Investment Treaties and Human Rights: Does international investment law need a Greta too?

Professor at ESL and the Dynamics of Inclusive Prosperity Initiative

Despite the mounting empirical evidence about the problems created by international investment treaties, policymakers are not taking serious steps for needed reforms. As policymakers seem deaf to the result of academic research, I propose to invite Greta Thunberg to talk to the UNCITRAL Group in charge of this reform process.

I just returned from a Workshop at the University of Oslo on the role of investment treaties to protect human rights. Under international investment treaties, which typically contain Investor-State Dispute Settlement (ISDS) clauses, foreign investors are entitled to a wealth of exceptional rights. These range from substantive rights (e.g. right to a fair and equitable treatment) to the procedural right to challenge the host state before an arbitration tribunal. By contrast, local communities affected by the investment have no rights under these agreements. The problem is that granting rights through investment treaties to foreign investors is not a neutral operation; it does have important redistributive consequences. When investors are granted strong rights, the human rights of investment-affected communities could be de facto trumped. There is mounting empirical evidence that foreign investors often conduct their business in violation of human rights, that local people are dispossessed to the benefit of investors, and that foreign direct investments (FDIs) often entail environmental degradation and socio-economic inequalities rather than development. While protecting foreign investors may not be a problem in itself, the asymmetrical allocation of rights is. The paucity of means to hold foreign investors accountable coupled with the strong rights acquired through investment treaties creates the perfect system to enhance environmental degradation, inequalities and ultimately injustice. Cases like Copper Mesa v Ecuador and Chevron v Ecuador bear witness of these grave injustices. In both cases, local communities were seriously harmed by the activity of the investor but their torts remained unaddressed. By contrast, both corporations succeeded in obtaining damages from an arbitration tribunal.

Most participants in the Workshop seemed to agree that, despite increasing references to human rights norms by arbitration tribunals, the system of investment treaties has a limited capacity to protect the human rights of investment-affected communities. Thus, the risk remains that all what arbitration tribunals can do is to pay lip-service to the discourse of human rights. Regrettably, the tenuous link forged by some ‘progressive’ arbitration tribunals is not even a promise of justice for the investment-affected people. In short; under the current system, injustice and inequality will continue to be reproduced. The system is rigged and it needs to be radically reimagined.

The legitimacy crisis of the investment treaties regime has spurred several reform processes. For example, at the multilateral level, countries are meeting under the aegis of the UNCITRAL Working Group III.  Yet, the options on the reform agenda are dismal. Together with 60 scholars, we have submitted a letter to the Working Group III pointing at ways to engage more forcefully with the key problems of the system. With my colleagues at Erasmus University, we have drafted some investment clauses to be included in international investment agreements, which would enable investment-affected communities to initiate a dispute. While the policymaking sphere may have acknowledged some of our arguments, I am starting to think that the message has fallen on deaf ears. As a new scramble for Africa is unfolding, the international community is doing virtually nothing to regulate investment for a sustainable future. To the contrary, we seem stuck with Treaties that enable polluting companies to kill the climate change regulation, with the Netherlands now being the target of a spectacular claim. So what can be done?

Maybe, as Zizek suggests, we need to rediscover the innocent gaze of the children, ‘who just take seriously what science is telling us.’ We may need a Greta Thunberg for the investment treaty regime who goes to the next Meeting of the UNCITRAL Working Group III in Vienna to proffer these words:

‘You lied to us. You gave us false hope; the false hope of development. You sold the future to a small number of people who could make an unimaginable amount of money. But we will not understand it until it is too late. And yet we are the lucky ones. Those who will be affected the hardest are those already suffering the consequences, like the indigenous communities in Ecuador. But their voices are not heard. We can still fix this. But, with authoritarian capitalism on the rise, the opportunity to do so will not last for long. We must start today. Did you hear me? Is my English ok? Because I am beginning to wonder.’

More information

This blogpost is written by Prof. Alessandra Arcuri and is the third blogpost in a series by the Erasmus Initiative Dynamics of Inclusive Prosperity.

Alessandra is a professor in the department of International and European Union Law at the Erasmus School of Law and core faculty of the Erasmus Initiative: Dynamics of Inclusive Prosperity.

Alessandra’s research studies how different international and EU legal regimes are implicated in the production of environmental degradation and social injustice. More concretely, she focuses on the field of international economic law and the relationship with human rights, environmental and public health law as well as on the global governance of risks and the emergence of global technocracy. By investigating and charting mechanisms by which exclusion and inclusion are produced through international legal institutions, her research contributes to better understand structural problems of the existing legal system and identify concrete ways to address them.

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