Published 12 January 2024
Tribunals in investment treaty arbitrations have struggled to address states' human rights and environmental law-based arguments and reconcile the international investment and international human rights legal regimes. In consequence, investors have been able to benefit from investment protection standards under investment treaties, even though they have violated human rights or contributed towards such violations in the host states, or the complained host state measure had been adopted to protect the human rights of their citizens. Human rights violations in this context may also be understood to encompass acts that have caused environmental damage or breached environmental laws of host states because human rights and environment are inherently intertwined.
This paper argues that allowing states to bring human rights and environmental law-based counterclaims would provide a remedy for the current legitimacy crisis of the investment treaty arbitration framework. The paper nevertheless recognises that despite the initiatives to develop international Business and Human Rights regime and the states' initiatives in recent international investment agreements ("IIAs") to encourage investors' compliance with international soft law human rights and corporate social responsibility standards, both procedural and substantive constraints persist in the states' ability to bring human rights counterclaims.
This paper examines both types of constraints. It then examines whether the states' efforts to reform the investment treaty arbitration system are sufficient to combat those constraints. To conclude, the paper examines alternative ways for states to invoke investors' human rights and environmental law violations in the investment arbitrations and argues that investment tribunals should more willingly embrace those alternative approaches.
This paper will be part of the third TDM Special Issue on "International Investment Arbitration - Environmental Protection and Climate Change Issues". More information here www.transnational-dispute-management.com/news.asp?key=1893