Human Rights in international investment arbitration – a conceptual analysis

In the recent era investment related disputes are increasing day by day and human right laws are increasingly being more and more relevant is such disputes, but is it relevant? Over the past years, tribunals have given more or less no to less attention when it comes to human rights law in cases of an […]

In the recent era investment related disputes are increasing day by day and human right laws are increasingly being more and more relevant is such disputes, but is it relevant? Over the past years, tribunals have given more or less no to less attention when it comes to human rights law in cases of an investment arbitration taking place. But with the changing era, it cannot be said that the two areas are of no importance and are disconnected from each other. A plethora of arbitral tribunals in investor-state disputes is increasingly open to drawing on human rights norms in cases of applying international investment agreements.

International trade, business, and investments are gaining momentum as countries invest internationally to advance their reach and boost their respective economies. While commercial arbitration has become quite popular, another form of arbitration, which is investment arbitration has gained popularity. The process of investment arbitration is a new one that forms its basis in international adjudication as well as law. It has a well-established principle that any investor, be it an individual or one with a corporate entity, may enforce international law obligations and receive monetary compensation from a state. Investment arbitration happens to be a procedure that is used to resolve the disputes which occur between foreign investors and the host state, this process is also called the Investor-State Dispute Settlement.

Human rights law is the department of international law containing customs, guidelines, and practices that furnish all people regardless of their place of birth, race, intercourse, and many others aspects. There are no exhaustive lists of rights that might be considered human rights. Investment arbitration and human rights law appear to be disjoint from each other but they’re aspects of the same coin. It may come as a surprise at first – how can it be related? Let’s us understand this with the help of an example, i.e., in the case of an international investment arbitration both the parties to dispute i.e., the host state as well as the investor wants to reinforce their position to do such the parties may turn to the provisions of the public international law which may also include human rights treaties.
Human Right Laws and International Investment Arbitration Disputes go hand in hand for the investor as well as the host country in many ways. Some are discussed below –
-The investor may commit or be involved in the violations of human rights.
-The State might violate the human rights of the investor.
-Any party to dispute during the proceedings may lead to invoking the practice of international human rights courts on issues of procedure.

-The State might adopt the approach of human rights measures that may interfere with investors’ property rights.
-A party to dispute can also raise an issue that can be incidental to the investment dispute raised by the foreign investor, the case of Urbaser vs. Argentina stands as an example of this situation where the right to water i.e. a basic human right was brought forward as a concern by the host state against the investor.
-A party to dispute can also invoke international human rights norms in the application or interpretation of the obligations when it comes to international investment.
But do Arbitral Tribunals have the Jurisdiction of analyzing Human Right Claims? To answer this question let’s refer to the widely recognized Kompetenz-Kompetenz principle in Arbitration Law.

This principle provides the right to the arbitral tribunal to exercise on the issues in its own jurisdiction. With the application of this principle, the tribunal is empowered to decide matters by assuming its own jurisdiction i.e., by implementing as well as interpreting the relevant provisions of the Bilateral Investment Treaties.
In the case of Strabag v. Poland, the court stated that the burden to establish a tribunal’s jurisdiction, while ultimately it is subject to a tribunal’s own satisfaction will fall on the party alleging a breach of human rights. Further, In another case of Bilbao Biscay Ur Partzuergoa vs. the Republic of Argentina, the court in its ruling stated that the arbitral tribunal shall settle disputes based on the principles and rights contained in the treaty, further also including the rules of international law, along with taking the general rules/principals in consideration.

Hence there is no direct answer to the question of jurisdiction of the arbitral tribunal to analyze human rights claims, as the applicability of it completely depends on the domestic law of the host country along with the relevant bilateral or multilateral arbitration treaty. Therefore, it can be said that whether or not the tribunal can apply human rights completely depends on the jurisdictional clause along with taking into consideration the relevant law. Hence no matter how limited the scope of jurisdiction of a tribunal is, it does not necessarily imply excluding human rights issues in cases it is raised by the parties to the disputes. Article 42 of the ICSID Convention clearly states that in cases of an absence of an agreement “The Tribunal should apply the rules as well as the law of the Contracting State party to the arbitral dispute along with rules of international law as well. It is to be noted that the specific human right this is being claimed to be violated needs to be one that is based on a treaty of such human rights, to which both the parties to the disputes are signatories. Hence the above-discussed provisions clearly open the door for the application of customary rules of international law to international investment arbitration disputes, as international law does include human rights law as well. Associations with regard to the applicability of an appropriate regulation/law become significantly more complicated in the present scenario.
The tribunal in the case of Siemens v. Argentina, stated that the tribunal isn’t committed or obligated to look at basic rights, regardless of whether it can do as such, in the event that it doesn’t see common freedoms as straightforwardly affecting the center issues of the debate. In case the tribunal accepts to consider human rights, it has the discretionary power to decide on which rights, obligations, etc. may be applied.
At times, human rights norms can also be applied while the dispute is going on during the merits and damages phase. During this phase, the tribunal relies on Art 31(3)(c)Vienna Convention on the Law of Treaties, which grants the tribunal to consider any relevant rules of international law. This process is also known as the systematic integration process, and the tribunal may not always expressly refer to it as human rights norms.

It is to be noted that both international investment law and International Human Rights Law do overlap each other to a degree in regard to certain basic human rights. For instance, the right to property is central to both laws.
Likewise, the option for fair treatment assumes a fundamental procedural part in the question goal and is safeguarded under the two systems. This is obviously just a little subset of the plethora of other rights under Int. Human Rights Laws, yet it confirms essential communication between the both.

With Globalization resulting in increased foreign investment, it becomes very clear that the parties to international investment arbitration cannot overlook international human rights laws. In the present generation, human rights norms are expressly being drafted and are also being relied on as a ground of claim/counterclaim in a plethora number of cases. But there are yet a few unsettled concerns introduced by the consideration of human rights issues in investor-state arbitration and even now human rights provisions are missing in most relevant treaties, which acts as a major problem in the present era which leads to straining of relations between the two.

For interactions to become more and more, efforts are to be put in to identify shared goals as well as the more vigorous contribution of human rights experts in relevant international investment disputes taking place as the two systems draw from international law, thus there exists no question for seeking additional amicable associations.



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