Restoring the Balance in Bilateral Investment Treaties: Incorporating Human Rights Clauses
| Autor | Yira Segrera Ayala |
| Cargo | Abogada de la Universidad del Norte (Colombia). |
| Páginas | 141-161 |
Este artículo es resultado de investigación del proyecto Derechos humanos y tratado bilateral de inversión, de la línea de investigación de Derecho Internacional del GIDECP.
Abogada de la Universidad del Norte (Colombia). Magíster en Derecho Internacional de American University Washington College of Law (Estados Unidos). Coordinadora del pregrado en Derecho y docente investigadora del GIDECP (categoría A, COLCIENCIAS) en la línea de Derecho Internacional de la División de Ciencias Jurídicas de la Universidad del Norte, Barranquilla (Colombia). ysegrera@uninorte.edu.co
Correspondencia: Universidad del Norte, Km 5 vía a Puerto Colombia, A.A 1569, Barranquilla (Colombia).
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Bilateral Investment Treaties are agreements made between two sovereign states. The capital-importing country has the basic purpose of attracting Foreign Direct Investment. The capital-exporting country, in turn, seeks to protect investors from political risk and instability and, in a more general sense, safeguard the investment made by its nationals within the territory of another state.
Foreign investment is a positive force to promote development in a country. Traditionally, host governments have taken various measures to direct investment towards national development needs. Such measures have included protecting infant industries by restricting the entry of foreign investors, protecting domestic economy against the entry of certain forms of investment, or demanding from investors the use of certain local materials, to transfer technology and skills, or to undertake joint ventures with local enterprises. Provided they have been part of an overall coherent and comprehensive investment strategy, such measures have, in the past, had beneficial impacts on national development (United Nations Conference on Trade and Development, 1999).
In certain situations, governments need to introduce or reinforce complementary measures to investments, such as competition policies, environmental protection standards, taxation measures and regulation towards the fulfillment of humans rights; in such cases, when the interests of foreign investors can potentially cause friction with the human rights of those living in the host country, the host country will need to rely on its international human rights obligations in order to justify the measures it takes against foreign investors, and to not be found responsible for the breach of its obligation under the Bilateral Investment treaty.
Quite often, bilateral investment agreements do not include clauses related to human rights in which states can rely in order to impose obligations upon investors to respect minimum rights standards, or Page 142 in which they can rely in order to enjoy the ability to justify certain nondiscriminatory treatment of foreign investors based in its international obligation to protect the human rights of its citizens. In this light, investment law needs to evolve and be interpreted consistently with international law, including human rights; however states need to start including human rights provisions in the celebration of bilateral investment treaties.
In this paper, the prospect for human rights norms to be injected into bilateral investment treaties, as well as the possibility of investment tribunals accepting human rights arguments of non investment law issues when there are no direct references to human rights law in the investment treaty will be analyzed, in order to demonstrate that investment treaties must include explicit human rights provisions in order to protect the ability of states to take appropriate measures under its human rights obligations.
Bilateral investment treaties (BITs) were developed in an effort to complement the slender protections afforded by customary international law to aliens (Subedi, 2008). BITs provide greater certainty and clarity as to legal rules which would apply, at least with respect to the investment flowing between a given set of countries.
Efforts to develop a single multilateral agreement on investment have failed consistently, often in the face of concerted opposition from civil society groups suspicious of the motives underlying such initiatives (Peterson, 2009)1. Human Rights non-governmental organizations (NGOs) were at the forefront of opposition to the proposed Multilateral Agreement on Investment (MAI) being negotiated Page 143 by the Organization for Economic Cooperation and Development (OECD), as well as a later initiative by WTO member-governments (Peterson, 2009).
The opposition from human rights NGOs is based on the concern that these agreements would undermine the ability of governments to regulate economic activity for broader objectives such as the promotion and protection of human rights, and would extend the legal protection to property and assets of the investors (Peterson, 2009). Since the conclusion of the first Bilateral Investment Treaty (BIT) between Germany and Pakistan in 1959, foreign investment has been governed even more by either BITs or by Regional or Bilateral Trade Agreements, which include a chapter on investment protection, such as the North American Free Trade Agreement (NAFTA) (NAFTA Secretariat).
Although BITs differ from one another, especially depending on the provisions each state wishes to include, they usually contain general standards of treatment. They provide for protection against direct and indirect expropriation, require fair and equitable treatment of the investor, provide for national treatment, full protection and security, free transfer of funds, and usually contain a most favored nation clause (MFN) (Dugan, 2008).
Even though bilateral investment treaties should be formulated in a way in which they regulate the rights and obligations of both parties, it often happens that these investment treaties tend to protect foreign investors and their assets rather than imposing duties or legal responsibilities on them (Peterson, 2009). In terms of Human Rights, BITs usually do not make references to commitments of the parties in this arena.
The most chosen forum for investment arbitration is the International Centre for Settlement of Investment Disputes (ICSID) (Reed, Page 144 Paulsson, & Blackaby, 2004), but arbitration also takes place under other rules, e.g. the United Nations Commission on International Trade (UNCITRAL) or the International Chamber of Commerce (ICC) rules. The ICSID was created in 1965 under the auspices of the World Bank with the goal of fostering private capital flows to developing countries ('international cooperation for economic development'2).
Usually, ICSID publicly registers details of disputes before its panel as well as some of its decisions, even though Article 48 (5) of the ICSID Convention requires the consent of the parties for an award to be published3. However, other arbitral awards are not publicly disclosed. For instance, the Arbitrations rules of the International Chamber of Commerce, the Stockholm Chamber of Commerce and the United Nations Commission on International Trade Law (UNCITRAL), all of which are incorporated in some number of BITs, provide no such requirements for arbitrators to be made a matter of public record (Peterson & Gray, International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration, 2003).
As we see, transparency is a problem for investment arbitration, because arbitral awards are often kept confidential. States are generally not aware of the substantive rules of international investment law that the tribunal will apply. This situation should be corrected in the future; wherever human rights and other public interests are concerned, transparency should be an important principle, of course taking into account the legitimate commercial confidentiality.
Tribunals interpret the provisions of the treaty in accordance with the applicable law agreed upon by the parties or, by default, as Page 145 specified in the arbitration rules. Some investment treaties provide for the application of public international law in addition to national law, and the provisions of the agreement (Schreuer, Reinisch, Sinclair, & Malintoppi, 2001).
Where the investment treaty does not specify the applicable law, the arbitrator will typically look to ascertain if the parties have reached consensus as to the applicable law. Whenever there is no consensus between the parties, it is necessary to look to the guidance of the specific arbitral rule (ICSID, UNCITRAL, ICC, etc).
ICC Arbitration Rules provide that, in the absence of an agreement between the parties, the tribunal will have the discretion to apply the law it deems appropriate. However, UNCITRAL rules state that, in the absence of an agreement between the parties, the tribunal will apply the law determined by the conflict-of-law rules that the tribunal considers appropriate. ICSID on the other hand, states that in the absence of an agreement between the parties, the tribunal 'will apply the law of the Contracting State party to the dispute (including its rules on the conflict of laws) and such rules of international law that may be applicable.4 This reference to rules of international law was elucidated in the Report of The World Bank Executive director on the (ICSID) Convention5, as being in the sense of Article 38 of the...
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