Human Rights and International Investment Arbitration
By Clara Reiner1 and Christoph Schreuer2
I. Introduction
Investment arbitration has emerged as the most effective means of resolving investor-State
disputes. The popularity of arbitration for this purpose has not only led to a rapid increase in
the caseload of arbitration institutions, but has brought with it an array of new issues. As a
consequence, investment law is presently being challenged by interactions with other, non-
investment, obligations. These are raised by investors, States, and non-party actors alike. In
addition to environmental and labour-related issues, references to human rights are
appearing, yet they remain sparse and infrequent.
It is not impossible for treaties for the protection of investments, such as bilateral
investment treaties (BITs), to provide for human rights, but this would be highly unusual.
The Model BITs of China (2003), France (2006), Germany (2005), the United Kingdom
(2005) and the United States (2004) do not mention them.3 Mention of human rights is
equally absent from the North American Free Trade Agreement (NAFTA) and the Energy
Charter Treaty (ECT), two important multilateral investment treaties. The ICSID
Convention (Convention on the Settlement of Investment Disputes between States and
Nationals of Other States) covers procedural and not substantial issues and hence does not
address human rights. The most important print source for decisions on international
investment law, the ICISD Reports, does not even include the term human rights in its
index.
This suggests that the present role of human rights in the context of investment arbitration is
peripheral at best. This contribution shall attempt to throw some light on the role of human
rights in international investment arbitration, focusing more particularly on the issues
relating to jurisdiction, the applicable law and invocation during proceedings.
3
See R Dolzer and C Schreuer, Principles of International Investment Law (2008) 352, 360, 368, 376 and 385.
In its Articles 12 and 13, the US Model BIT does however address environmental and labour law.
1
II. Jurisdiction over Human Rights Issues
The system of investment arbitration does not generally require the exhaustion of local
remedies and places the investor and the State on an equal footing, thus supplanting
diplomatic protection. This is somewhat of an anomaly in the larger context of international
law. Established on a case-for-case basis, arbitral tribunals draw their jurisdiction to make
binding rulings on a dispute solely from the consent of the parties. The tribunal’s
jurisdiction is consequently both based on and limited to that agreement. Hence, the mere
allegation of a human rights violation would not suffice to confer jurisdiction on a tribunal.
To determine whether an investment tribunal is competent to decide on human rights issues,
the clause establishing jurisdiction is decisive.
Thus, the formulation of the compromissory clause in the treaty or contract will reveal the
breadth of the tribunal’s jurisdiction. In many cases, it will be “restricted to ‘investment
disputes’ … or to alleged violations of the substantive rights in the investment treaty.”4 In
the case of NAFTA, Article 1116 effectively delimits NAFTA’s applicability to alleged
breaches of Section A, i.e. to breaches of NAFTA obligations. Similarly, Article 26 (1) and
(2) of the ECT provides that only breaches of obligations contained in its Part III are
arbitrable. These restrictions to disputes originating from the breach of a treaty obligation
coupled with the fact that these treaties contain no substantive human rights standards
suggest that arbitral tribunals will lack the competence to rule on human rights issues as far
as the NAFTA and the ETC are concerned. However, certain human rights violations, such
as those related to the protection of the investor’s property, may at the same time constitute
a breach a of particular treaty obligation and hence fall within the realm of the tribunal’s
competence, thus providing access to investment arbitration.
In the case of Biloune v. Ghana,5 the Syrian investor, Biloune, had been arrested and held in
custody for thirteen days without charge and finally deported from Ghana to Togo. The
Claimant sought redress also for these alleged violations of his human rights. The
UNCITRAL arbitration was based on Article 15 (2) of the agreement between the investor
4
LE Peterson and KR Gray, International Human Rights in Bilateral Investment Treaties and Investment
Treaty Arbitration (2005) 10.
5
Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana
(UNCITRAL), Award on Jurisdiction and Liability, 27 October 1989, 95 ILR 184.
2
and the host State, which provided that “ [a]ny dispute between the foreign investor and the
Government in respect of an approved enterprise … may be submitted to arbitration.”6
The Tribunal affirmed that customary international law requires that a State accord foreign
nationals a minimum standard of treatment and that international law endows all individuals,
regardless of nationality, with inviolable human rights. But it held that these rules do not
imply that the Tribunal is competent to pass upon every type of departure from the
minimum standard or violations of human rights. Basing its reasoning on the wording of the
consent clause in the agreement, the Tribunal ruled that its competence is limited to
disputes “in respect of” the foreign investment and that hence the “Tribunal lacks
jurisdiction to address, as an independent cause of action, a claim of violation of human
rights.”7
The Tribunal’s reasoning, based on the interpretation of the agreement’s compromissory
clause which limits jurisdiction to disputes “in respect of an approved enterprise”, declared
that an independent claim for violation of human rights fell beyond the scope of its
competence. Yet, while it may not be competent for an independent claim, human rights
violations cannot per se be excluded from its jurisdiction. If and to the extent that the
human rights violation affects the investment, it becomes a dispute “in respect of” the
investment and is hence arbitrable.
III. Human Rights Law as Applicable Law
In considering the role of human rights in international investment arbitration, it does not
suffice to establish the tribunal’s jurisdiction over alleged violations of human rights, since
the analysis and evaluation of the breaches will depend upon the applicable substantive
standards.
It is not impossible that BITs or multilateral investment treaties contain human rights
provisions. But this would be quite exceptional.8 In the absence of specific human rights
6
At p. 188.
7
At p. 203.
8
LE Peterson and KR Gray, International Human Rights in Bilateral Investment Treaties and Investment
Treaty Arbitration (2005) 6 and 8.
3
norms in investment treaties and given the parties’ freedom to select the applicable law,
human rights provisions are applicable to the extent to which they are included in the
parties’ choice of law. It depends on any choice of law provisions whether human rights
norms of international or domestic law will be applicable to the case.
Numerous BITs contain composite choice of law clauses, typically including treaty rules,
host State law and customary international law. Under these provisions, human rights, as a
component of international law, are part of the applicable law. For instance, Article 9 of the
Chinese Model BIT (2003) provides for the settlement of disputes between investors and a
contracting party and determines that “[t]he arbitration award shall be based on the law of
the Contracting Party to the dispute including its rules on the conflict of laws, the provisions
of this Agreement as well as the universally accepted principles of international law.”9 The
US Model BIT (2004) provides that in certain cases, “the tribunal shall decide the issues in
dispute in accordance with this Treaty and applicable rules of international law”10 whereas
in others, international law shall be applicable alongside the law of the respondent State
only when the parties’ do not otherwise agree.11
Certain multilateral investment instruments also provide for the applicability of
international law, so that relevant human rights rules may also be pertinent in arbitrations
based on these instruments. Article 1131 of the NAFTA determines that “[a] tribunal
established under this Section shall decide the issues in dispute in accordance with this
Agreement and applicable rules of international law.”12 And the ECT disposes that “[a]
tribunal … shall decide the issues in dispute in accordance with this Treaty and applicable
rules and principles of international law.”13
9
Article 9 (3), Chinese Model BIT (2003), see R Dolzer and C Schreuer, Principles of International
Investment Law (2008) 357.
10
Article 30 (1), US Model BIT (2004), see R Dolzer and C Schreuer, Principles of International Investment
Law (2008) 412.
11
Article 30 (2), US Model BIT (2004), see R Dolzer and C Schreuer, Principles of International Investment
Law (2008) 412, 413.
12
Article 1131 (1) NAFTA, see R Dolzer and C Schreuer, Principles of International Investment Law (2008)
344, 345.
13
Article 26 (6) ETC, see R Dolzer and C Schreuer, Principles of International Investment Law (2008) 326.
4
Article 42 (1) of the ICSID Convention establishes that in the absence of an agreement of
the parties on the applicable law, “the Tribunal shall 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 as may be applicable.” 14 The Report of the World Bank Executive
Directors specifies that “the term ‘international law’ as used in this context should be
understood in the sense given to it by Article 38(1) of the Statue of the International Court
of Justice, allowance being made for the fact that Article 38 was designed to apply to inter-
State disputes.”15
The UNCITRAL Arbitration Rules of 1976 do not envisage the application of international
law, giving priority to the parties’ agreement. In the event that such an agreement is lacking
they state that “the arbitral tribunal shall apply the law determined by the conflict of laws
rules which it considers applicable.”16 This peculiarity may be explained by the fact that
UNCITRAL is primarily an instrument for the settlement of commercial disputes between
private actors and hence less prone to applying public international law.
IV. Corporate Social Responsibility
When considering whether and to what extent States are bound by human rights duties, it
would be inconsistent to disregard obligations that might be incumbent upon the investor.
Foreign investment has not always harvested praise and concern about the role played by
multinational enterprises in the protection of fundamental rights has grown. As a response
to this, the concept of (international) corporate social responsibility has emerged,
attempting to apply human rights responsibilities to investors.
Before attempting to substantiate the content of such obligations, it seems necessary to
question whether legal persons such as corporations can be bearers of human rights
responsibilities. After all, these are traditionally considered to pertain to the domain of
States alone. Yet Muchlinsky comments that “at a moral level it would appear that there
14
Article 42 (1) ICISID Convention, see R Dolzer and C Schreuer, Principles of International Investment Law
(2008) 303.
15
§40 of the Report of the Executive Directors of the Convention on the Settlement of Investment Disputes
between States and Nationals of other States, see 1 ICSID Reports, 31.
16
Article 33 (1), UNCITRAL Arbitration Rules 1976, see www.uncitral.org
5
exists a widening consensus that MNEs [multinational enterprises] should observe
fundamental human rights standards. This can be supported by reference to the fundamental
need to protect from assaults against human dignity regardless of whether their perpetrators
are state or non-state actors.”17 He also emphasises that “[d]espite this strong theoretical and
moral case for extending responsibility for human rights violations to MNEs, the legal
responsibility of MNEs for such violations remains uncertain.”18
Indeed, in his Interim Report, the Special Representative of the Secretary-General on the
Issue of Human Rights and Transnational Corporations and Other Business Enterprises
comments that “with the possible exception of certain war crimes and crimes against
humanity, there are no generally accepted international legal principles that [directly bind
businesses]” 19 . He goes on to state that “all existing instruments specifically aimed at
holding corporations to international human rights standards […] are of a voluntary
nature,”20 and that relevant instruments impose obligations on states, not companies. Yet he
also indicates that “under customary international law, emerging practice and expert
opinion increasingly do suggest that corporations may be held liable for committing, or for
complicity in, the most heinous human rights violations amounting to international crimes,
including genocide, slavery, human trafficking, forced labour, torture and some crimes
against humanity.”21
In the subsequent report, the UN Special Representative notes in a similar vein that
“[c]orporations increasingly are recognized as “participants” at the international level, with
the capacity to bear some rights and duties under international law.” 22 However, after
analysing the Universal Declaration of Human Rights, the two Covenants and other core
UN human rights treaties, the Special Representative concludes that “it does not seem that
17
PT Muchlinsky, ‘Corporate Social Responsibility’, in P. Muchlinski, F. Ortino, and C. Schreuer (eds), The
Oxford Handbook of International Investment Law (forthcoming 2008) 655 (footnote omitted).
18
PT Muchlinsky, Multinational Enterprises and the Law (2007) 517.
19
J Ruggie, Interim Report of the Special Representative of the Secretary-General on the Issue of Human
Rights and Transnational Corporations and Other Business Enterprises (2006)§ 60.
20
At § 61.
21
Loc. cit.
22
J Ruggie, Business and Human Rights: Mapping International Standards of Responsibility and
Accountability for Corporate Acts (2007) § 20.
6
the international human rights instruments discussed here currently impose direct legal
responsibilities on corporations.”23
Although the current state of international law does not seem to prescribe human rights
obligations for investors beyond the extent to which they are incorporated into national
legislation applicable to the investor, the debate is on-going and the conclusions reached
will presumably evolve. For the time being, soft law has espoused the role of formulating
and further developing standards which may, at a later stage, emerge as hard law.
Several international instruments provide codes of conduct for transnational corporations.
For instance, the OECD Guidelines for Multinational Enterprises (27 June 2000) are
“recommendations addressed by governments to multinational enterprises [and] provide
voluntary principles and standards for responsible business conduct consistent with
24
applicable laws.” The UN Global Compact, “a framework for businesses that are
committed to aligning their operations and strategies with ten universally accepted
principles in the areas of human rights, labour, the environment and anti-corruption,” 25
encourages companies to adopt certain values derived from the Universal Declaration of
Human Rights, the International Labour Organization’s Declaration on Fundamental
Principles and Rights at Work, the Rio Declaration on Environment and Development and
the United Nations Convention against Corruption.
The UN Norms, 26 which were adopted by the Sub-Commission on the Promotion and
Protection on Human Rights in Resolution 2003/16 of August 13, 2003, “comprise 23
articles, […] which set out human rights principles for companies in areas ranging from
international criminal and humanitarian law; civil, political, economic, social, and cultural
rights; as well as consumer protection and environmental practices.” 27 There can be no
23
At § 44.
24
§ 1 Preface, OECD Guidelines for Multinational Enterprises, www.oecd.org/dataoecd/56/36/1922428.pdf,
25
http://www.unglobalcompact.org/AboutTheGC/index.html
26
Norms on the Responsibilities of Transnational Corporations and Other Business Enterprises with Regard to
Human Rights, U.N. Doc. E/CN.4/Sub.2/2003/12/Rev.2 (2003), approved August 13, 2003 by U.N. Sub-
Commission on the Promotion and Protection of Human Rights resolution 2003/16, U.N. Doc.
E/CN.4/Sub.2/2003/L.11 at 52 (2003). See under: http://www1.umn.edu/humanrts/links/norms-Aug2003.html
27
J Ruggie, Interim Report of the Special Representative of the Secretary-General on the Issue of Human
Rights and Transnational Corporations and Other Business Enterprises (2006) § 56.
7
doubt as to their voluntary nature, since at its 56th meeting, whilst taking note of the UN
Norms document, the Commission on Human Rights affirmed that “as a draft proposal” the
document “has no legal standing.”28
V. Invocation of Human Rights in Arbitrations
A. By the Investor
Surprisingly, human rights are rarely invoked by investors in investment arbitrations.29 This
may in part stem from the fact that in most investment arbitrations, the investors involved
are not natural, but juridical persons and that only the European Convention for Human
Rights provides protection for the property of juridical persons.30 Another reason may be
that the standard of protection provided by human rights instruments is typically lower than
the standard contained in investment treaties and contracts.
Even in cases where human rights of the investor could have been relevant, the tribunals did
not address the human rights issues. Thus in Biloune v. Ghana,31 the Tribunal declared it
lacked jurisdiction to examine the allegations of human rights violations.
In the case of Patrick Mitchell v. DR Congo, the Decision on Annulment cites an extract of
the (unpublished) Award, which describes the dispute as relating to “the intervention
ordered by the Military Court of the Democratic Republic of Congo and executed on March
5, 1999 when the premises housing Mr. Mitchell’s firm were put under seals, documents
qualified as compromising and other items were seized, the employees of the firm were
forced to leave the premises and two lawyers, Mr. Risasi and Mr. Djunga, were put into
prison. These individuals remained incarcerated until the day of their release by a decision
of the Military Court on November 12, 1999, which also ordered the removal of the seals
28
UN Commission on Human Rights, Resolution 2004/116 of 20 April 2004, see also
http://ap.ohchr.org/documents/E/CHR/decisions/E-CN_4-DEC-2004-116.doc
29
The cases cited are available on the ICSID homepage (http://icsid.worldbank.org) or on the Investment
Treaty Arbitration homepage (http://ita.law.uvic.ca/).
30
For an analysis of the debate concerning the extension of human rights to juridical persons, see PT
Muchlinsky, Multinational Enterprises and the Law (2007) 509-514.
31
Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana
(UNCITRAL), Award on Jurisdiction and Liability, 27 October 1989, 95 ILR 184.
8
placed on the premises of Mr. Mitchell’s firm.”32 Clearly, the seizure of property and the
incarceration of employees raise human rights issues. Yet there is no indication that the
Award considered these issues and the Annulment Decision fails to mention them at all.
B. By the Host State
States have to date not introduced claims against investors for breaches of human rights.
One of the reasons for this may be procedural: for the investor’s consent to arbitration is
generally expressed in its request for arbitration and hence limited to the substance of the
request. Another reason is that active human rights violations by the investor will most
likely occur with the complicity of the host State. Moreover, as discussed above, it is
uncertain to what extent non-State parties are subject to human rights obligations.
Instead, host States have relied on human rights considerations defensively to justify
measures with adverse effects on the investment, arguing that their treatment of an investor
was in furtherance of or necessary to protect certain international human rights
commitments.33
Under human rights law, the State bears obligations, including not only the prohibition of
engaging in human rights violations, but also the duty of preventing the infringement of
human rights by others. Failure by the host State to protect its citizens may engage its
responsibility. It is in this capacity that States have invoked human rights, in particular in
cases involving public utilities, yet with little success.
In CMS Gas v. Argentina, Argentina argued that the country’s economic and social crisis
affected human rights and that “no investment treaty could prevail as it would be in
violation of such constitutionally recognized rights." 34 The Tribunal held that when
32
Patrick Mitchell v. Democratic Republic of Congo, ICSID ARB/99/7, Decision on the Application for
Annulment of the Award, 1 November 2006, § 1, citing § 23 of the Award, 9 February 2004 (not publically
available).
33
LE Peterson and KR Gray, International Human Rights in Bilateral Investment Treaties and Investment
Treaty Arbitration (2005) 16.
34
CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8, Award, 12 May 2005, § 114
9
considering the issues disputed between the parties “there is no question of affecting
fundamental human rights.”35
In Azurix v. Argentina, an ICSID case concerning water and sewage systems, Argentina
raised the issue of the compatibility of the BIT with human rights treaties that protect
consumers’ rights and argued that “a conflict between a BIT and human rights treaties must
be resolved in favour of human rights because the consumers’ public interest must prevail
over the private interest of service provider.”36 The Tribunal found that the matter had not
been fully argued and noted that it failed to understand the incompatibility in the specific
case seeing that the services to consumers continued without interruption after the
termination notice.37
In Siemens v. Argentina, Argentina again claimed that given the social and economic
conditions of Argentina, recognizing the property rights asserted by Claimant would
disregard human rights incorporated in the Constitution. 38 In response to Argentina’s
argument, the Tribunal held that the argument had not been developed and that “without the
benefit of further elaboration and substantiation by the parties, it is not an argument that,
prima facie, bears any relationship to the merits of this case.”39
These awards seem to indicate the tribunals’ reluctance to take up matters concerning
human rights, preferring to dismiss the issues raised on a procedural basis rather than
dealing with the substantive arguments themselves. In an analysis on the interactions
between investment and non-investment obligations in international investment law, Hirsch
notes that “structural differences [between public international law and international
investment law] have led investment tribunals to grant precedence to the contractual or
consensual rules that have been agreed upon by host states and investors.”40 Since “the
superior position of the host state regarding influence upon the content of both domestic and
35
CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8, Award, 12 May 2005, § 121.
36
Azurix v. Argentine Republic, ICSID Case No. ARB/01/12, Award, 14 July 2006, § 254.
37
At § 261
38
Siemens v. Argentina, ICSID Case No. ARB/02/8, Award, 6 February 2007, § 75.
39
At § 79.
40
M Hirsch, ‘Interactions between Investment and Non-Investment’, in P. Muchlinski, F. Ortino, and C.
Schreuer (eds), The Oxford Handbook of International Investment Law (forthcoming 2008) 179.
10
international law is glaring … investment tribunals are inclined to emphasise the obligations
included in the investment agreement.”41
A perhaps slightly different approach is discernible in the case of Sempra v. Argentina. The
Tribunal acknowledged that “this debate raises the complex relationship between
investment treaties, emergency and the human rights of both citizens and property owners.”
Nonetheless, it found that “the real issue in the instant case is whether the constitutional
order and the survival of the State were imperilled by the crisis, or instead whether the
Government still had many tools at its disposal to cope with the situation.” It concluded that
“the constitutional order was not on the verge of collapse” and that hence “legitimately
acquired rights could still have been accommodated by means of temporary measures and
renegotiation.”42
C. By Non-Party Actors
Whilst invocations of human rights obligations by host States have been met with little
enthusiasm, tribunals have been more willing to consider human rights issues in another
context, namely that of amicus curiae submissions. Translating to friend of the court, the
term amicus curiae is used to describe a “person who is not a party to a lawsuit but … has a
strong interest in the subject matter.”43
The human rights issues involved in the participation of non-parties in the arbitration
proceedings are twofold. One is procedural, the other is substantive. A procedural right of
petitioners to submit amicus curiae briefs may be seen as emanating from their right to a
fair trial, such as the one enshrined in Article 6 of the European Convention on Human
Rights (right to a fair trial) or Article 14 of the International Covenant on Civil and Political
Rights.
In Aguas del Tunari v. Bolivia, the petitioners argued that international human rights
principles supported their participation in the arbitration, referring to Article 14 of the
41
M Hirsch, ‘Interactions between Investment and Non-Investment’, in P. Muchlinski, F. Ortino, and C.
Schreuer (eds), The Oxford Handbook of International Investment Law (forthcoming 2008) 179.
42
Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16, Award, 28
September 2007, § 332.
43
Black’s Law Dictionary, (7th ed, 1999).
11
International Covenant of Civil and Political Rights in support of their demand to submit
briefs to the Tribunal.44 The Letter of the President of the Tribunal of 29 January 2003,
refused their demand, concluding that the “requests [of the petitioners] are beyond the
power or the authority of the Tribunal to grant.” He emphasised the consensual nature of
arbitration and the fact that the duties of the Tribunal “derive from the treaties which govern
this particular dispute.” Since neither the applicable treaties nor the consent of the parties
provided for the participation of amici curiae, the Tribunal found that it did not “have the
power to join a non-party to the proceedings; to provide access to hearings to non-parties
and, a fortiori, to the public generally.”45
It is doubtful whether the right to a fair trial is designed to promote the case of an amicus
curiae. It confers rights upon persons “whose rights and obligations in a suit at law are
being determined by a court or tribunal” 46 and concerns the standing as a party to
proceedings, rather than the possibility to submit documents and briefs as amicus curiae.
The standing as a party for those directly concerned, such as the inhabitants of Cochabamba,
Bolivia, may be desirable, yet the consensual nature of the arbitration system and its limited
jurisdiction would presumably prevent it.
In a second group of cases, the admissibility of amicus curiae submissions were considered
not so much from the point of view of the petitioners’ human right to a fair trail, but on
substantive grounds. The human rights issues raised by the petitioners were understood to
contribute to the special public interest of the arbitration and thus justified the admission of
amicus curiae briefs.
The NAFTA case of Methanex v. United States was the first investment arbitration in which
amicus curiae rights were accorded. Based on an interpretation of the relevant UNCITRAL
and NAFTA provisions, the Tribunal concluded that “by Article 15(1) of the UNCITRAL
Arbitration Rules it [the Tribunal] has the power to accept amicus submissions (in writing)
44
Aguas del Tunari S.A. v. Republic of Bolivia, ICSID Case No. ARB/02/3, NGO Petition to Participate as
Amici Curiae, 29 August 2002, §§ 47, 48.
45
Aguas del Tunari S.A. v. Republic of Bolivia, ICSID Case No. ARB/02/3, Letter from President of Tribunal
Responding to Petition, 29 January 2003.
46
United Parcel Service of America v. Canada (NAFTA), Decision on Petitions for Intervention and
Participation as Amici Curiae, 17 October 2001, § 40.
12
from each of the Petitioners.” 47 The Tribunal noted that “the public interest in this
arbitration arises from its subject matter” and argued that “the Chapter 11 arbitral process
could benefit from being perceived as more open or transparent” so that “the Tribunal’s
willingness to receive amicus submissions might support the process in general and this
arbitration in particular.”48
In the context of NAFTA arbitration, the competence of tribunals to admit amicus curiae
submissions was confirmed by the Statement of the North American Free Trade
Commission on Non-Disputing Party Participation of October 7, 2003 which clarifies that
“No provision of the North American Free Trade Agreement (“NAFTA”)
limits a Tribunal’s discretion to accept written submissions from a
person or entity that is not a disputing party (a ‘non-disputing party’).”49
Hence, in the pending Glamis Gold v. United States (NAFTA) case, the Tribunal admitted
the Submission of the Quechan Indian Nation since it was of the view that “the submission
satisfies the principles of the Free Trade Commission’s Statement on non-disputing party
participation.”50
The discussion concerning amicus curiae evolved slightly differently in the domain of
ICSID arbitrations since the Convention provided the relevant framework for procedural
decisions. Yet the NAFTA cases played a role in providing precedent for the conclusions
reached by the tribunals.51
47
Methanex v. United States (NAFTA), Decision on Amici Curiae, 15 January 2001, § 47.
48
At § 49.
49
Statement of the North American Free Trade Commission on Non-Disputing Party Participation of October
7, 2003, see (www.ustr.gov) http://www.international.gc.ca/assets/trade-agreements-accords-
commerciaux/pdfs/Nondisputing-en.pdf
50
Glamis Gold v. United States, Decision on Application and Submission by Quechan Indian Nation, 16
September 2005, § 10.
51
See for example, Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v.
Argentine Republic (ICSID ARB/03/19), Order in Response to a Petition for Transparency and Participation
as amicus curiae, 19 May 2005, § 14; Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas
ServiciosIntegrales del Agua S.A. v. The Argentine Republic, (ICSID ARB/03/17), Order in response to a
Petition for Participation as Amicus Curiae, 17 March 2006, § 14;
13
The Tribunal in Aguas Argentinas 52 accepted amicus curiae briefs in principle since
“Article 44 of the ICSID Convention grants it [the Tribunal] the power to admit amicus
curiae submissions from suitable non-parties in appropriate cases.”53 It went on to say that
“[c]ourts have traditionally accepted the intervention of amicus curiae in ostensibly private
litigation because those cases have involved issues of public interest and because decisions
in those cases have the potential, directly or indirectly, to affect persons beyond those
immediately involved as parties in the case.” The Tribunal noted that “the factor that gives
this case particular public interest is that the investment dispute centers around the water
distribution and sewage systems of a large metropolitan area, the city of Buenos Aires and
surrounding municipalities. Those systems provide basic public services to millions of
people and as a result may raise a variety of complex public and international law questions,
including human rights considerations. Any decision rendered in this case, whether in
favour of the Claimants of the Respondent, has the potential to affect the operation of those
systems and thereby the public they serve.”54
The Tribunal in the case of Aguas Provinciales de Santa Fe 55 was identical in its
constitution to that of Aguas Argentinas and the proceedings concerned the same subject
matter, namely water distribution and sewage systems in an urban area. Again, the Tribunal
concluded that “Article 44 of the ICSID Convention grants it the power to admit amicus
curiae submissions from suitable nonparties in appropriate cases”56 and specified that water
and sewage systems provide basic public services as a result of which a variety of public
and international law questions, including human rights considerations, emerge and that the
subject matter is hence appropriate for amicus curiae submissions.57
52
Suez, Sociedad General de Aguas de Barcelona, S.A .and Vivendi Universal, S.A. v. the Argentine Republic
(ICSID ARB/03/19), Order in Response to a Petition for Transparency and Participation as amicus curiae, 19
May 2005.
53
At § 16
54
At § 19.
55
Suez, Sociedad General de Aguas de Barcelona S.A., and InterAguas ServiciosIntegrales del Agua S.A. v.
The Argentine Republic, (ICSID ARB/03/17), Order in response to a Petition for Participation as Amicus
Curiae, 17 March 2006.
56
See § 16.
57
See § 18.
14
The case of Biwater Guaff v. Tanzania58 also concerned water privatization. In the Petition
for amicus curiae status submitted on 27 November 2006, the petitioners emphasised the
salient relationship of service delivery to basic human rights and needs in the water sector59
and stressed that “the arbitration process goes far beyond merely resolving commercial or
private conflicts, but rather has a substantial influence on the population’s ability to enjoy
basic human rights.”60 In its Procedural Order N° 5,61 the Tribunal acceded to the amicus
curiae petition and expressed the view that “it [the Tribunal] may benefit from a written
submission by the Petitioners, and that allowing for the making of such submission by these
entities in these proceedings is an important element in the overall discharge of the Arbitral
Tribunal’s mandate, and in securing wider confidence in the arbitral process itself.”62
On the basis of the reasoning provided by the tribunals, it appears that in permitting amicus
curiae briefs, arbitral tribunals seem more moved by efforts to increase transparency and
respond to public interest rather than by human rights considerations.
The revision of the ICSID Arbitration Rule 37(2) on 10 April 2006, removed all doubts
over the tribunal’s power to admit amicus curiae briefs. Rule 37(2) now provides:
After consulting both parties, the Tribunal may allow a person or entity
that is not a party to the dispute (in this Rule called the “non-disputing
party”) to file a written submission with the Tribunal regarding a matter
within the scope of the dispute. …
D. By the Tribunal
The influence of human rights on investment arbitration is also demonstrated by the
occasional willingness of tribunals to cite human rights documents as authority for their
decisions.
58
Biwater Gauff (Tanzania) Ltd. v. United Republic of Tanzania, (ICSID ARB/05/22)
59
Petition for amicus curiae status, 27 November 2006, p. 7
60
At p. 8
61
Procedural Order No. 5 on amicus curiae, 2 February 2007.
62
At § 50
15
In the Tecmed arbitration, the Tribunal cited both the European Court of Human Rights and
the Inter American Court of Human Rights as authority for the existence of an indirect de
facto expropriation63 and cited the European Court of Human Rights on the principle of
proportionality and the differentiation between treatment of nationals and non-nationals.64
In Saipem v. Bangladesh, the Tribunal relied on the European Court of Human Rights’
holding that rights under judicial decisions are protected property that can be the object of
an expropriation and that court decisions can amount to an expropriation.65
Finally, in the NAFTA case of Mondev v. United States, the Tribunal cited the European
Court of Human Rights as authority for the non-retroactivity of criminal legislation and on
the issue of State immunity and access to courts.66 This case deserves particular attention
for its demonstration of the far flung reach of certain human rights instruments: the
arbitration involved a Canadian national and the United States, meaning that neither country
involved was a party to the European Convention on Human Rights.
VI. Conclusion
In some respects, human rights law and investment law are very similar. Ben Hamida
observes that certain substantive norms such as the prohibition of discrimination and the
protection of property may be common to both investment and human rights law. 67
Moreover, both are fundamental to the process of the emancipation of the individual from
the State. They both provide for proceedings between an individual and a State.68
63
Técnicas Medioambientales Tecmed, S.A. v. United Mexican States, ICSID Case No. ARB (AF)/00/2,
Award, 29 May 2003, § 116
64
At § 122.
65
Saipem S.p.A. v. The People's Republic of Bangladesh, ICSID Case No. ARB/05/07, Decision on
Jurisdiction and Recommendation on Provisional Measures, 21 March 2007, see §§ 130 and 132.
66
Mondev International Ltd. v. United States of America, ICSID Case No. ARB (AF)/99/2 (NAFTA), Award,
11 October 2002, § 138 and §§ 141-144.
67
W Ben Hamida, ‘Investment Arbitration and Human Rights’ in Transnational Dispute Management (2007)
10.
68
W Ben Hamida, ‘Investment Arbitration and Human Rights’ in Transnational Dispute Management (2007)
10, referring to G Burdeau.
16
In the procedural context, investment law grants more rights to the individual. Many human
rights treaties still do not foresee the possibility of individual complaints by private persons,
let alone juridical persons. Equally, the requirement of the exhaustion of local remedies as a
condition for the exercise of jurisdiction by the international body is rare in investment law.
The contrary applies to human rights law, where the necessity to exhaust local remedies is
the rule.69
In some respects, human rights and investment law differ dramatically. The paradox of
nationality as it exists in the investment context is alien to human rights law. In investment
arbitration, nationality is crucial. Not only is the entire concept of BITs founded on the
possession of a specific nationality, but to establish the tribunal’s jurisdiction the investor
must fulfil both positive and negative requirements: the investor must be a national of a
State party to a particular investment instrument (be it ICSID or NAFTA). In addition, the
investor must not be a national of the investment’s host State. This has led to what is
termed “nationality planning.” Beyond the jurisdictional phase of proceedings, the
paradoxical nature of nationality becomes apparent: discrimination on the basis of
nationality is prohibited thanks to clauses mandating national and most favoured nation
treatment.
By contrast, nationality is irrelevant in human rights law. Foreigners and nationals alike are
guaranteed rights irrespective of any specific nationality. Transferring this approach to
investment law may be possible on the basis of multilateral investment treaties with wide
participation. What seems more controversial than the equal treatment of all foreigners is
the conferment upon national investors of rights against their own State. The privileged
treatment accorded to foreign investors is based precisely on their quality as aliens and upon
the desire to attract foreign investments.
The differences between the investment law and the human rights system are not restricted
to matters of jurisdiction. The substantive issue of expropriation also shows great
69
W Ben Hamida, ‘Investment Arbitration and Human Rights’ in Transnational Dispute Management (2007)
12.
17
differences. In investment law, the ‘all or nothing’ principle is applied.70 This means that
investors are entitled to full compensation in case of an expropriation and to nothing if a
legitimate regulation is found to have occurred. By contrast, the ECHR has developed a
more differentiated practice based on a proportionality test which includes the amount of
compensation in its considerations.71 Rather than using the proportionality text to decide
whether an expropriation has occurred, it is used to decide “whether a suitable balancing of
the State’s interest to interfere and the property protection interest of the person hit by the
interference has taken place.”72 Kriebaum suggests transferring elements from the ECHR’s
practice to investment law so as to integrate the level of compensation into the
proportionality test to prevent the dissatisfying results of an ‘all or nothing’ approach.73
The current trend seems to indicate that the role of human rights in investment arbitration
will continue to increase. Whether the arbitral system is the best suited for dealing with
breaches of human rights is a controversial issue. Lack of transparency and legitimacy are
perhaps inevitable reproaches 74 and it remains to be seen whether these issues can be
resolved.
BIBLIOGRAPHY
W Ben Hamida, ‘Investment Arbitration and Human Rights’ in Transnational Dispute
Management (2007), see under www.transnational-dispute-management.com
70
U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the State’, in 8 Journal of
World Investment & Trade (2007) 719, 720.
71
U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the State’, in 8 Journal of
World Investment & Trade (2007) 730.
72
U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the State’, in 8 Journal of
World Investment & Trade (2007) 730.
73
U Kriebaum, ‘Regulatory Takings: Balancing the Interests of the Investor and the State’, in 8 Journal of
World Investment & Trade (2007) 729-743.
74
LE Peterson and KR Gray, International Human Rights in Bilateral Investment Treaties and Investment
Treaty Arbitration (2005) 34.
18
R Dolzer and C Schreuer, Principles of International Investment Law (Oxford, Oxford
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