Investor Obligations in International Investment Law
by David Cheng, Jai Abhijit Unde, and James Casey Ryan
Prepared for the South Centre as part of the Geneva Graduate Institute’s LL.M. Legal Clinic Programme
This report first outlines key instruments and different approaches that some States across Africa, Asia, Europe and the Americas have taken to reform the international investment regime in relation to investor obligations. Second, it charts the trends arising from investment tribunals following Urbaser across environmental and human rights cases. Third, it describes and evaluates the reform efforts at the multilateral level. Finally, it summarises and evaluates avenues for policy reform by States.
Discussions on Draft Provisions on Damages in the Investor-State Dispute Settlement System in UNCITRAL Working Group III
By José Manuel Alvarez Zárate
This paper summarizes the discussions within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) on the reform of investor-state dispute settlement (ISDS) regarding the two draft provisions on damages prepared by the UNCITRAL Secretariat as part of the two drafts on procedural and cross-cutting issues. It covers the period from September 2022 to July 8, 2024. It describes the draft provisions on damages and related provisions on procedural and cross-cutting issues of document A/CN.9/WG.III/WP.231, dated 26 July 2023, as well as the comments made on it by some members of WG III and observers. It also describes the changes to the above document contained in the second draft on the procedural and cross-cutting issues, dated July 8, 2024, contained in document A/CN.9/WG.III/WP.244.
The purpose of this paper is to provide an overview of the comments made by some States on the draft provisions on damages, the substantive changes made by the Secretariat to the first draft, mostly based on the comments made by some States, and the exclusion of important aspects highlighted by some Global South States in their interventions. In the light of this review, countries of the Global South may consider commenting on document A/CN.9/WG.III/WP.244 to ensure that their concerns are effectively taken into account.
Painting the Grass Green: A Climate Change Carve-Out in Investment Agreements
By Daniel Uribe
During the Twenty-Eighth Session of the Conference of the Parties (COP-28) of the United Nations Framework Convention on Climate Change (UNFCCC), States recognised the critical need to accelerate efforts to mitigate climate change and called on Parties to take action to transition away from fossil fuels in energy systems, to achieve net zero emissions by 2050. However, implementing such a transition finds obstacles in investor-state dispute settlement (ISDS) mechanisms, which can undermine regulatory actions necessary for climate policies, leading to a ‘regulatory chill’. As a response to these challenges, the Organisation for Economic Co-operation and Development’s (OECD) Future of Investment Treaties program has proposed a model carve-out provision to exclude fossil fuel sectors from ISDS protection with procedural safeguards, but its effectiveness may be limited. A holistic reform of investment agreements and additional measures, such as withdrawal from international investment agreements, are necessary to safeguard regulatory space and promote sustainable investment and a just transition.
The India-EFTA Deal: A New Model for Developing Countries?
By Danish
Governments are shifting from investor-state dispute mechanisms to treaties that encourage and ease investment. The India-European Free Trade Association (EFTA) Trade and Economic Partnership Agreement could be setting a new standard for developing countries to promote and benefit from foreign investment.
Response to the Call for Inputs by the UN Special Rapporteur on human rights and the environment
“Should the interests of foreign investors trump the human right to a clean,
healthy and sustainable environment?”
South Centre
14 June 2023
To realize the right to clean, healthy & sustainable environment and reduce ISDS risks, States need to align their FDI policies with human rights, climate action and SDGs, including via reform of the international investment regime.
Preserving Regulatory Space for Sustainable Development in Africa
By Roslyn Ng’eno
Investment has an important role for achieving sustainable development in developing countries. Although international investment agreements (IIAs) can serve as instruments to promote such objective, protection oriented IIAs have undermined the ability of States to regulate in the benefit of the community. Likewise large financial reparations imposed by arbitral tribunals have increased the threat of regulatory chill in the face of major global challenges. Strengthening the right to regulate of States and addressing regulatory chill are key matters to consider in the reform of IIAs and the international investment regime.
Análisis de las intersecciones entre cambio climático y derechos humanos
Por Daniel Uribe Terán y Luis Fernando Rosales
Los efectos del cambio climático en la vida diaria de las personas amenazan el pleno disfrute de los derechos humanos. El Consejo de Derechos Humanos ha adoptado dos resoluciones históricas en las que se reconoce por un lado el derecho humano a un medio ambiente limpio, saludable y sostenible (Resolución 48/13), y se establece por otro el mandato de un Relator Especial sobre la promoción y la protección de los derechos humanos en el contexto del cambio climático (Resolución 48/14). Aun así, parece existir la necesidad de que la CMNUCC y la estructura de derechos humanos de las Naciones Unidas mantengan un diálogo más amplio a fin de dar con una respuesta coordinada y coherente al cambio climático y sus efectos sobre los derechos humanos.
En este documento de investigación se analizan las intersecciones de estos dos sistemas jurídicos. Para ello, se identifica el modo en que las negociaciones relativas al cambio climático y la estructura de derechos humanos pueden contribuir a fortalecer la cooperación internacional. También se reconoce la necesidad de un debate internacional de mayor calado acerca de las relaciones entre los derechos humanos y el cambio climático, coherente con los principios de equidad y las responsabilidades comunes pero diferenciadas del CMNUCC.
Analyse des Intersections entre le Changement Climatique et les Droits de l’Homme
Par Daniel Uribe Teran et Luis Fernando Rosales
Les effets du réchauffement climatique sur la vie quotidienne des êtres humains menacent la pleine jouissance de leurs droits. Le Conseil des droits de l’homme a adopté deux résolutions d’une portée historique, qui reconnaissent le droit de l’homme à un environnement propre, sain et durable (résolution 48/13), et nomment un rapporteur spécial chargé de la promotion et de la protection des droits de l’homme dans le contexte du changement climatique (résolution 48/14). Toutefois, un dialogue plus large entre la Convention-cadre des Nations unies sur les changements climatiques (CCNUCC) et l’architecture de protection des droits de l’homme de l’ONU semble nécessaire en vue de parvenir à une réponse coordonnée et cohérente au réchauffement climatique et à ses effets sur les droits de l’homme.
Le présent document de recherche analyse les points de convergence entre ces deux mécanismes en mettant en avant de quelle manière les négociations sur le réchauffement climatique et l’architecture de protection des droits de l’homme peuvent contribuer à renforcer la coopération internationale. Il reconnaît également la nécessité de discussions plus approfondies au niveau international sur les liens entre droits de l’homme et réchauffement climatique, conformément aux principes d’équité et de responsabilités communes mais différenciées inclus dans la CCNUCC.
Analysing Intersections between Climate Change and Human Rights
By Daniel Uribe Teran and Luis Fernando Rosales
The effects of climate change on people’s daily lives threaten the full enjoyment of human rights. The Human Rights Council adopted two landmark resolutions recognising the human right to a clean, healthy and sustainable environment (Resolution 48/13), and establishing the mandate for a Special Rapporteur on the promotion and protection of human rights in the context of climate change (Resolution 48/14). Nevertheless, a broader dialogue between the UNFCCC and the UN human rights architecture seems necessary to establish a coordinated and coherent response to climate change and its effects on human rights.
This research paper analyses the intersections of these two legal systems. It does so by identifying how the climate change negotiations and the human rights architecture can contribute to strengthening international cooperation. It also recognises the need for a more profound international debate on the linkages between human rights and climate change consistent with the principles of equity and common but differentiated responsibilities included in the UNFCCC.
The Post COVID-19 Recovery: A Stringent Test for the Business and Human Rights Discourse
By H.E. Ambassador Luis Benigno Gallegos Chiriboga
Although the global economic outlook seems to be improving for the rest of 2021 and 2022, such benefits seem to only affect developed economies, while furthering the gap with emerging markets and developing economies. This shows that ‘recovery for all’ will remain gloomy for several years, as access to the COVID-19 vaccine continues to showcase the global inequalities between the rich and the poor. In this scenario, States require to make full use of their regulatory and policy space to protect and promote the human rights of all people and persons in their jurisdictions, including the right to health, while safeguarding the necessary fiscal space towards guaranteeing development expenditures to build back fairer and better. It is time for reducing inequalities rather than increasing the gap between developed and developing nations.
Virtual Consultation in support of the UN Working Group’s 2021 Report to the UN General Assembly on Human Rights-Compatible International Investment Agreements
South Centre, 23 June 2021
Foreign direct investment (FDI) should support States’ efforts to “bring the SDGs and goals of the Paris Agreement to life for all people, everywhere.” However, achievement of these objectives is slowed down in the current situation where investor-State dispute settlement (ISDS) mechanisms are included in international investment agreements (IIAs). These mechanisms have increased the exposure of States to claims from foreign investors against regulatory measures taken to protect and guarantee a clean and safe environment, public health, human rights, social inclusion, and poverty reduction.
In the current scenario marked by the impact of the COVID-19 pandemic, FDI can be a valuable source of financing a better and fairer recovery, including investment needed to achieve the full realisation of all human rights. But to achieve this potential, there is a need to reshape the international investment regime, including through the reform of its substantive rules and standards, as well as of the ISDS mechanisms embedded in existing IIAs.
The South Centre and the United Nations Working Group on human rights and transnational corporations and other business enterprises convened a virtual consultation to identify and assess the different challenges developing countries face while negotiating or reforming IIAs in line with their international human rights obligations. The virtual consultation aimed at highlighting and discussing some of the most common concerns and challenges those developing countries face in the promotion of responsible investment practices, including an exploratory discussion about balancing the rights and obligations of investors in IIAs and safeguarding the sovereign right of States to regulate in the public interest for building back better and fairer in face of the COVID-19 pandemic. It also discussed possible reforms of the ISDS mechanism.
This Semester Report summarizes the activities undertaken by the South Centre during the period 1st January to 30 June 2021. It is intended to provide information, organized by themes, about recent developments in the areas covered by the Centre’s Work Program, meetings organized or co-organized by the Centre to examine particular issues or provide analytical support for negotiations taking place in various international fora, and conferences and other meetings where the Centre has participated. It also informs about publications of the outcomes of internal policy-oriented research and external contributions made as a result of cooperation with the Centre.
