In this issue
Welcome to the second International Law Bulletin
Human Rights Law’s Myths
Closing the gap between human rights and investment protection: What role for human rights impact assessments?
Terrorism and French Criminal Justice
Ukraine passes sweeping ban on Russian media and social networks in expansion of economic sanctions
Bobby Moore v Texas: The protection of intellectually disabled death row inmates in Texas
Rocking the boat in small island communities – lessons from the “Jersey Way”.
Closing the gap between human rights and investment protection: What role for human rights impact assessments?

By Nicola Peart.

Arbitral tribunals are increasingly called on to consider the “complex relationship” between investment protection and human rights. This post considers the potential significance of human rights impact assessments (HRIAs) in investor-State arbitration. Depending on the scope and status of an HRIA, it may be useful for understanding the content of investment protections contained in Bilateral Investment Treaties (BITs) and addressing certain procedural aspects of an arbitration.


HRIAs


In his 2011 Report to the Human Rights Council, Oliver De Schutter (then, UN Special Rapporteur on the Right to Food) argued that States have a duty not to enter into international agreements that are inconsistent with their international human rights obligations and that States should conduct HRIAs to measure the potential human rights impacts of trade agreements. De Schutter proposed a broad HRIA methodology focusing on independence, transparency and expertise, and highlighted the importance of public consultation. He argued that HRIAs conducted ex ante should play a meaningful role in shaping the terms of the deal, and HRIAs ex post should identify impacts that cannot be anticipated.

Notwithstanding the nearly 3000 BITs in existence, HRIAs have been conducted relatively infrequently. Examples include the EU Commission’s Sustainability Impact Assessments and ex post Impact Assessments of its trade and investment treaties and the ex post HRIAs of measures taken under the 2011 Canada-Colombia BIT.

This infrequency may be because the primary object and purpose of investment treaties is not to safeguard human rights against the negative impacts of foreign investment; rather, they aim to protect the rights of foreign investors, thereby reducing business risk and, ideally, attracting foreign capital to the host State. States are not obligated to conduct HRIAs of treaties and the absence of an HRIA does not undermine the agreement’s validity, even if it does attract some criticism.


Investment Arbitration


Beyond their use during investment treaty negotiations, HRIAs may be relevant to investment treaty arbitration. Systemic integration of States’ international obligations might be achieved by interpreting investment treaties with reference to international human rights norms and jurisprudence identified in HRIAs and on the basis of Article 31(3)(c) VCLT, albeit within a tribunal’s jurisdiction to apply the investment treaty concerned.

Pursuant to Article 32 VCLT, HRIAs might form part of a treaty’s travaux preparatoires. This depends somewhat on the status of the HRIA: if endorsed by only one State Party, the HRIA will not form part of the travaux as it is merely indicative of that Party’s understanding of treaty terms at the time.

HRIAs might be relevant to jurisdictional questions, such as the application of a BIT to disputed territories and to the identification of domestic human rights laws that apply to foreign investors for the purposes of admissibility of claims or human-rights based counterclaims.

The content of substantive investment protections may also be informed by HRIAs. The Commission’s EU-Canada CETA HRIA, for example, recommends investment protections that permit “flexibility in implementing national water policies that explicitly protect water necessary to support human and ecosystem health”. The final agreement includes an express right of each State Party to protect and preserve its natural water resources. Similarly, HRIAs may be relevant to an investor’s legitimate expectations to certain regulatory stability where an HRIA identifies sectors likely to be subject to regulatory reform in order to ensure human rights protection.

HRIAs may also play a role in a tribunal’s determination of procedural matters, notably the admission of amicus briefs. There have been occasions where investment tribunals have rejected amicus briefs raising human rights issues because they addressed matters beyond the scope of the arbitration. A tribunal may come to a different conclusion where shown that, through an HRIA process, the State Parties identified the nexus between human rights and the particular treaty provisions or investment sectors relevant to the claim.

Finally, ex post evaluations may allow States to shape the meaning of substantive treaty provisions over time to ensure consistency with their human rights obligations, whether through an express treaty mechanism or through subsequent agreement or practice (per Article 31(3)(a) and (b) VCLT).


Conclusions


The potential role of HRIAs in investment treaty arbitration cannot yet be fully assessed, but they reflect an emerging practice that may one day prove to be widespread. As HRIA practice develops, these assessments may have increasing utility in investor-State arbitrations and, where appropriate, may assist tribunals in navigating through the complex interaction between investment protections and human rights.


A version of this article first appeared on the Practical Law Arbitration blog on 26 May
2017, available at: http://arbitrationblog.practicallaw.com