Reshaping International Investment Regime from Human Rights Perspective

Reshaping International Investment Regime from Human Rights Perspective PhD. candidate Aida BEKTASHEVA1 Abstract The impact of foreign investment on the human rights generally has increased and interaction between them has shown to be complex in nowadays. Human rights considerations enter into the discourse of international investment law since increasing number of states are beginning to include references to human rights in their investment treaties and investor-state contracts, in particular for the new generation of investment treaties. Human rights related issues have played a vital role in various contexts of investment proceedings as w ell and whether an investment tribunal can apply to human rights law depends both on the relevant jurisdictional clause and the applicable law. To consider all this issue, the article takes a qualitative approach by examining secondary data, in particular, difference concepts, legal documents and applying case law as well. Moreover, in order to present existing window of opportunity for States, article outlined some findings and recommendations. Keywords: applicable law, arbitration, investment law, investment treaties, human rights. JEL Classification: K33, K38 DOI: 10.62768/PLPA/2024/13/2/01 Please cite this article as: Bektasheva, Aida „Reshaping International Investment Regime from Human Rights Perspective”, Perspectives of Law and Public Administration 13, no. 2 (June 2024): 201-209. Article History Received: 15 April 2024 Revised: 12 May 2024 Accepted: 2 June 2024 1. Introduction Attracting foreign direct investment (FDI) became a central component of the state’s strategies to promote economic growth and development in any country. Global FDI flows rebounded to USD 972 billion in the first half of 2022 and the United States was the leading FDI recipient worldwide, followed by China and Brazil. 2 Obviously, investment can have both positive and negative impacts on the lives of people. Foreign investment is especially important in developing countries where it can make up for a lack of domestic capital, increase tax receipts, improve employment, and hopefully lead to economic development and others. At the same time foreign investors may also undertake private activities that have negative consequences for local populations, for example, mining projects may have long-term negative environmental impacts 3. Investment protection standards may preclude the host state from introducing new forms of regulation to protect the public interest in a variety of fields from human rights perspectives. Traditionally, human rights obligations are addressed to states and have been intended principally to regulate the relations between individuals and the state 4. The state not only a duty bears to respect the human rights of the individuals on its territory, but also has a duty to ensure that private actors, including foreign investors, do not violate those human rights.5 Foreign investors usually accused of violating the human rights of the local community which is mainly due to lack of a binding regulatory framework, like bilateral investment treaties (BITs), which require investors to comply with domestic and international human rights laws. In particular, the traditional model BITs concern the treatment of investors through facilitating 1 Aida Bektasheva - Faculty of Law, University of Miskolc, Hungary, . 2 Organization for Economic Cooperation and Development, Foreign Direct Investment Statistics: Data, Analysis and Forecasts, 2022, https://www.oecd.org/investment/statistics.htm, accessed on 11 March 2024. 3 Laurence Boisson de Chazournes and Rukia Baruti, Human rights, international investment law and transparency, Research Handbook on Human Rights and Investment, University of Louvain (UCLouvain), Belgium, 2018. 4 John H. Knox, Horizontal Human Rights Law, American Journal of International Law, Cambridge University Press, 2008, Vol. 102, No. pp. 1–47. 5 Christian Tomuschat, ‘Human Rights: Between Idealism and Realism’, Oxford University Press; Third edition Collected Courses of the Academy of European Law, 2014, p. 309. Perspectives of Law and Public Administration Volume 13, Issue 2, June 2024 202 different standards of protection like national treatment, most favoured nation, fair and equitable treatment, full protection and security, and free credit transfers. Sine investment law is highly fragmented as there are thousands of treaties protecting investment in force in the world today. Even the main multilateral investment treaties, such as the North American Fair-Trade Agreement (NAFTA) and the Energy Charter Treaty (ECT), to name but a few, make no mention of human rights. The question arises whether all parties to such regional treaties must also be parties to a given human rights treaty for it to be relied upon. It is necessary to recognize that there is no uniform answer to this question. Although states have since recently effectively included some references to human rights norms in their recently BITs at the same time, the vast majority of contemporary old BITs do not mention human rights at all. As for today, more than 3000 of such investment agreements have been concluded 6 and it should be noted that many of them still did not include the norm for the protection of human rights. Respectively, United Nations Guiding Principles on Business and Human Rights (UNGPs) 7has highlighted the need for States to maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives through investment treaties or contracts. Moreover, the UN Working Group on Business and Human Rights submitted in October 2021 report to the UN General Assembly focused on how states should negotiate human-rights compatible International Investment Agreements (IIAs) in order to properly balance the contrasting interests of attracting foreign investments and protecting human rights of locals 8. This legal framework has centered around IIAs, specifically on the way to draft future IIAs or to reform and revise existing ones in order to strike a balance between the need to attract investment, by granting foreign investors’ rights, and the need to protect human rights. There are several reasons for the continuation of human rights abuses by business, such as the complexity of global value chains, informal sectors involved and others. For today it is important to meet human rights expectations that leads corporates and investors to more effectively and proactively manage a range of complex social issues. Human rights law and international investment law are often juxtaposed for both substantive and procedural reasons9. At the substantive level, human rights law and international investment law provide for analogous standards of protection. At the procedural level, access to investors – state arbitration shares many characteristics of the direct right of action before human rights courts. However, (...truncated)