A first technique applied by tribunals in response to a human rights defence is evasion, meaning that the tribunal ignores or fails to assess the argument. In Azurix v Argentina, the tribunal noted that ‘the matter has not been fully argued and the Tribunal fails to understand the incompatibility’ between human rights law and the investment protection treaty.32 In Siemens v Argentina, the tribunal held that the human rights defence had ‘not been developed by Argentina. The Tribunal considers that, without the benefit of further elaboration and substantiation by the parties, it is not an argument that, prima facie, bears any relationship to the merits of this case’.33 In Vivendi v Argentina (Vivendi II), Argentina complained before the annulment committee that the tribunal had ‘disregarded fundamental issues between the parties’, including the issue of ‘the right to water as an essential human right’, which was not discussed in the award.34 The committee, however, rejected the request for annulment.35
In several other cases, tribunals considered that the human rights issues raised did not need to be resolved, even if they were somehow related to the case. In Glamis Gold v United States, one of the non-disputing parties, the Quechan Indian Nation, relied heavily on international human rights law.36 In its award, the tribunal held:
The Tribunal is aware that the decision in this proceeding has been awaited by private and public entities concerned with environmental regulation, the interests of indigenous peoples, and the tension sometimes seen between private rights in property and the need of the State to regulate the use of property. These issues were extensively argued in this case and considered by the Tribunal. However, given the Tribunal's holdings, the Tribunal is not required to decide many of the most controversial issues raised in this proceeding.37
In Bernhard von Pezold and Others v Zimbabwe and Border Timbers Ltd and Others v Zimbabwe, the tribunal refused an amicus curiae application by various indigenous communities who alleged that the cases raised ‘critical questions of international human rights law’.38 The tribunal disagreed with the petitioners’ assertion that ‘international investment law and international human rights law are interdependent such that any decision […] which did not consider the content of international human rights norms would be legally incomplete’.39 According to the tribunal, the ‘putative rights of the indigenous communities’ did not fall within the scope of the dispute.40
Evasion has become a common response to human rights defences in investment arbitration. This may result from the way in which parties have argued a case,41 or from mere considerations of convenience.42 The relationship between international human rights and investment law is an intricate and controversial matter, so it is perhaps unsurprising that tribunals have shied away from issuing elaborate pronouncements. At the same time, evasion might confirm common beliefs that investment arbitration tribunals are insensitive to human rights concerns. For that reason, it might be thought preferable that a well-argued human rights defence receives a proper answer from the tribunal.
B. Harmonious Interpretation
Under a harmonizing approach, a tribunal interprets the applicable investment treaty norm in the light of human rights law or vice versa.43 In this way, a conflict between the two fields is avoided. As noted by the International Law Commission's Report on Fragmentation, the interpretation of treaty provisions and the solution of apparent norm conflicts are part of the same process, because ‘[r]ules appear to be compatible or in conflict as a result of interpretation’.44 The legal basis for harmonious interpretation by an investment arbitration tribunal can be found in applicable law clauses that include international law45 or in the principle of systemic integration.46
Article 31(3) of the Vienna Convention on the Law of Treaties (VCLT) provides that, when interpreting a treaty, ‘[t]here shall be taken into account, together with the context: … (c) any relevant rules of international law applicable in the relations between the parties’.47 Article 31 is generally agreed to reflect customary international law,48 so it applies even when the parties to a treaty are not also parties to the Vienna Convention. Systemic integration relies on two presumptions: according to the positive presumption, international law provides the normative framework for questions which the treaty at hand does not resolve; according to the negative presumption, contracting States do not intend to act inconsistently with general international law or with previous treaty obligations towards third States.49 When using Article 31(3)(c) or the customary rule which it reflects, an adjudicator is not applying another treaty but employing it as a tool with which to interpret the treaty which it is obliged to apply. This distinction—between the interpretation of one treaty by means of the provisions of another and the application of the latter treaty—is a fine one but needs to be maintained.50
The principle of systemic integration suggests that investment arbitral tribunals can interpret investment treaties in the light of other rules of international law.51 Claims under investment treaties are claims under international law and it is international law which needs to be applied in order to interpret treaties as creatures of international law. At the same time, Article 31(3)(c) does not justify resort to any rule of international law to guide the process of interpretation: only ‘relevant’ rules that are ‘applicable in the relations between the parties’ can be taken into account.52 These are clearly flexible elements that leave room for debate.53 If the criterion of ‘relevance’ is meant to include only rules that have the same subject matter as the BIT,54 provisions from human rights treaties would probably not qualify as relevant rules. Yet it seems widely accepted that the criterion of ‘relevance’ should be understood more widely and does not necessarily exclude rules from other subfields of international law.55 The requirement that the relevant rules should be ‘applicable in the relations between the parties’ has also evoked some debate.56 Yet irrespective of one's interpretation of this element, it would at least cover human rights treaties that are binding upon both State parties to the relevant BIT.57
The Annulment Committee ruling on Tulip Real Estate v Turkey has explicitly endorsed the principle of systemic integration with regard to international human rights law, albeit not in the context of a human rights defence.58 Before the committee, the investor argued that an application of Article 52(1)(d) of the ICSID Convention, which authorizes annulment in case of a ‘serious departure from a fundamental rule of procedure’ should be informed by human rights instruments and jurisprudence.59 The Committee agreed. It noted that ‘there is a widespread sentiment that the integration of human rights law into international investment law is an important concern’.60 Having discussed the principle of systemic integration, the Committee concluded that:
Provisions in human rights instruments dealing with the right to a fair trial and any judicial practice thereto are relevant to the interpretation of the concept of a fundamental rule of procedure as used in Article 52(1)(d) of the ICSID Convention. This is not to add obligations extraneous to the ICSID Convention. Rather, resort to authorities stemming from the field of human rights for this purpose is a legitimate method of treaty interpretation.61
One might think that what is sauce for the goose is sauce for the gander. If a resort to human rights law is legitimate in order to interpret references to procedural justice in the ICSID Convention, it seems equally legitimate to resort to human rights law in interpreting the substantive provisions of investment treaties.62
Some tribunals have taken a rather convenient approach to harmonization in response to human rights defences made by respondent States. In CMS v Argentina, the respondent argued that since ‘the economic and social crisis that affected the country compromised basic human rights, no investment treaty could prevail as it would be in violation of such constitutionally recognized rights’.63 The tribunal ruled that there was no collision between the BIT on the one hand, and Argentina's Constitution and international human rights law, on the other, for the following reasons: ‘[f]irst because the Constitution carefully protects the right to property, just as the treaties on human rights do, and secondly because there is no question of affecting fundamental human rights when considering the issues disputed by the parties’.64 Commenting on this cursorily argued conclusion, Luke Eric Peterson remarked that:
[T]he tribunal seems to dismiss concerns raised as to the impact of the Argentine financial crisis on the human rights by means of the following syllogism: property is a human right; investment treaties protect property; therefore, investment treaties are treaties which protect rather than harm rights.65
It may be that investment treaties sometimes protect human rights, but this observation concerns situations where the investor, rather than the respondent, invokes human rights law.66
A more convincing way of harmonizing investment treaties and human rights treaties might point out that both types of treaties grant States a considerable amount of discretion with regard to how they implement their obligations.67 It is commonly accepted that the application of broad human rights standards to specific political, economic, and social circumstances allows for diverse solutions.68 Moreover, most of the human rights susceptible to being invoked in investor–State arbitration cases are codified in the International Covenant on Economic, Social and Cultural Rights (ICESCR).69 Unlike the ICCPR, all of the provisions of which States must implement immediately, Article 2(1) of the ICESCR provides that:
Each State Party to the present Covenant undertakes to take steps … to the maximum of its available resources, with a view to achieving progressively the full realization of the rights recognized in the present Covenant by all appropriate means.
The principle of ‘progressive realization’ subject to ‘available resources’ renders it difficult to derive precise obligations from the provisions of the ICESCR to which it applies,70 given the multifaceted nature of most of those obligations and the discretion granted States as to the means by which they can undertake them.71 A similar argument can be made for common provisions in investment treaties. Given the open-ended language found in many of these provisions, they have often been held to grant a wide policy freedom, imposing only minimum standards on host States.72 Once both human rights and investment treaties are understood in this way, adjudicators should not have much difficulty in interpreting their provisions in light of each other and avoiding norm conflicts.73
In Suez, the tribunal concluded that Argentina's obligations under the BIT and under human rights law were not contradictory:
Argentina is subject to both international obligations, i.e. human rights and treaty obligation, and must respect both of them equally. Under the circumstances of these cases, Argentina's human rights obligations and its investment treaty obligations are not inconsistent, contradictory, or mutually exclusive. Thus, … Argentina could have respected both types of obligations.74
According to the tribunal, ‘Argentina could have attempted to apply more flexible means to assure the continuation of the water and sewage services to the people of Buenos Aires and at the same time respected its obligations of fair and equitable treatment’.75 For example, to offset the harmful consequences of a tariff freeze, Argentina could have relieved the investors of some of their contractual obligations. Moreover, ‘if Argentina's concern was to protect the poor from increased tariffs, it might have allowed tariff increases for other consumers while applying a social tariff or a subsidy to the poor, a solution clearly permitted by the regulatory framework’.76 In other words, the discretion left to Argentina both under human rights and investment law allowed for solutions that would comply with both regimes. The EDF tribunal also rejected Argentina's claims that its obligations under investment law conflicted with its human rights obligations. It failed to see why Argentina's refusal to renegotiate tariffs ‘was necessary to guarantee human rights’, especially once the economy was recovering.77
In SAUR, the tribunal considered that human rights law was ‘une des diverses sources’ to be taken into account, as part of the Argentine constitutional legal order and of the general principles of international law.78 Yet according to the tribunal, the exercise of State powers necessary to guarantee the human right to water of its population were compatible with the investor's rights under the APRI, the applicable BIT.
Le droit fondamental à l'eau et le droit de l'investisseur à bénéficier de la protection offerte par l'APRI opèrent sur des plans différents: l'entreprise concessionnaire d'un service public de première nécessité se trouve dans une situation de dépendance face à l'administration publique, qui dispose de pouvoirs spéciaux pour en garantir la jouissance en raison de la souveraineté du droit fondamental à l'eau; mais l'exercice de ces pouvoirs ne se fait pas de façon absolue et doit, au contraire, être conjugué avec le respect des droits et des garanties octroyés à l'investisseur étranger en vertu de l'APRI.79
Although the SAUR tribunal somewhat cryptically held that human rights and investor rights ‘operate on different levels’, the final conclusion was that both sets of obligations should be read together instead of being contraposed. The tribunal considered that the fundamental right to water did not grant any absolute powers to the State; rather, Argentina's powers should be exercised in accordance with its obligations under the BIT. The approach taken by the SAUR tribunal provides an example of harmonization that served the case of the investor: the human right invoked by the host State was interpreted in the light of the applicable investment treaty, even if the respondent sought the opposite effect, namely an interpretation of the investment treaty in the light of human rights.
The latter form of harmonization has been advocated, not only by respondent States but also by the United Nations High Commissioner for Human Rights:
While human rights should not provide a shield to protect unwarranted protectionism, administrative failures or unfair treatment, neither should they be made subject solely to an economic calculus. Consequently, it will be important to ensure that interpretations of these and other provisions in investment agreements place human rights and environmental considerations centrally within their reasoning where relevant.80
An example of an investment treaty being interpreted in the light of human rights law can be found in the case of the Sawhoyamaxa Indigenous Community v Paraguay before the Inter-American Court of Human Rights (IACtHR).81 In this case, the Court found that Paraguay was in breach of its obligations under numerous provisions of the Inter-American Convention on Human Rights, including Article 21, the right to property. Consequently, the Court required the respondent State to ‘formally and physically convey to the members of the Sawhoyamaxa Community their traditional lands’.82 Yet those lands were owned and occupied by a number of German nationals, and there was an operative BIT between Germany and Paraguay under which the owners might claim if they themselves were dispossessed of their property. The Court noted, however, that the BIT allowed expropriation for ‘a public purpose or interest’, which could justify land restitution to an indigenous people.83 The Court proposed that the requirement of ‘public purpose or interest’ imposed by the BIT should be read in the light of the Inter-American Convention. Consequently, it was open to Paraguay to comply with its secondary, if not its primary obligations under both treaties: by making restitution in one instance (under the American Convention) and paying compensation in the other (under the Germany–Paraguay BIT).84
A third response to the human rights defence is to prioritize a rule from one field over a rule from the other field. Host States invoking a human rights defence commonly assume that human rights treaties should override investment treaties.85 In Azurix, it was argued on Argentina's behalf that ‘a conflict between a BIT and human rights treaties must be resolved in favour of human rights’.86 A similar stance was taken by the IACtHR in the Sawhoyamaxa case:
The Court considers that the enforcement of bilateral commercial treaties negates vindication of non-compliance with state obligations under the American Convention; on the contrary, their enforcement should always be compatible with the American Convention, which is a multilateral treaty on human rights that stands in a class of its own and that generates rights for individual human beings and does not depend entirely on reciprocity among States.87
Even though one may have an intuitive sense that human rights obligations should prevail over investment protection obligations,88 there seems to be no basis for this in treaty law. Unless the relevant human rights norms constitute jus cogens (in which case, were there a conflict between the two treaties, the BIT would be void),89 it is difficult to see why the different nature of the two treaties should render a human rights treaty normatively superior to a BIT.90 The erga omnes (partes) or multilateral character of human rights obligations does not necessarily give them a higher normative status than bilateral obligations of investment protection.91
Instead, assuming that nothing in the treaties speaks to the issue,92 tribunals could resort to general maxims such as lex specialis or lex posterior, but their utility seems limited in practice. Under the lex specialis maxim, priority would be given to the treaty provision with the ‘more precisely delimited scope of application’.93 Yet it is difficult to determine whether the investment protection obligation or the human rights obligation would be the more precise one, in particular because both obligations originate from different fields of law.94 According to the lex posterior maxim (Article 30 VCLT), a later treaty overrules an earlier treaty related to the same subject-matter as long as all parties are party to both treaties.95 However, even if one understands the phrase ‘relating to the same subject-matter’ in a broad sense,96 it seems problematic to prioritize an investment protection obligation over a human rights obligation (or vice versa) on this basis.97 Indeed, in practice, a tribunal charged with deciding the issue does not have a real choice which treaty to apply in case of norm conflict: it must prioritize the treaty it is charged with applying, since it is only because of that treaty that it has jurisdiction to determine the dispute at all.98 What this means is that in case of a treaty conflict, an investment arbitration tribunal has no real alternative than to prioritize the investment treaty over the respondent State's human rights obligations.99