Relationship Between Arbitration and Human Rights

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Introduction

Investment arbitration is a dispute resolution mechanism to resolve disputes between an investor, which may be a natural or legal entity, and the host country. It is also known as Investor-State Dispute Resolution or ISDS. Arbitration provisions for investment disputes may be included in the investment agreement or in the relevant law of the host country. By using this mechanism, the investor is assured of an independent and impartial resolution of the dispute by an impartial third party and not by national courts that may be biased or even censored. controlled by the government of the host State.

Human rights law is the branch of international law that includes customs, rules and practices that confer on all people, regardless of their place of birth, race, sex, etc., some fundamental rights and freedoms. There is no exhaustive list of rights that are considered human rights. Some of the main human rights are the right to life (which has been defined by States as broadly as possible to include all aspects of what makes life worth living), the right to dignity and the right to equality. They can be found in treaties or found in non-treaty-based principles or guidelines. 

At first glance, investment arbitration and human rights law may seem separate. However, upon a closer look, we can see that these are two sides of the same coin. When a party in the host country invests in mining, building roads, ports, etc., there is an impact on the communities living around the area or sometimes the people of the Host Country. as a whole, directly or indirectly. In the following article, the author will attempt to shed light on the intertwined relationship between investment arbitration and human rights. 

Specific reference to human rights

It is rare to find specific references to human rights law in an investment agreement or bilateral investment agreement.

One of these investment treaties is the EU-Singapore BIT, in which the Participating States declare in writing that they are committed to complying with the Charter of the United Nations signed in San Francisco on 26 May. June 1945 and in relation to the principles set forth in the General Declaration.

On Human Rights adopted by the United Nations General Assembly on 10 December 1948. If a dispute arises between any State of the European Union and Singapore and a matter concerns human rights law, the person must arise in the same way as an accessory, and the court can easily declare itself in capacity without explanation. Since the arbitral tribunal derives its powers from the provisions of the relevant agreement, it will be very easy for the arbitral tribunal to make an award on those particular terms of the agreement or treaty. 

Implied reference to human rights

The widely recognized Kompetenz-Kompetenz Principle allows the arbitral tribunal to decide the matter of its own jurisdiction. Under this principle, the arbitral tribunal may assume its jurisdiction by interpreting the relevant provisions of the relevant BIT.

For example, an investment treaty may contain a provision stating that “all disputes of any nature relating to an investment made by an investor in the host State are subject to arbitration.” “. Some investment agreements contain provisions that are consistent with human rights law.

The ICSID Court, while ruling on a counterclaim filed against a claim under Article X of the Agreement on the Promotion and Mutual Protection of Investments between the Republic of Argentina and the Kingdom of Spain (signed on 3 October 1991) in the case, namely, Urbaner S.A. and Consorcio de Aguas Bilbao Biscay, Bilbao Biscay Ur Partzuergoa vs. Republic of Argentina; ICSID Case No. ARB/07/26 (Decision 8 December 2016) explains the terms of the bilateral investment treaty concluded between Spain and Argentina. The relevant part of the BIT, i.e. BIT Article X Clause 5, roughly translates as follows:

“The arbitral tribunal shall settle disputes on the basis of the principles and rights contained in the treaty concluded between the Parties, the internal law of the Party whose territory the investment is made, including the rules of international law and general rules. principles of international law”.

It should be noted here that the aforementioned provision is very similar to Article 42 of the ICSID Convention.
The Court explained that “general principles of international law” were broad enough to include those contained in the 1948 Universal Declaration of Human Rights.

It declared itself to have jurisdiction over counterclaims. offered by the Republic of Argentina, but the Claimant failed to provide the necessary investment in the Concession, thereby violating its commitments and obligations under international law based on human rights to water. A widely used clause in an investment agreement implicitly alluding to human rights law is the fair and equal treatment clause.

For example, Article II (4) of the Agreement between the Governments of Canada and the Republic of Argentina on the Promotion and Protection of Investments provides that:

Investments or profits of investors of either Contracting Party shall at all times be treated fairly and fairly in accordance with the principles of international law and shall enjoy full protection and security. sufficient in the territory of the other Contracting Party”.

Article 5(2) of Hong Kong, China SAR-Mexico BIT also defines “fair and equal treatment” as meaning and including the obligation not to refuse justice in criminal, civil or administrative proceedings. according to the principles of due process; and “adequate protection and security” require each Contracting Party to provide the level of police protection required by customary international law.

Another example might be Article 17(1)(a) of the BIT between the Governments of Canada and the Republic of Cameroon which grants both parties the possibility to adopt or adopt a measure necessary to protect life. or human, animal or plant health.

How are human rights in investment arbitration relevant?

Human rights law is relevant to both the investor (especially when the investor is an individual) and the host country.

Where appropriate, host countries, investors and even affected third parties/communities (wherever agreed to by the BIT or agreement) have used human rights law as a sword or shield in investment arbitration. The wording of the arbitration clause is what allows either party or affected communities to go to court with Urbaser’s case against Argentina is a perfect example where the host country raised the issue of human rights (rights to water) as an adjunct to an investment dispute brought by a foreign investor.

In Biloune v. Ghana, the petitioner has claimed damages for property deprivation, denial of justice and human rights violations resulting from detention without charge and deportation to Togo. The court rejected the claim as it concluded that it lacked jurisdiction as there was no relevant provision in the investment treaty regarding the protection of the human rights of ‘investors’. The Investment Arbitration Tribunal considers that it does not have the authority to address any rights of either party that it has under separate contracts entered into by them.

In the joint applications of Border Timbers Limited and others v. Republic of Zimbabwe, Case No. ICSID. ARB/10/25 and Bernhard von Pezold et al. Republic of Zimbabwe (Case No. ICSID. ARB/10/15, European Center for Constitutions and Human Rights (ECCHR) has submitted a submission as an amicus curiae (“third party”). The petition was launched alongside leaders of four indigenous communities in the Chimanani region of Zimbabwe.

The arbitration involved tree plantations operating on properties that originally belonged to indigenous groups, implicitly acquired by the government as part of land reform. As amicus curiae, the rights to the ancestral property of indigenous peoples under international law were stated. The court ignored this because it concluded that the matter was beyond its jurisdiction. However, this case shows that if there is a relevant provision in the investment agreement, even an affected third party can assert its rights against the Parties to the investment agreement. 

Do investor-state arbitral tribunals have jurisdiction to analyse human rights claims?

The answer is both yes and no.

As noted earlier, the jurisdiction or jurisdiction of the court to enter into a case depends on the relevant bilateral or multilateral arbitration treaty and the domestic laws of the host country. If the host country has agreed in the investment treaty or relevant domestic law, the arbitral tribunal has the same jurisdiction and vice versa.

Thus, an arbitration clause in an investment agreement/treaty may limit the jurisdiction of a court or extend its scope to the provisions of other international treaties, including of human rights law as far as they relate to the investment in dispute.

For example, Article X(5) of the Reciprocal Investment Protection and Promotion Agreement between the Republic of Argentina and the Kingdom of Spain is based on Urbaner v. Argentina. The provision expands the scope and powers of the arbitral tribunal.

It should be noted that arbitral tribunals always have the power to hear human rights issues depending on the claim of either party. In Urbaner v. Argentina, the plaintiffs allege that they have been treated unfairly by the host/respondent country according to BIT standards.

It should also be noted here that under the terms of the agreement, the investor may be treated equally with other foreign investors or their respective domestic investors. Although in this case, the court concluded that the claim was unfounded, the court considered that it had sufficient jurisdiction to consider the matter. Therefore, if either party alleges a breach of the terms of the investment treaty/agreement as well as an ancillary violation of human rights, the arbitral tribunal may have jurisdiction to decide, regardless of the fact that there is no provision in the human rights law agreement / the treaty itself. 

How could investor-state arbitral tribunals apply human rights law in investment arbitration disputes?

Investment treaties often include dispute settlement provisions that stipulate that it will be resolved in accordance with the national law of the host country as well as principles of international law. Article X (4) of the Agreement between the Governments of Canada and the Republic of Argentina on the Promotion and Protection of Investments and Article X (5) of the Agreement on the Promotion and Protection of Reciprocal Investments between the Republic of Argentina and the Kingdom of West Spain are just two examples of such terms. These provisions in an investment treaty are worded very similarly to those of Article 42 of the ICSID Convention. The relevant part of the Convention is extracted as follows:

“42(1). The court decides a dispute in accordance with the rules of law to which the parties may agree. In the absence of such agreement, the Tribunal shall apply the law of the Contracting State to which the dispute is settled (including its rules on conflicts of laws) and such rules of international law as may be applied.

The ICSID Court, in ruling on Urbaner v. Argentina, based on the findings of Cf. Tulip Real Estate and Development Netherlands B.V. v. Republic of Turkey, ICSID/ARB/28/11 (Decision 30.12.2015) to conclude that:

“1200. The Court further held that the Convention must be interpreted according to the rules set forth in the Vienna Convention on the Law of Treaties of 23 May 1969 and that Article 31 § 3(c) of that treaty indicates that derived from “any relevant rule of international law applicable to the relations between the parties”.

The BIT cannot be interpreted and applied blindly. The BIT’s specific objective is a treaty favouring foreign investment, but it cannot do so without taking into account the relevant rules of international law. The BIT must be developed in harmony with the other rules of international law of which it is a part, including those relating to human rights.

It should be noted that the specific human rights that one of the parties claims has been violated must be based on a human rights treaty in which the Investor-State and the ‘Host State’ are signatories. Thus, it is not possible to use the human rights granted to investors by the internal laws of the State to sue in court. 

Conclusion 

Globalization has led to an increase in foreign investment worldwide. This in turn has increased investment disputes between foreign investors and the host state. Investor-State Arbitration or ISDS is mainly engaged by the parties to protect the investor’s interests from the possible bias of the domestic courts of the host country. An investor can bring up any issue between the parties, including any incidental violation of his or her human rights.

These types of arbitration are rarely used by host countries to resolve investment disputes because they often use national dispute resolution systems. This does not mean that the investor can get away with any breach or violation of the agreement, including the human rights of the people of the host country, once arbitration has commenced. Article 46 of the ICSID Convention allows the arbitral tribunal to consider any counterclaim by the host country against the investor of any collateral matter, including violations of human rights law. permission.

The sole claim, when such matters arise, is for an arbitral tribunal to have jurisdiction over such claims, whether expressly or implicitly in a bilateral or multilateral treaty.

It should be stated here that the United Nations has launched a strategic policy for business, namely the United Nations Global Compact and Corporate Social Responsibility, which is a policy initiative. for companies committed to aligning their activities and strategies on ten widely accepted criteria. principles in the areas of human rights, labour, environment and anti-corruption.

In doing so, business, as a key driver of globalization, can help ensure that markets, trade, technology and finance develop in ways that benefit economies and societies around the world. This clearly shows that there is a correlation between investment agreements and international human rights law. 


By: Sankalp Mirani, a student at MNLU, Mumbai.


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