Human rights law is relevant in the realm of investment arbitration. This does not come as a surprise: both investors and host States may turn to public international law provisions, including human rights treaties, to reinforce their respective positions or to put forward autonomous claims. While little attention was initially given to human rights law considerations by arbitral tribunals, it can no longer be said that human rights and investment arbitration are wholly disassociated. To the contrary, the tide seems to have turned and recent decisions show that arbitration tribunals are increasingly open to considering human rights issues.
I. Do Investor-State Arbitral Tribunals Have Jurisdiction to Analyze Human Rights Claims?
A question that naturally arises when it comes to human rights and investment arbitration is whether arbitral tribunals have jurisdiction to consider human rights claims.
A tribunal’s jurisdiction can be defined as the power to decide a case. In the context of investment arbitration, the scope of the tribunal’s jurisdiction depends primarily on the host State’s domestic legislation or the relevant investment treaty that sets out a State’s unilateral consent to arbitrate (the present note will focus on the latter method of expressing consent, i.e., through investment treaties).
Therefore, the answer as to whether arbitral tribunals have jurisdiction to rule on human rights issues depends upon the wording of the clause containing the host State’s consent.
For instance, in Urbaser v. Argentina, ICSID Case No. ARB/07/26, the tribunal upheld jurisdiction over the host State’s counterclaim for alleged violation of human rights by the foreign investors under the Spanish-Argentine Bilateral Investment Treaty (BIT). While Argentina’s main argument was that the foreign investors had violated the principles of good faith and pacta sunt servanda by failing to comply with the Concession Contract, the tribunal addressed, for the first time, Argentina’s considerations on the basic human right of access to water services.
In the tribunal’s view, Article X of the Spanish-Argentine BIT was sufficiently broad so as to include counterclaims by Argentina, even though the basis for its counterclaims was human rights law, including the 1948 Universal Declaration of Human Rights. In particular, the Urbaser tribunal noted that “[t]he BIT has to be construed in harmony with other rules of international law of which it forms part, including those relating to human rights”.
Such an approach is rather prudent where the arbitration clause is sufficiently broad, encompassing, for instance, “any dispute between one Contracting State and an investor of the other Contracting State concerning an investment of the latter in the territory of the former”.
Apart from clauses limiting jurisdiction, arbitration clauses typically extend a tribunal’s jurisdiction not only to human rights claims, but to claims based on other international treaties insofar as they are related to the investment in dispute.
Finally, yet importantly, irrespective of whether the arbitral tribunal has jurisdiction to rule upon human rights claims, tribunals do have jurisdiction to analyze human rights issues that are incidental to the parties’ claims. For example, the investor may argue that measures, carried out by the respondent State amounted to a violation of human rights in addition to a breach of the investment treaty itself. In such a case, it is very likely that tribunals will uphold jurisdiction over incidental arguments invoked by the parties.
II. How Could Investor-State Arbitral Tribunals Apply Human Rights Law in Investment Arbitration Disputes?
While tribunals may resort to public international law to determine the scope of investment treaties’ provisions, there are a few theories that could justify the direct applicability of human rights in investment arbitration disputes:
- Human rights law as part of international law that applies to investment arbitration
Investment treaties typically provide that disputes shall be resolved in accordance with the domestic law of the host State and international law. Even if the relevant investment treaty is silent on the governing law, it is accepted that international law applies, to a greater or lesser extent, to the parties’ dispute. Additionally, Article 42 of the ICSID Convention leaves no doubt that tribunals shall decide disputes in accordance with “such rules of international law as may be applicable”.
Thus, human rights law may be applicable to investment arbitration disputes to the extent that they are part of international law. Based on this premise, the tribunal in Urbaser v. Argentina noted that the ICSID Convention as well as the relevant BIT must be interpreted in light of Article 31(3)(c) of the Vienna Convention on the Law of Treaties (VCLT), which requires the interpreter (or the arbitral tribunal) to take into consideration other relevant rules of international law, including those relating to human rights, when construing investment treaties’ provisions.
Recourse to Article 31(3)(c) of the VCLT is subject to some conditions, however:
- the external treaty (here, the human rights treaty) must be binding upon the contracting States; and
- if the choice of law clause refers to the “principles of international law” or “general principles of international law”, human rights treaties can only apply to the extent that they fall within these narrower categories.
If these two cumulative criteria are met, human rights norms could be invoked in investment arbitration as part of international law that governs the merits of the dispute.
It is worth recalling that tribunals frequently rely on different sources of international law in construing investment treaties’ provisions. In Mondev v. United States, for example, the tribunal noted that “the standard of treatment, including fair and equitable treatment and full protection and security, is to be found by reference to international law, i.e., by reference to the normal sources of international law determining the minimum standard of treatment of foreign investors”.
- Specific reference to human rights
In practice, specific references to human rights treaties would allow any adjudicatory body to interpret investment treaties with regard to human rights instruments.
For instance, Annex II of the Brazilian-Angolan Cooperation Agreement for the Promotion of Investments sets forth that investors must bear human rights norms in their business activities in accordance with the host State’s human rights obligations.
In the same vein, the Preamble of the 2018 EU-Singaporean Free Trade Agreement provides that parties must have regard to the principles set forth in the Universal Declaration of Human Rights adopted by the General Assembly of the United Nations.
Depending on the wording, these provisions leave little doubt on the applicability of human rights law, although direct reference is rare.
- Implied reference to human rights
Some investment treaties contain provisions that are in harmony with protections afforded by human rights law, such as the right to public health, protection of the environment, labour standards and corporate social responsibility.
References to human rights can also be found in certain protection standards, such as the obligation to afford fair and equitable treatment or the prohibition against unlawful expropriation. For instance, Article 5(2) of the 2012 U.S. BIT Model indicates that access to justice and due process are part of the host State’s obligation to provide fair and equitable treatment:
“fair and equitable treatment” includes the obligation not to deny justice in criminal, civil, or administrative adjudicatory proceedings in accordance with the principle of due process embodied in the principal legal systems of the world.
Finally, implied references to human rights may be included in “non-precluded measures” clauses (or NPM clauses), which limit the State’s liability in certain circumstances. In this case, host States are authorized to take measures “to protect human rights” without breaching any provision of the investment treaty. Article 17 of the Canada-Cameroon BIT, for example, provides that “each of the Parties may adopt or enforce a measure necessary: (i) to protect human, animal or plant life or health”.
III. What Is the Relevance of Human Rights in Investment Arbitration?
Human rights law can be invoked for different purposes by the foreign investor or the host State.
Foreign investors have relied on human rights law for claims related to violation of due process, property rights, arbitrary detention and unlawful deportation. In this respect, human rights claims are more relevant when the foreign investor is a physical person, rather than a legal entity.
This was the case in Biloune v. Ghana, where Mr. Biloune claimed damages for expropriation, denial of justice and violation of human rights for his detention without charge and deportation to Togo.
In its ruling on jurisdiction, the tribunal concluded that Ghana agreed to arbitrate the dispute, but only “in respect of an approved enterprise”. As a result, the tribunal declined jurisdiction to rule on Mr. Biloune’s human rights claim as an autonomous cause of action.
Notwithstanding, it should be noted that Ghana’s consent to arbitrate was not expressed in an investment treaty, but in a contract entered into with the investor. In addition, the arbitration clause was drafted in a way that only covered disputes “in respect of” the investment.
Against this background, the tribunal’s conclusion could have been different if (i) the State’s consent were expressed in an investment treaty and (ii) the arbitration clause were broad enough so as to encompass “all disputes” between the host State and the foreign investor in connection with the investment.
As stated before, depending on the wording of the jurisdictional clause, it is possible for investors to base their claims on human rights treaties, as long as these claims refer to the investments made in the host State. These types of claims are likely to be examined together with the allegations of violation of the standards of protection provided by investment treaties.
With respect to host States, they may raise human rights claims in their defense on the basis that the foreign investor failed to comply with human rights rules in force. Human rights allegations can also be raised to limit a State’s liability and reduce compensation. In light of the 2016 Urbaser v. Argentina decision, a host State may also potentially invoke human rights to advance counterclaims in case investors fail to respect human rights law and treaties.
 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award dated 8 December 2016, paras. 1153-1155.
 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award dated 8 December 2016, para. 1200.
 See, e.g., MTD Equity Sdn. Bhd. and MTD Chile S.A. v. Republic of Chile, ICSID Case No. ARB/01/7, Award dated 25 May 2004, para. 204.
 See, e.g., Middle East Cement Shipping and Handling Co. S.A. v. Arab Republic of Egypt, ICSID Case No. ARB/99/6, Award dated 12 April 2002, para. 87.
 Urbaser S.A. and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. The Argentine Republic, ICSID Case No. ARB/07/26, Award dated 8 December 2016, para. 1200 (emphasis added).
 Mondev International Ltd. v. United States of America, ICSID Case No. ARB(AF)/99/2, Award dated 11 October 2002, para. 120.
 For more information, see https://investmentpolicy.unctad.org/international-investment-agreements
 Biloune and Marine Drive Complex Ltd v. Ghana Investments Centre and the Government of Ghana, UNCITRAL ad hoc Tribunal, Award on Jurisdiction and Liability, 27 October 1989 in E. Lauterpacht, CBE QC and C. Greenwood (eds.), International Law Reports, Vol. 95, pp. 202-203.