ESIL-International Human Rights Law Symposium: IHRL and Investment Law – What Could A Human Rights Based Approach Look Like?

Scholars have increasingly focused (see here, here, here and here) on the relationship between international human rights law (“IHRL”) and international investment law (“IIL”). While some argue (see here, here and here) that IHRL and IIL are mutually re-enforcing, several cases highlight significant tensions between the fields.

When conflicts arise, IHRL rarely fares well. IIL provides a more powerful remedy than IHRL, often allowing for recourse to international remedies without the exhaustion of domestic ones. IIL decisions are also usually binding on the state without review or appeal, and can be enforced against a state’s assets overseas. This can incentivize states to comply with their IIL obligations at the expense of IHRL commitments. If IIL is not simply to “trump” IHRL without consideration for the merits of competing rights, a standard is needed that accommodates both fields. It appears to me that IHRL already provides the necessary tools for reconciling conflicting obligations without unduly burdening (or ignoring) either field.

The threat posed by conflicts between IHRL and IIL is perhaps best illustrated by one of the more disappointing judgments in international law, Suez, Sociedad General de Aguas de Barcelona S.A. and Vivideni S.A. v Argentina. This case arose from the economic crisis of 2001 when Argentina ordered a tariff freeze on water services. The IHRL right to water includes a core obligation that states ensure each individual can access a minimum daily allowance of water. “Accessibility” includes a financial aspect, requiring states ensure the minimum amount is affordable for all individuals, “including the most vulnerable or marginalized sections of the population” (para 12). To meet this obligation, states must not only respect the right but also protect it against corporate actions that would make water financially inaccessible.

Foreign investors with monopolies over water services challenged Argentina’s tariff freeze. They argued, and the tribunal agreed, that the action violated IIL’s “fair and equitable treatment” standard by disrupting investors’ “reasonable expectations” to regulatory stability. In other words, the Government could not take actions to stop corporations from making water prohibitively expensive for poor people because the corporations could not be expected to anticipate government action aimed at protecting access to water. While the state and amicus curiae submissions addressed the IHRL issues, the tribunal concluded there was no conflict between the expectations of IHRL and IIL in this matter. Even if a conflict did exist, the tribunal determined that IHRL has no effect on the state’s IIL obligations. Instead, the state was simply required to “respect both” sets of obligations “equally,” without giving weight to one set of obligations over the other. The panel provided no guidance as to how the state could have done this (para. 262).

The Suez and Vivendi decision, and others like it, create a de facto hierarchy in which IIL is prioritized over IHRL. By disregarding the conflict between the two fields, the tribunal creates a legal paradox for states: they are required to simultaneously abide by standards that are seemingly mutually exclusive. If the Vienna Convention on the Law of Treaties’ Article 31(3)(c) is to have meaning, the answer to conflicts between IHRL and IIL cannot simply be for one regime to ignore the other. As discussed in the ILC’s fragmentation report, a unified application requires interpreting rules and binding obligations in light of other applicable standards. When the fields are as diverse as IIL and IHRL, it is important to develop a framework for analysis that ensures the adequate protection of both fields, without allowing either to displace the other.

The inclusion of IHRL specific clauses in investment agreements, and the use of amicus curiae on IHRL issues have each been touted as potential solutions to the legal conflict. However, neither provides a systematic means of addressing the complex issues of how to resolve direct conflicts in the law. A more systematic treatment may be found in IHRL itself, which, as Edward Guntrip acknowledged, varies in the standards of protections afforded different rights.

The variation in IHRL stems from a recognition that individual rights can conflict, and that the rights of an individual may affect the community at large. This sits in contrast to the foundation of IIL, which anticipates a binary relationship affecting only the state and the investor. The investor makes claims against the state, and the state owes IIL duties only to the investor. The investor and the state become the only relevant parties, with others acting only as interested observers. In IHRL, the state (and consequently the tribunal) is obliged to consider not just the protection owed to an individual claimant, but how that claimant’s rights intersect with or interfere with the rights of third parties or the interests of the state as a whole. Consequently, IHRL includes mechanisms such as derogation clauses, limitations clauses, and minimum core obligations, which regulate a state’s response to competing demands by multiple rights holders.

The ICJ’s advisory opinions in Nuclear Weapons and Palestinian Wall make clear that lex specialis can redefine the contours of a state’s obligations to take into account obligations that arise from other regimes. In such cases, the applicable law is the one more specific to the facts of the case. The right to life – a non-derogable IHRL obligation – is reinterpreted in armed conflict to take account of the rules provided for in international humanitarian law. However, where IHRL provides a more specific rule, such as in the right to education, it remains the dominant standard despite the presence of other rules or obligations. In applying this to the interaction between IIL and IHRL, the factual complexity involved in a conflict between the different rights-holders (individuals or communities with IHRL claims and foreign investors with IIL claims) requires a legal approach that can account for these varying relationships. IIL’s binary nature and IHRL multifaceted approach suggests IHRL will often provide the applicable lex specialis. The focus in IIL on only one relationship – the investor and the state – means the field has developed few internal rules for addressing conflicts with the rights or obligations of other parties. IHRL, on the other hand, provides a series of rules specifically intended to allow the state to simultaneously meet other obligations. It is not the field as a whole, but rather these individual IHRL rules, which allow for prioritizing or limiting rights where necessary to address other rights and obligations, that provide clearer guidance for addressing the facts at IHRL-IIL conflicts. These rules are likely to be the best existing recourse for resolving conflicts between IHRL and IIL.

So what would an IHRL-based approach look like? It would involve asking a series of questions about the rights at issue, and the answers would inform the balance of claims.

The first question is whether a right claimed is jus cogens. It would be unusual for an IIL treaty to require a state to violate a jus cogens norm; if that were to occur, the Vienna Convention on the Law of Treaties makes it clear the IIL treaty would be void (arts. 53 and 64).

What is more likely is an IIL treaty creating obstacles to a state’s obligation to provide remedies for a violation of jus cogens. Take, for example, Colombia’s current land restitution process, which is aimed at restoring property to some of the 5 million people forcibly displaced during the country’s decades-long armed conflict. As the International Criminal Court’s Office of the Prosecutor found in a 2012 interim report, at least some of the relevant displacements met the standard for crimes against humanity (paras 60-67), the prohibition of which may be a jus cogens norm (see M. Cherif Bassiouni’s assessment starting at page 68). Some of that land was subsequently sold to foreign investors. While a complete assessment of this case requires more than a blog post, an IIL treaty’s prohibition on the taking of property without compensation could interfere with the state’s ability to remedy jus cogens violation and restore displaced individuals to their property (i.e., to return them to the state they would have enjoyed but for the violation).

Jus cogens norms supersede any conflicting rights. Violations of jus cogens norms create an automatic right to a remedy for victims. Even when a victim cannot pursue a claim procedurally (see Lorna McGregor’s analysis), the offending state retains an obligation to provide a remedy (Italy v. Germany, para 94). The obligation to remedy is a fundamental aspect of a state’s obligation to abide by the jus cogens norm. No IIL rules are asserted as jus cogens, so remedies for violations of jus cogens human rights standards should supersede competing IIL claims. (Sornarajah has made a similar assertion (p. 228)).

The second question is whether one of the rights can (or should be) limited. IIL scholars who recognize the need to integrate IHRL and IIL have often argued that human rights can be addressed through the “fair and equitable treatment” standard, a provision common in investment treaties that is believed to be part of customary international law. Scholars have argued that this standard allows tribunals to account for the state’s other international obligations as well as for the conduct of the investor. This is hypothetically true, but to date IIL tribunals have not demonstrated this when considering conflicts between IIL and IHRL.

In IHRL, some rights – those most likely to come into direct conflict with others – can be limited in one of three ways. Several civil and political rights have explicit clauses allowing the state to limit the right in the interest of third parties or the state itself (see, e.g., arts. 18-19). For economic, social and cultural rights, the concepts of “minimum core obligations,” “maximum available resources” and “progressive realisation” allow a state to take into account the totality of its obligations and interests when meeting its obligations. The state is expected to give preference to “minimum core obligations” over competing claims. Finally, in a state of emergency, many rights can be derogated from, excusing the state’s obligations for a limited period of time. These means of limiting a human right can be used to prioritise the protections owed both investors and others affected by an investor’s actions.

To prevent against the abuse of limitation clauses, minimum core standards have been recognized for both civil and political rights as well as economic, social and cultural rights. Even where the state may limit an obligation, it cannot eviscerate that obligation. A state’s use of limitation provisions are judged by their reasonableness (or a “margin of appreciation” standard) in light of counter-veiling interests.

Applying this framework in a manner that does not create absurd results requires translating IIL into the language of IHRL. Some standards in IIL clearly carry more weight than others. The prohibitions on direct expropriation of property and on discriminatory treatment are undisputed, while the prohibition on indirect expropriations and modern interpretations of the fair and equitable treatment standard as protecting an investor’s “legitimate interests” are hotly debated and resisted by states. By transferring these preferences and weighting into IHRL terminology, IIL tribunals may find themselves more readily prepared for addressing complex cases involving clashes between IIL and IHRL.