilateral agreements in the field of … the protection of human rights to which they are party’.

63 CMS Gas Transmission Company v Argentina, ICSID ARB/01/8, Award of 12 May 2005, para 114.

64 ibid, para 121.

65 Peterson, LE, Human Rights and Bilateral Investment Treaties. Mapping the Role of Human Rights Law within Investor-State Arbitration (Int'l Centre for Human Rights and Democratic Development 2009) fn 53.

66 Some investment disputes could be rephrased as horizontal conflicts between the right to property of the investor and the human rights of others. However, the human right to property is often heavily qualified in ways that common investment treaty provisions are not, see eg Article 1 of the First Additional Protocol to the European Convention on Human Rights.

67 Jansen Calamita, ‘International Human Rights and the Interpretation of International Investment Treaties’ (n 3) 182.

68 eg James and Others v United Kingdom, ECtHR 8793/79, Judgment of 21 February 1986, para 46.

69 Simma, ‘Foreign Investment Arbitration’ (n 3) 586.

70 Not all of the obligations in the ICESCR have this aspirational quality: see Committee on Economic, Social and Cultural Rights, ‘General Comment 3: The Nature of State Parties’ Obligations (Art. 2, para. 1 of the Covenant), UN Doc E/1991/23 (14 December 1990) para 10.

71 A certain ‘vagueness and lack of conceptual clarity’ is not peculiar to economic, social and cultural rights, but applies to other human rights norms too. Baderin, M and McCorquodale, R, ‘The International Covenant on Economic, Social and Cultural Rights: Forty Years of Development’ in Baderin, M and McCorquodale, R (eds), Economic, Social and Cultural Rights in Action (Oxford University Press 2007) 11. Baderin and McCorquodale note, however, that ‘the ESCR Committee has provided considerable conceptual clarity and elaboration to the nature and scope of many ESC rights contained in the ICESCR’.

72 Al Faruque, ‘Mapping the Relationship between Investment Protection and Human Rights’ (n 3) 548: ‘the general concepts of the investment protection contain within them considerable flexibility, which enables the arbitrators to balance the public and private interests and to ensure that the treaty protections leave a considerable margin of appreciation for the exercise of state sovereignty’; Schill, S, ‘Cross-Regime Harmonization through Proportionality Analysis: The Case of International Investment Law, the Law of State Immunity and Human Rights’ (2012) 27 ICSIDRev 87: ‘most of the standard rights granted under investment treaties … are not understood by tribunals as absolute guarantees’. See also Moloo, R and Jacinto, J, ‘Standards of Review and Reviewing Standards: Public Interest Regulation in International Investment Law’ in Sauvant, K (ed), Yearbook on International Investment Law and Policy 2011–2012 (Oxford University Press 2013).

73 Simma and Kill, ‘Harmonizing Investment Protection and International Human Rights’ (n 3) 704, commenting on the FET standard: ‘[i]f the inherent flexibility of the standards contained in BITs does in fact “invite” States to exercise a margin of appreciation in observing such protection, then international human rights law can play a useful role in determining the bounds of this margin of appreciation’. Bonnitcha, J, Substantive Protection under Investment Treaties (Cambridge University Press 2014) 34: ‘[i]t is difficult to imagine a situation in which a state's human rights and investment treaty obligations would be doctrinally inconsistent’. It has been argued that proportionality analysis could facilitate harmonization. See J Krommendijk and J Morijn, ‘“Proportional” by What Measure(s)? Balancing Investor Interests and Human Rights by Way of Applying the Proportionality Principle in Investor-State Arbitration’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3).

74 Suez v Argentina (n 26) para 262.

75 ibid, para 260.

76 ibid, para 235. See for a more extensive discussion of the case Tanzi, A, ‘On Balancing Foreign Investment Interests with Public Interests in Recent Arbitration Case Law in the Public Utilities Sector’ (2012) 11 LPICT 47, 5564.

77 EDF v Argentina (n 28) para 914.

78 SAUR v Argentina (n 27) para 330.

79 ibid, para 331. ‘The fundamental right to water and the investor's right to benefit from the protection offered by the APRI operate on different levels: the company holding a concession for a public service providing basic needs is in a position of dependency vis-à-vis the public administration, which has special powers to ensure its enjoyment because of the sovereignty of the fundamental right to water; the exercise of these powers, however, should not take place in an absolute manner but, on the contrary, must be combined with respect for the rights and guarantees granted to the foreign investor under the APRI.’

80 UN High Commissioner for Human Rights, ‘Human Rights, Trade and Investment’, Report of 2 July 2003, E/CN.4/Sub.2/2003/9, para 35.

81 Sawhoyamaxa Indigenous Community v Paraguay, Inter-American Court of Human Rights, Judgment of 29 March 2006. See for a discussion P Nikken, ‘Balancing of Human Rights and Investment Law in the Inter-American System of Human Rights’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3).

82 Sawhoyamaxa Indigenous Community v Paraguay (n 81) para 215.

83 ibid, para 140.

84 cf J Waincymer, ‘Balancing Property Rights and Human Rights in Expropriation’ in Dupuy, Francioni and Petersmann, Human Rights in International Investment Law (n 3) 308: ‘[h]uman rights norms would rarely, if ever, call for expropriation without just compensation’. For the relationship between investment law and indigenous rights specifically, see J Levine, ‘The Interaction of International Investment Arbitration and the Rights of Indigenous Peoples’ in Baetens, The Interaction of International Investment Law with Other Fields of International Law (n 3); Krepchev, M, ‘The Problem of Accommodating Indigenous Land Rights in International Investment Law’ (2015) 6 JIDS 42.

85 Human rights bodies have repeatedly confirmed this. Joseph, S, ‘Trade Law and Investment Law’ in Shelton, D (ed), The Oxford Handbook of International Human Rights Law (Oxford University Press 2013) 866.

86 Azurix v Argentina (n 5) para 254. cf South American Silver v Bolivia (n 32) para 210.

87 Sawhoyamaxa Indigenous Community Paraguay (n 81) para 140.

88 Bruno Simma hints at ‘granting priority to the host State's human rights obligations, particularly where “minimum core” obligations’ are affected’. Simma, ‘Foreign Investment Arbitration’ (n 3) 591.

89 Art 53 VCLT. It should be noted that this would not establish hierarchy, but the invalidity of the BIT. Desierto, D, ‘Conflict of Treaties, Interpretation, and Decision-Making on Human Rights and Investment during Economic Crises’ (2013) 10 TDM 1, 37–9.

90 van Aaken, A, ‘Defragmentation of Public International Law through Interpretation: A Methodological Proposal’ (2009) 16 Indiana Journal of Global Legal Studies 483, 493.

91 This has sometimes been suggested. eg Sornarajah, Resistance and Change (n 42) 317. The ILC Report on Fragmentation clarified that ‘[t]he erga omnes nature of an obligation … indicates no clear superiority of that obligation over other obligations’. ‘Fragmentation of International Law’ (n 44) para 380.

92 An example might be art 16 of the Energy Charter Treaty. However, a close reading of the provision seems to lead to the conclusion that it does not cover human rights treaties, as they do not concern investment promotion and protection.

93 ‘Fragmentation of International Law’ (n 44) para 57.

94 ibid, para 58.

95 See for a general, critical account of art 30 VCLT, Borgen, C, ‘Resolving Treaty Conflicts’ (2005) 37 GeoWashIntlLRev 573.

96 As proposed in ‘Fragmentation of International Law’ (n 44) paras 21–4, 253–4.

97 R Michaels and J Pauwelyn, ‘Conflict of Norms or Conflict of Laws? Different Techniques in the Fragmentation of Public International Law’ (2012) DukeJComp&IntlL 349, 367: ‘this type of conflict is more akin to inter-systemic conflict for which intra-systemic conflict rules such as lex posterior and lex specialis were not designed’.

98 cf, in a different context, Grand River Enterprises Six Nations Ltd et al. v USA, UNCITRAL, Award of 12 January 2011, para 71.

99 Host states may themselves be aware of the dilemma and apply the so-called ‘principle of political decision’, by choosing to honour one of the competing obligations. See De Brabandere, ‘Human Rights Considerations’ (n 3) 197; Desierto, ‘Conflict of Treaties’ (n 89) 81–2.

The authors would like to thank the anonymous reviewers and editors for their helpful comments.

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