Source: http://arbitrationblog.kluwerarbitration.com/2018/07/24/human-rights-and-environmental-disputes-in-international-arbitration/
Timestamp: 2019-04-19 01:08:44+00:00

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Based on the panel discussion moderated at the 30th Annual ITA Workshop and Annual Meeting, with panelists Lorraine de Germiny, Robert Landicho, and Laura Sinisterra.1) This post is a summary of the first panel discussion of the Young ITA Roundtable, 30th Annual ITA Workshop and Annual Meeting: Multiple Proceedings, Multiple Parties, and International Arbitration: What a Tangled Web We Weave, 20-22 June 2018, Dallas, Texas, USA, moderated by Dr. Crina Baltag (University of Bedfordshire, Young ITA Thought Leadership Chair); and with panelists Lorraine de Germiny (LALIVE); Robert Landicho (Vinson & Elkins LLP, Young ITA Communications Chair); and Laura Sinisterra (Debevoise & Plimpton LLP, Young ITA Mentorship Program Chair). The views expressed in this article are those of the author alone.
In light of the many initiatives attempting to tackle issues of legitimacy and efficiency of the ISDS system,2) See, (i) the new generation of IIAs, in particular the FTAs signed by the EU, but also the new models of BITs; (ii) the amendment process of the ICSID Arbitration Rules; (iii) the mandate of the UNCITRAL Working Group III (Investor-State Dispute Settlement Reform) in assessing the concerns with the ISDS system and in finding possible solutions to address them; (iv) initiatives of other institutions and organizations in dealing with particular issues relevant in the context of investment protection and promotion and arbitration, such as the drafting of a set of Business and Human Rights Arbitration Rules, the establishment of an International Court for the Environment, and even a UN Treaty on Business and Human Rights. one challenge that might be addressed is the lack of a proper mechanism to address human rights and environmental claims and counterclaims. Such claims might be dealt with by arbitral tribunals on a presumption of reciprocity “host State ↔ investor.” In fact, some commentaries argue that an efficient ISDS system can only exist if participants are granted both rights and obligations, and, in any case, such rights should be accompanied by proper remedies—including redress for human rights and environmental claims.3) Jose Daniel Amado, Jackson Shaw Kern and Martin Doe Rodrigues, Arbitrating the Conduct of International Investors, Cambridge University Press 2018, p. 5. As it stands now, arbitral tribunals rarely address human rights or environmental issues, given in particular the jurisdictional and applicable law challenges that arise. These can touch upon issues of the scope of jurisdiction of arbitral tribunals, content of protected rights and even the accountability of investors, the adequate forum, and the participation of third parties in the proceedings.
For example, in Biloune v. Ghana, the contract provided for arbitration of “[a]ny dispute between the foreign investor and the Government in respect of an approved enterprise.” The tribunal found that it lacked jurisdiction over claims of arbitrary detention of the Syrian investor by state security forces because the words “in respect of” meant its competence was limited to so-called “commercial disputes” arising under the investment contract.4) Biloune and Marine Drive Complex Ltd. v. Ghana Investments Centre and the Government of Ghana (UNCITRAL), Award on Jurisdiction and Liability of 27 October 1989, 95 ILR 184, 202.
Similarly, the dispute resolution clause must be broad enough to include counterclaims, reflecting the consent of the parties. At least one investment tribunal has found that a human rights-based counterclaim brought by a respondent State had met the specified requirements, including those of Article 46 of the ICSID Convention providing for the condition that the counterclaim arises directly out of the subject-matter of the dispute. Specifically, in Urbaser v. Argentina, Argentina filed a $190 million counterclaim, alleging that the investors had violated their obligations in relation to the human right of access to water. Although the tribunal ultimately rejected the counterclaim on the merits, it deemed the BIT to be worded broadly enough to afford jurisdiction over the counterclaim, and deemed the factual connection between the claim and the counterclaim to be “manifest” since they were based on the same investment and involved claimants’ compliance with the concession commitments at issue.5) Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award of 8 December 2016, paras 1217 et seq.
It appears that there is no consensus on this issue. Some scholars have suggested that human rights are part of the applicable law, as they are a “component of international law.”6) Clara Reiner & Christoph Schreuer, Human Rights and International Investment Arbitration, in HUMAN RIGHTS IN INTERNATIONAL INVESTMENT LAW AND ARBITRATION (Dupuy et al. eds. 2009) 82, 84–85 (for BITs containing composite choice of law clauses including international law, “human rights, as a component of international law, are part of the applicable law.”). The Urbaser v. Argentina tribunal acknowledged but ultimately did not answer this question.7) Urbaser v. Argentina, para. 1204: “Beyond these sources of law, it remains to be examined, in light of the openly framed provision of Article 31 § 3(c) of the Vienna Convention, whether other parts of international law may be relevant in the instant case. This leads to the question whether the human right to water and sanitation as part of the general notion of human rights is pertinent in the instant case….” Other tribunals have rejected this view, narrowing the reference to “international law” only to international law relevant to the BIT. For instance, third parties applied to make amicus curiae submissions in Von Pezold v. Zimbabwe regarding the application of indigenous rights, which they argued were applicable by virtue of the Germany-Zimbabwe BIT’s reference to “international law.” The tribunal found that the “rules of general international law as may be applicable does not incorporate the entire universe of international law such as international human rights law on indigenous peoples—only the international law relevant to the BIT, such as international law standards for “fair and equitable treatment.8) Bernhard von Pezold and Others v. Republic of Zimbabwe, ICSID Case No. ARB/10/15, Procedural Order No. 2 of 26 June 2012, paras 39, 57.
a. Investor-State Decisions where Claimant invoked human rights principles. International investment law and international human rights law, having the same historical roots, may touch on issues of procedural and substantive due process, and investor-State tribunals have made reference, by analogy, to human rights norms and binding obligations set forth in the International Covenant on Civil and Political Rights (ICCPR) or other conventions. Substantive due process violations have been addressed through the “fair and equitable” (FET) and/or the “full protection and security” standards. In particular, in applying the legitimate expectations test, a State’s binding human rights obligations, as set forth in relevant treaties that have been incorporated into municipal law or otherwise have effect, have been deemed relevant in shaping both positive and negative expectations of investors. In Al Warraq v. Indonesia, the tribunal held that “the Claimant did not receive fair and equitable treatment as enshrined in the ICCPR for the above reasons….”9) Hesham T. M. Al Warraq v. Republic of Indonesia, UNCITRAL, Final Award of 15 December 2016, para. 621.
The new IIAs entered into force or recently signed, as well as the proposed drafts, appear to take a positive approach towards addressing human rights and environmental issues. These new IIAs acknowledge at least an obligation on investors to make and maintain their investments in accordance with the host State laws and regulations, and that, although recognizing the importance of foreign investments, host States should not relax their labour, public health, safety or environmental measures only to attract such investments.10) Iran-Slovakia BIT, 2017, arts. 2 and 10. Other IIAs, such as the new draft of the Dutch Model BIT, contain more incisive provisions, such as allowing arbitral tribunals, when deciding on the amount of compensation, to take into account “non-compliance by the investor with its commitments under the UN Guiding Principles on Businesses and Human Rights, and the OECD Guidelines for Multinational Enterprises.”11) Draft Dutch Model BIT, art. 23. States, as main stakeholders of the ISDS system and of investment law can adopt suitable approaches when negotiating or renegotiating their IIAs and address their direct concerns about the protection of human rights and the environment within their territory or concerning their nationals.
The UN is currently contemplating a binding treaty on Business and Human Rights and it appears that it has secured the support of the EU. In the 2018 Annual Report on the implementation of the common commercial policy, the European Parliament highlights the expected engagement of the EU Member States in the deliberations within the UN regarding this proposed Treaty.12) EU Parliament, Annual Report on the implementation of the common commercial policy, 30 May 2018, para. 16.
1. ↑ This post is a summary of the first panel discussion of the Young ITA Roundtable, 30th Annual ITA Workshop and Annual Meeting: Multiple Proceedings, Multiple Parties, and International Arbitration: What a Tangled Web We Weave, 20-22 June 2018, Dallas, Texas, USA, moderated by Dr. Crina Baltag (University of Bedfordshire, Young ITA Thought Leadership Chair); and with panelists Lorraine de Germiny (LALIVE); Robert Landicho (Vinson & Elkins LLP, Young ITA Communications Chair); and Laura Sinisterra (Debevoise & Plimpton LLP, Young ITA Mentorship Program Chair). The views expressed in this article are those of the author alone.
2. ↑ See, (i) the new generation of IIAs, in particular the FTAs signed by the EU, but also the new models of BITs; (ii) the amendment process of the ICSID Arbitration Rules; (iii) the mandate of the UNCITRAL Working Group III (Investor-State Dispute Settlement Reform) in assessing the concerns with the ISDS system and in finding possible solutions to address them; (iv) initiatives of other institutions and organizations in dealing with particular issues relevant in the context of investment protection and promotion and arbitration, such as the drafting of a set of Business and Human Rights Arbitration Rules, the establishment of an International Court for the Environment, and even a UN Treaty on Business and Human Rights.
3. ↑ Jose Daniel Amado, Jackson Shaw Kern and Martin Doe Rodrigues, Arbitrating the Conduct of International Investors, Cambridge University Press 2018, p. 5.
4. ↑ Biloune and Marine Drive Complex Ltd. v. Ghana Investments Centre and the Government of Ghana (UNCITRAL), Award on Jurisdiction and Liability of 27 October 1989, 95 ILR 184, 202.
5. ↑ Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award of 8 December 2016, paras 1217 et seq.
6. ↑ Clara Reiner & Christoph Schreuer, Human Rights and International Investment Arbitration, in HUMAN RIGHTS IN INTERNATIONAL INVESTMENT LAW AND ARBITRATION (Dupuy et al. eds. 2009) 82, 84–85 (for BITs containing composite choice of law clauses including international law, “human rights, as a component of international law, are part of the applicable law.”).
8. ↑ Bernhard von Pezold and Others v. Republic of Zimbabwe, ICSID Case No. ARB/10/15, Procedural Order No. 2 of 26 June 2012, paras 39, 57.
9. ↑ Hesham T. M. Al Warraq v. Republic of Indonesia, UNCITRAL, Final Award of 15 December 2016, para. 621.
10. ↑ Iran-Slovakia BIT, 2017, arts. 2 and 10.
11. ↑ Draft Dutch Model BIT, art. 23.
12. ↑ EU Parliament, Annual Report on the implementation of the common commercial policy, 30 May 2018, para. 16.

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