Human Rights and Investment Law: The Way Forward
A pressing issue arising in investment treaty arbitration is the interaction between investment law and human rights. While case law on this point is available from roughly the early 2000s, the problems with the approach taken by investment arbitration tribunals (“IATs”) has become clearer over time in the backdrop of the increased usage of the Investor-State Dispute Settlement (“ISDS”) mechanism to, routinely, sue a developing State for breaches of the rights of an investor from a developed State.
One of the common methods by which States have attempted to utilize international human rights obligations to their advantage in ISDS is to claim that the obligations owed to foreign investors are necessarily moulded and shaped through the prism of human rights. The logical deduction from this, which is also fairly self-evident, is that in several scenarios the two sets of obligations, those under human rights law and investment treaty law respectively, will come into conflict with each other. This presents IATs with the question of which set of obligations take precedence. Past practice demonstrates that the question has often proved to be beyond the capabilities of most tribunals and has merely been avoided altogether in a manner that is neither legally coherent nor consistent. [1]
Evasion
The Argentinean cases of the early 2000s are a good example of this. Most directly in the cases of SAUR v. Argentina [2] and EDF v. Argentina [3], it was argued by the Respondent that investment treaty obligations did not override its responsibility to provide for the human rights of its citizens. The Respondent even went as far as claiming that the rights guaranteed under international human rights covenants are jus cogens in nature. [4] The practice of evading such arguments entirely originated in this slew of cases.
In Azurix v. Argentina, the tribunal blithely stated that it could not understand why human rights law and investment treaty law might be incompatible. [5] Similar reasoning was adopted in the tribunal’s response to the aforementioned cases, as well as in Siemens v. Argentina [6] and Vivendi II [7]. In Glammis Gold v. United States, the tribunal simply stated that the “most controversial” human rights issues raised during the proceedings did not require resolving in order for its award to be passed and, thus, bypassed them entirely. [8] Similarly, in Border Timbers v. Zimbabwe, the tribunal deemed that the human rights of indigenous communities affected by the investment in contention would fall outside the scope of the dispute. [9]
The long line of cases indicates a deep-seated reluctance to properly engage with these issues. The reasons vary from a lack of clarity in the arguments made by the Respondent State [10] to the belief that international human rights fall outside the realm of expertise of an IAT [11], considering its limited mandate and role in interpreting provisions of the relevant investment treaty. However, such avoidance inevitably creates inequities for the Respondent States and, in essence subordinates human rights law to investment treaty law. This conclusion is particularly damaging for developing States such as India, where a wide variety of potential detriments are likely to arise for the tribal/indigenous populations, rural communities who depend on the environment for their livelihood, and for the country in general.
Harmonisation
One of the alternatives to such an evasive approach has been to harmoniously interpret the two areas of international law. [12] The legal backing for this method comes from Article 31(3)(c) of the Vienna Convention on the Law of Treaties (“VCLT”). [13] The International Law Commission (“ILC”) has, for long, maintained its stance on international law being part of a singular system and the need to avoid fragmentation between different international regimes. [14] It is, however, the focus on this approach which actually leads to greater problems than solutions in the arena of conflict between investment treaty law and human rights law.
Before elaborating on how this approach does little to resolve the issue, it is important to note that the awards of IATs do not lead to significantly different conclusions, even if they attempt to harmoniously interpret the obligations under the investment treaty in accordance with international human rights. In SAUR, the tribunal claimed that the two sets of obligations/rights operated on different levels. Despite this, the tribunal proceeded to try and read the two together. [15] Its attempt at doing so involved the determination that Argentina’s obligation to guarantee human rights would have to be exercised in consonance with the rights owed to an investor under the investment treaty. This, once again, subordinated human rights to the rights of the investor.
This conclusion is the most common one among IATs when they attempt to harmoniously interpret rights rather than merely ignore the possible conflict. [16] The danger of this mode of interpretation is, therefore, that IATs are bound to interpret the human rights obligations of states as an exception, or a caveat, to investor rights. In essence, what this does is merely interpret the overarching legal framework, the investment treaty, in light of human rights laws, rather than the other way around. The latter, i.e., interpreting investor rights as subject to human rights, is what most Respondent States argue should be done and which IATs routinely refuse to engage with. To some extent, this is perhaps inevitable and understandable, given the expertise of the tribunal is investment treaty law and not human rights law. Additionally, its scope and mandate are to interpret the former and not necessarily to try and harmonize it with the latter. [17] This, to a large extent, explains why even where a tribunal has the wherewithal to attempt a harmonization exercise, the only difference between this approach and the evasiveness tactic, is to expressly acknowledge the applicability of human rights law but to subvert it to investment treaty law, rather than skirting past it as done by those tribunals which avoid the dilemma.
Conflict of Norms or Conflict of Systems?
Having addressed the relative convergence in conclusions between the evasion and harmonization approaches, it is necessary to take stock of the legal standard as it stands in order to examine why a fundamentally different approach is required to be taken. To begin with, the notion that the entire body of public international law belongs to the same system has been widely accepted for decades. The ILC in its work on the fragmentation of international law has stressed the importance of moving toward a system of coherence and complementarity among different branches of international law. [18] This is one of the primary motivators behind Article 31(3)(c) of the VCLT, which is recognized as the foremost legal tool to push international law towards the direction of harmonization and away from a fragmentary approach. [19]
However, this approach could be counterproductive, especially when the internal logic of integration within international law hits the roadblock presented by the conflict between investment law and human rights law. The VCLT lays out a number of methods by which to resolve what is called norm conflict. [20] These include the several maxims that are commonly used in domestic jurisdictions, such as lex specialis, lex posterior,[21] and so forth. For reasons that I will not elaborate upon here, these legal rules are insufficient for the purpose of resolving the issue of investment treaty and human rights law clashes. [22] Ultimately, as Joost Pauwelyn and Ralf Michaels have noted, such conflicts are more akin to conflict of laws than they are to conflict of norms. [23]
What prevents us from recognizing this and dealing with the conflicts appropriately is the belief that international law must be looked at as an internalized and coherent system. However, as we have seen, the belief in “one system” means that we are saddled with rules which help us determine conflict of norms but not conflict of laws. [24] It is evident that the discrepancies in priorities and objectives between investment law and human rights law do not lend to a belief that they originate from similar norms. They are, rather, two completely different systems of law existing under the corpus of what we term “public international law”.
Another reason why we cannot look at investment law and human rights law as belonging to the same system of international law is that there is no underlying principle which undergirds both. Within domestic jurisdictions, the constitution of the country binds the system of laws together as the final arbiter of what is legally permissible and what isn’t. A hierarchy of laws is better established in case of norm conflicts within a domestic legal framework rather than in the international sphere where multiple sections of law exist, essentially, like islands. [25] While it may be intuitively desirable to bring them all within a single framework, the viability of undertaking such an exercise seems increasingly fraught when confronted with conflict of laws situations such as that between international human rights law and investment law.
The emphasis, therefore, should be to shift the focus away from the ILC’s preoccupation with interpreting international law as a coherent whole. The only way in which to create legal certainty in terms of the conflict between two systems of law is to begin utilizing legal rules which are not predicated upon international law’s status as one system. Without this, we will remain mired in the current situation of contradictions with IATs determining, at their convenience, whether to evade the conflict or to try to harmonize the two systems. As pointed out earlier, the conclusions in terms of both these approaches are similar, to the extent where it may not be of great significance as to which approach is adopted.
ENDNOTES
[1] Johannes Hendrik Fahner and Matthew Happold, ‘The Human Rights Defence in International Investment Arbitration: Exploring the limits of systemic integration’ (2019) 68 ICLQ 741, 747.
[2] SAUR International SA v. Argentina, ICSID Case No. ARB/04/4, Decision on Jurisdiction and Liability, (6 June 2012), ¶ 328.
[3] EDF International SA v. Argentina, ICSID Case No. ARB03/23, Award, (11 June 2012), ¶ 192.
[4] ibid ¶ 193.
[5] Azurix v. Argentina, ICSID Case No. ARB/01/12, Award, (14 July 2006), ¶ 261.
[6] Siemens AG v. Argentina, ICSID Case No. ARB/02/8, Award, (17 January 2007), ¶ 79.
[7] Compania de Aguas del Aconquija SA and Vivendi Universal SA v. Argentina, ICSID Case No. ARB/97/3, Annulment Decision, (19 August 2010), ¶ 57.
[8] Glamis Gold, Ltd v. United States, UNCITRAL, Award, (8 June 2009), ¶ 8.
[9] Bernhard von Pezold and Others v. Zimbabwe, ICSID Case No. ARB/10/15, and Border Timbers Ltd and Others v. Zimbabwe, ICSID Case No. ARB/10/25, Procedural Order No. 2, (26 June 2012), ¶ 58.
[10] See, Siemens (n 6), ¶ 79.
[11] See, Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana UNCITRAL, Award on Jurisdiction and Liability, (27 October 1989), (1994) 95 International Law Reports 184; Border Timbers (n 9), ¶ 60; Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/3, Award, (6 May 2013), ¶ 170, 172; for a contrary opinion, see Urbaser S.A. and Consorcio de Aguas Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award, (8 December 2016), ¶ 1143ff; Saluka Investments B.V. v. The Czech Republic, UNCITRAL, Decision on Jurisdiction over the Czech Republic’s Counterclaim, (7 May 2004), ¶ 37.
[12] Rainer Hoffman and Christian Tams (ed), International Investment Law and General International Law: From Clinical Isolation to Systemic Integration? (Nomos 2011).
[13] D Rosentreter, 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).
[14] Martti Koskenniemi and Paivi Leno, ‘Fragmentation of International Law? Postmodern Anxieties’, (2002) 15 Leiden J. Int’l L. 553.
[15] SAUR International SA (n 2), (2002) 331.
[16] See also Suez Sociedad General de Aguas de Barcelona, SA and Vivendi Universal SA v. Argentina, ICSID Case No. ARB/03/19, Decision on Liability (30 July 2010 ¶ 260, 262; CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8, Award (12 May 2005), ¶ 121.
[17] However, tribunals have begun to go beyond merely interpreting the investment treaty; see Urbaser S.A. (n 11), ¶ 1143ff; Marfin Investment Group Holdings SA, Alexandros Bakatselos and Others v. Cyprus, ICSID Case No. ARB/13/27, Award (26 July 2018), ¶ 827.
[18] ‘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) ¶ 412.
[19] Campbell McLachlan, ‘The Principle of Systemic Integration and Article 31(3)(c) of the Vienna Convention on the Law of Treaties’ (2005) 54 ICLQ 279.
[20] See generally, Christopher Borgen, ‘Resolving Treaty Conflicts’ (2005) 37 Geo Wash Intl L. Rev 573.
[21] Vienna Convention on the Law of Treaties 1980, Article 30.
[22] Fahner and Happold (n 1) 741, 758.
[23] Ralf Michaels and Joost Pauwelyn, ‘Conflict of Norms or Conflict of Laws?: Different Techniques in the Fragmentation of Public International Law’ in Tomer Broude and Yuval Shany (eds), Multi-Source Equivalent Norms in International Law (Bloomsbury 2011).
[24] ibid 35.
[25] ibid 26-28.
Sayantan Chanda is an alumnus of O.P. Jindal Global University, who went on to become an associate of the International Arbitration and Disputes team at P&A Law Offices. Mr. Chanda has since moved on to judicial clerkship.
The views and opinions expressed in the article are those of the author(s) solely and do not reflect the of official position of the institution(s) with which the author(s) is /are affiliated. Further, the statements of the author(s) produced herein should not be construed as legal advice.
