Relationship between Arbitration and Human Rights


Investment arbitration is a dispute settlement mechanism that resolves disputes between an investor (which can be a legal or natural entity) and the host nation. ISDS is another name for Investor-State Dispute Resolution. Arbitration provisions may be included within the investment agreement or the country’s law in which the dispute is to be resolved. This mechanism ensures that the dispute will be determined by an impartial and independent third party and not by national court judges who may have been biased or censored and controlled by the government in the host state.

Human Rights Law is a branch of international law that includes customs and rules that grant all people some fundamental freedoms and rights, regardless of where they were born, their race, gender, etc. Human rights do not include all rights. The right to life, dignity, and equality are some of the most essential human freedoms. These rights can be found either in treaties or in principles and guidelines that are not based on treaties.

At first glance, human rights law and investment arbitration may appear to be separate. When we look closer, it becomes clear that they are both sides of the coin. If a party invests in mining or building roads, ports, etc., in the host nation, it has an impact on local communities and sometimes even the entire population of the Host Country. As a whole, either directly or indirectly. The author of the article will try to shed some light on the relationship between human rights and investment arbitration.

Human rights specific

Rarely will you find a specific reference to human rights laws in an investment or bilateral agreement.

The EU-Singapore BIT is one of these investment agreements, where the participating states declare in writing their commitment to the Charter of the United Nations that was signed in San Francisco on 26 May. The General Declaration of June 1945 is a reference to these principles.

The United Nations General Assembly adopted the Declaration of Human Rights on 10 December 1948. The Court may declare itself competent without explanation if a dispute involving a State of the European Union involves human rights. The arbitral tribunal’s powers are derived from the relevant agreements, so it is very easy for them to award based on the specific terms of that agreement.

Implied Reference to Human Rights

The well-known Kompetenz-Kompetenz Principle gives the arbitral tribunal the power to determine its jurisdiction. This principle allows the arbitral tribunal to assume its jurisdiction by interpreting relevant provisions of the BIT.

A provision in an investment agreement may state, for example, that “all disputes relating to investments made by investors in the host country are subject to arbitration.” Some investment agreements include provisions that are in line with human rights laws.

While ruling on a Counterclaim filed against a Claim under Article X of the Agreement on the Promotion and Mutual Protection of Investments Between the Republic of Argentina and the Kingdom of Spain, signed on 3 October 1991, in the case, namely, Urbaner S.A. and Consorcio de Aguas Bilbao Biscay and Bilbao Biscay Ur Partzuergoa vs. Republic of Argentina, ICSID Case No. The ARB/07/26 decision (Decision of 8 December 2016) explains the terms and conditions of the bilateral investment agreement concluded between Spain and Argentina. The relevant part of BIT is Article X Clause 5. The BIT Article X clause 5 roughly translates to:

The arbitral tribunal will settle disputes based on the principles and rights in the treaty between the parties, the internal laws of the Party whose territory is the investment, as well as the rules of international and general law. “Principles of international law”.

Note that this provision is similar to Article 42 of the ICSID Convention.

The Court explained that the “general principles of International Law” included those in the 1948 Universal Declaration of Human Rights.

It declared that it had jurisdiction over counterclaims. The Republic of Argentina offered the Concession, but the Claimant did not make the required investment, thus violating international law on the human right to water. Fair and equal treatment is a clause that is commonly used in investment agreements to refer implicitly to human rights laws.

As an example, the Article II (4) of a joint agreement between the Governments of Canada and Argentina on Investment Promotion and Protection states:

Investors of either Contracting Party will be treated in accordance with international law principles and enjoy full protection. “enough in the territory the other Contracting Party.”

In Article 5(2), the Hong Kong, China, SAR-Mexico BIT, “fair and equal treatment” is defined as including and meaning not to refuse justice during criminal, civil, or administrative proceedings. According to the principles governing due process. “Adequate Protection and Security” requires each Contracting Party to provide the police protection required under customary international law.

Article 17(1)(a), BIT between Canada and the Republic of Cameroon, grants both parties the right to adopt or adopt a necessary measure to protect life. Or human, animal, or plant health.

What is the relevance of human rights in arbitration?

The investor (especially if the investor is an individual investor) and the host nation are subject to human rights law.

Host countries, investors, and affected third parties/communities have used human rights law in investment arbitration when appropriate (wherever agreed upon by the BIT). The arbitration clause allows for either parties or affected communities to take the case to Court. Urbaser vs Argentina is an example of a host country using human rights law as a sword or shield in investment arbitration.

In Biloune against Ghana, the petitioner claimed damages for deprivation of property, denial of justice, and human rights violations as a result of detention without charges and deportation from Ghana to Togo. The Court dismissed the claim, concluding that it did not have jurisdiction because there were no provisions in the investment agreement regarding protection of human rights for ‘investors.’ The Investment Arbitration Tribunal believes that it is not authorized to deal with any rights that either party may have under separate contracts that they entered into.

In the joint application of Border Timbers Limited v. Republic of Zimbabwe ( Case no. ICSID. ARB/10/25 and Bernhard von Pezold et al. The Republic of Zimbabwe (Case No. ICSID. The European Center for Constitutions and Human Rights has filed a submission on ARB/10/15 as an amicus curie (“third-party”). The petition was presented alongside four leaders from indigenous communities of the Chimanani Region of Zimbabwe.

In the arbitration, tree plantations operated on land originally owned by indigenous groups and implicitly acquired as part of land reform. In an amicus curie, international law rights of indigenous peoples to ancestral property were stated. The Court did not consider this because it ruled that the matter fell outside its jurisdiction. This case shows, however, that even a third party affected by the investment contract can assert their rights against the parties to the agreement if the agreement contains a relevant clause.

Does the investor-state arbitration tribunal have jurisdiction to examine human rights claims?

As mentioned earlier, the Court’s jurisdiction to hear a case is determined by the bilateral or multilateral arbitral treaty in question and the country of origin’s laws. The arbitral tribunal will have the same jurisdiction if the host country agrees to it in an investment treaty or domestic law.

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