Arbitral tribunals are increasingly required to consider the relevance and applicability of international human rights norms to investment protection and arbitration. While opinions are divided on this issue, there is an inescapably “complex relationship” between investment protection and human rights. This post considers the potential significance of human rights impact assessments (HRIAs) in investor-state arbitration. HRIAs may be performed in advance of concluding treaties or ex post, to identify where trade and investment treaties might undermine or enhance human rights protections. We propose that, depending on the scope and status of an HRIA, it may be useful in the context of investment treaty arbitration for understanding the content of investment protections and addressing certain procedural aspects of the arbitration (namely the admissibility of amicus briefs).
Human rights impact assessments
In his 2011 report to the Human Rights Council, Oliver De Schutter (then, United Nations’ Special Rapporteur on the Right to Food) advanced an argument that existing international law compels states to conduct HRIAs of trade and investment deals. Thus, in accordance with Articles 26 and 30(4)(b) of the Vienna Convention on the Law of Treaties (VCLT) as well as Article 103 of the UN Charter, states have a duty not to enter into international agreements that are inconsistent with their international human rights obligations. Pursuant to fulfilling this duty, De Schutter notes that states should conduct HRIAs:
“… that measure the potential impact of the trade or investment agreement on human rights outcomes and on the capacity of States (and non-State actors, where relevant) to meet their human rights obligations”.
Moreover, HRIAs should extend beyond domestic borders to potential impacts in foreign jurisdictions to ensure that a partner state is not limited in its ability to fulfil its human rights obligations.
De Schutter proposed a broad methodology focusing on independence, transparency and expertise. He stated further that Article 25(a) of the International Covenant on Civil and Political Rights (ICCPR) (recognising the right of citizens to take part in the conduct of public affairs) implies that no trade or investment agreement should be concluded without public consultation. HRIAs conducted ex ante should, per De Schutter, play a meaningful role in shaping the terms of the deal. In addition, since not all impacts of a trade or investment deal can be anticipated, the recommendation is that ex post HRIAs should be conducted on a regular basis following the deal. Finally, to prevent mere lip-service being given to HRIAs, assessment results should be given due status, for example by being the subject of parliamentary debate or formal adoption by the relevant governing body.
Notwithstanding the nearly 3,000 bilateral investment treaties (BITs) in existence, HRIAs have been conducted relatively infrequently. The EU Commission, for example, conducts sustainability impact assessments and ex post impact assessments of its trade and investment treaties. The present methodology reflects the 2015 guidelines on HRIAs. Another example is the ex post HRIAs conducted pursuant to the Agreement Concerning Annual Reports on Human Rights and Free Trade between Canada and Colombia, which requires the parties to draft annual reports for tabling in their respective legislatures on the effects on human rights in both states of measures taken under the 2011 Canada-Colombia Free Trade Agreement (FTA).
The infrequency of HRIAs may be because it is not the primary object and purpose of investment treaties to safeguard human rights against the negative impacts of foreign investment. Rather, they aim to protect the rights of foreign investors, thereby reducing business risk and, ideally, attracting foreign capital to the host state. At the same time, as De Schutter notes, there are international norms that may compel states to conduct HRIAs. Moreover, states may be placed under public pressure to conduct HRIAs due to the perceived negative human rights impact of foreign investment that has created misconception among some stakeholders about the investment treaty system. Nonetheless, states are not presently obligated to conduct HRIAs of treaties, and the absence of an HRIA does not undermine the validity of the agreement, even if it does attract some criticism.
Implications for arbitration
Beyond their use during the negotiation and implementation of trade and investment agreements, HRIAs may be relevant to the interpretation and application of investment treaties by arbitral tribunals. Tribunals may contribute to the systemic integration of states’ international obligations by interpreting investment treaties with reference to international human rights norms and jurisprudence and on the basis of Article 31(3)(c) VCLT (for example, Tulip Real Estate v Turkey, Decision on Annulment, paragraphs 86-92), albeit within the limitation that human rights law can be considered only within a tribunal’s jurisdiction to apply the investment treaty concerned (for example, Channel Tunnel Group v France and UK, Partial Award on Jurisdiction, paragraphs 151-153). HRIAs may be useful in such cases for indicating a state’s engagement with those norms prior to and following agreement of the treaty.
HRIAs might also have a role to play, under Article 32 VCLT as part of a treaty’s travaux preparatoires. Arbitral tribunals have been open to looking at a treaty’s travaux where appropriate (for example, Austrian Airlines v Slovak Republic, Award, paragraph 137; Judge Brower’s Separate Opinion, paragraph 4). However, where ex ante HRIAs are developed by independent consultants, their relevance as part of a treaty’s travaux may be limited by the ultimate status of the assessment. Thus, if an HRIA is conducted and endorsed by only one state party, it is merely indicative of that party’s motivations and understanding of treaty terms at the time. While it may be relied on to preclude that state from later adopting inconsistent positions, it will not form part of the travaux.
In practice, HRIAs might be relevant to jurisdictional questions, such as the application of a BIT to disputed territories. They might also be relevant to the identification of the landscape of relevant domestic human rights laws that apply to foreign investors for the purposes of admissibility of claims, or even human rights-based counterclaims.
HRIAs might inform the interpretation and application of substantive investment protections relevant to the regulatory space afforded to state parties under the BIT, such as protections against certain expropriatory measures. The Commission’s EU-Canada Comprehensive Economic and Trade Agreement (CETA) HRIA, for example, recommends investment protections that permit “flexibility in implementing national water policies that explicitly protect water necessary to support human and ecosystem health”. The final agreement includes, under Article 1.9, an express right of each state party to protect and preserve its natural water resources. Similarly, a tribunal may consider an HRIA relevant to interpreting an investor’s legitimate expectations to certain regulatory stability where an impact assessment identifies sectors likely to be subject to regulatory reform in order to ensure human rights protection. The EU-Myanmar BIT HRIA, for example, identifies the need for developing a clear land regulatory framework in Myanmar in order to guard against forced evictions, loss of livelihoods and land-grabbing that might be associated with foreign investment.
HRIAs may also play a role in a tribunal’s determination of certain procedural matters, such as the admission of amicus briefs. There have been occasions where investment tribunals have rejected amicus briefs raising human rights issues on the basis that they addressed matters beyond the scope of the arbitration. It is possible that a tribunal may come to a different decision where it can be shown that, through an HRIA process, the state parties identified the nexus between human rights and the particular treaty provisions or investment sectors relevant to the claim.
Finally, we note that ex post evaluations may also allow states to shape the meaning of substantive treaty provisions over time to ensure consistency with their human rights obligations. This may be through an express mechanism in the treaty referring to ex post HRIAs or through subsequent agreement or practice that establishes agreement between the parties as to the integration or application of the treaty (in accordance with Article 31(3)(a) and (b) VCLT). Canada’s 2015 HRIA pursuant to the Canada-Colombia BIT documents public consultations revealing “a high-level of concern regarding some companies, including Canadian-owned, doing business in Colombia which were seen not to be respecting international human rights standards” primarily in the extractives sector. The report did not find any direct link between the provisions of the BIT and alleged human rights violations. If such a link were to be identified, presumably the HRIA mechanism might be a basis for the parties to address any incompatibility with human rights protections.
The potential role of HRIAs in the context of investment treaty arbitration cannot yet be fully assessed. Presently, there is no standardised methodological approach, existing assessments appear to vary in scope and depth, and states have variably adopted the recommendations made in HRIA. However, they reflect an emerging practice that may one day prove to be widespread. In the context of the current “backlash” against investment treaties and arbitration, we may see states under increasing pressure to conduct HRIAs. As HRIA practice develops and matures, these assessments may play an increasing role in investor-state arbitrations and, where appropriate, may assist tribunals in navigating through the complex interaction between investment protections and human rights.