International Investment Agreements and Human Rights

The International Institute for Sustainable Development, a Canadian-based NGO, recently prepared a study for the UN entitled International Investment Agreements, Business and Human Rights: Key Issues and Opportunities.

Currently, over 2500 such agreements exist. They typically provide for national treatment of foreign investors (granting them the same rights to invest as domestic investors, liberalizing access to most business sectors), guarantees against expropriation without compensation, and special dispute settlement mechanisms.

These investor-state dispute rules let investors sue states for interfering with various business practices while frequently allowing for little external review or scrutiny:

"To date, the range of issues raised by foreign investors under this process has included taxation measures, environmental measures, changes in banking and radio and television laws, alterations of royalties in the resource sectors, and many others."

"(...) In addition, the dispute settlement process remains completely ad hoc, with no coordinating body, no appellate or political oversight mechanisms as exist in the WTO, limited transparency at best, and no legal processes available to correct incorrect decisions."

"Perhaps the most salient conclusion to be drawn here is that the existing IIAs have become extremely important legal documents, both for their impact in supporting the movement of capital and for the ability of foreign investors to directly enter the realm of international law and enforce their treaty rights. From less than 10 known investor-state arbitrations in the mid-1990s, we now have some 300 known cases. These cover all areas of investment and all types of government actions and measures. Thus, even while diffuse in origin and while lacking any international institutional structure, the existing international investment law regime is extremely important in today’s globalization context, and it continues to expand (...)"

"In the context of the state duty to protect and promote human rights, the most critical issue that arises are the duties to legislate in order to implement international human rights obligations into domestic law and to enforce such legislation. In investment law terms, this relates to what has been described in some texts as the right of host states to regulate. At the same time, however, IIAs limit the right of states to regulate, and these limits may extend to the state duty to protect and promote human rights."

"These limits arise from the application of the investor rights provisions common to almost all IIAs, and the ability of investors to unilaterally enforce these rights in investor-state arbitrations. This paper will give some examples of how these limits have been applied in practice, and raise the issue of the impact of these investor protections before measures are taken."