Public Interest, Human Rights, and Foreign Investment
- LAST MODIFIED: 27 September 2017
- DOI: 10.1093/obo/9780199796953-0160
- LAST MODIFIED: 27 September 2017
- DOI: 10.1093/obo/9780199796953-0160
Foreign direct investment (FDI) involves a private investor from one state (the home state) investing in another state (the host state). The time frame for the investment is usually medium to long-term. The investment is often governed by a contract, and protections are offered to the investor in an international investment agreement. The international investment agreement frequently contains provisions requiring disputes to be settled by way of investment arbitration. The medium to long-term presence of a foreign-owned private party in a state, that has been granted investment protection standards, has given rise to concerns regarding whether the host state’s ability to act in the public interest is compromised. Often, foreign direct investment results in public services being operated by private companies. Should these public services fail, the host state can intervene, but it risks breaching the terms of the international investment agreement. If the host state does not intervene, its population can suffer. Foreign investors may also undertake private activities that have negative consequences for local populations. For example, mining projects may have long-term environmental impacts. Investment protection standards may preclude the host state from introducing new forms of regulation to protect the public interest in a variety of fields. Human rights have been raised as a particular concern, given widely publicized human rights violations resulting from the actions of some foreign investors. Human rights such as indigenous rights, the prohibition on racial discrimination, the right to health, and the emerging “right to water” have all been raised in investment arbitrations. Conversely, host states can also act in a manner that violates the human rights of the foreign investor; for example, by arbitrarily detaining those associated with the investment project. Given the potential for the public interest to be detrimentally affected by FDI, it has been suggested that human rights and public interest claims be introduced into investment arbitration. However, given investment arbitration’s jurisdictional limits, there remains considerable debate regarding how this can be achieved. Further, investment arbitration has traditionally been confidential, preventing public access to hearings and public scrutiny of investment awards. In response, measures have been taken to improve public awareness of investment disputes and to permit interested groups to make submissions to arbitral tribunals. Nonetheless, investment awards may undermine host state regulatory power exercised in accordance with democratic processes. Consequently, research in the field of public interest, human rights, and foreign direct investment is increasing at a rapid rate.
Given the breadth of the topic, no single resource provides a comprehensive overview of all of the issues related to how the public interest, human rights, and foreign investment interact. However, both Peterson 2009 and Kriebaum 2007 provide clear outlines of the issues that are raised by the intersection of international investment law and international human rights law. For more detailed consideration of key aspects of this intersection, there are several edited collections. Dupuy, et al. 2009 provides an excellent starting point, as does Kriebaum 2013. For more focused attention on specific interrelationships, Baetens 2013 and Treves, et al. 2014 offer in-depth coverage. Titi 2014 and Mouyal 2016 present extensive studies on how international investment law potentially affects a host state’s right to regulate. Kulick 2012 proposes a theoretical perspective on how these elements interconnect. Van Harten 2007 explains how investment arbitration operates in a similar manner to domestic public law.
Baetens, Freya, ed. Investment Law within International Law: Integrationist Perspectives. Cambridge, UK: Cambridge University Press, 2013.
Part II of this edited collection focuses on the intersection of international investment law and international human rights law. It addresses a variety of topics, including the sociology of investment tribunals and human rights, indigenous peoples, the right to property, and means of resolving conflict through interpretation. These chapters present a good cross-section of examples of where international investment law and international human rights law intersect.
Dupuy, Pierre-Marie, Francesco Francioni, and Ernst-Ulrich Petersmann, eds. Human Rights in International Investment Law and Arbitration. International Economic Law. Oxford: Oxford University Press, 2009.
This edited collection examines the interaction of international investment law and international human rights law from several perspectives. The framework of the book relates to the constitution and structures of investment arbitration and human rights adjudicative bodies, but also refers to case studies of specific interactions between international investment law and international human rights law. The collection argues that there is a need for a constitutional theory in economic adjudication.
Kriebaum, Ursula. “Privatizing Human Rights: The Interface between International Investment Protection and Human Rights.” In The Law of International Relations: Libor Amicorum Hanspeter Neuhold. Edited by August Reinisch and Ursula Kriebaum, 165–190. Utrecht, The Netherlands: Eleven International, 2007.
Kriebaum’s chapter considers the intersection of international investment law and international human rights law from three perspectives. It discusses examples of where conflict may arise, the unclear nature of the legal standards, and the minimal interface between the supervisory mechanisms that govern each regime. Although out of date in relation to economic, social and cultural rights, this chapter provides a good introduction to the tensions that exist between these regimes.
Kriebaum, Ursula, ed. Special Issue: Aligning Human Rights and Investment Protection. Transnational Dispute Management 2013.1 (2013).
This special edition addresses human rights within international investment law from a wide variety of perspectives, including treaty conflicts, balancing obligations, the role of dialogues between institutions, and amicus curiae submissions. This is a subscription only service available online. See also Procedures to Introduce Human Rights and Public Interest Claims into Foreign Investment Disputes.
Kulick, Andreas. Global Public Interest in International Investment Law. Cambridge Studies in International and Comparative Law. Cambridge, UK: Cambridge University Press, 2012.
Kulick addresses the potential for international investment law to delimit public interests. By reference to the structure and operation of international investment law, the author proposes the Global Public Interest theory, which permits host states to protect public interests based on general principles of law and customary international law. Kulick suggests proportionality as a means of reconciling the competing objectives of each regime. See Proportionality Analysis and Balancing.
Mouyal, Lone Wandahl. International Investment Law and the Right to Regulate: A Human Rights Perspective. Routledge Research in International Economic Law. Abingdon, UK: Routledge, 2016.
Mouyal considers international investment law and international human rights law from the perspective of the host state’s right to regulate. She examines international investment agreements and International Centre for Settlement of Investment Disputes (ICSID) arbitration to identify what regulatory measures may not amount to a compensable expropriation. She further addresses what methods could be employed by negotiators of international investment agreements, and investment tribunals, to permit host states to regulate, while maintaining legal certainty for foreign investors.
Peterson, Luke Eric. Human Rights and Bilateral Investment Treaties: Mapping the Role of Human Rights Law within Investor-State Arbitration. Montreal: Rights & Democracy, 2009.
Peterson’s publication was written for the Canadian non-governmental organization Rights & Democracy, and therefore, is not a monograph. However, it does provide an overview of the international investment law regime and its intersections with human rights law, with reference to early investment awards. As such, it provides a good starting point for those new to the area.
Titi, Aikaterini. The Right to Regulate in International Investment Law. Studien zum Internationalen Investitionsrecht 10. Baden-Baden, Germany: Nomos, 2014.
Titi provides a comprehensive overview of the right to regulate in international investment law. She determines the limits of the right in relation to investment arbitration, investment protection standards, and defenses. She also considers the right to regulate as an express term in international investment agreements. While focusing generally on the right to regulate, this text also highlights how international investment law addresses the public interest.
Treves, Tullio, Francesco Seatzu, and Seline Trevisanut, eds. Foreign Investment, International Law and Common Concerns. Routledge Research in International Economic Law. Abingdon, UK: Routledge, 2014.
This edited collection considers the role of common concerns, such as human rights, environmental law, and labor standards, within the international investment law regime. It examines these intersections from the perspectives of general international law and institutional concerns. It then addresses more specific issues relating to the common concerns identified and analyzes how particular sectors affect these common concerns.
Van Harten, Gus. Investment Treaty Arbitration and Public Law. Oxford Monographs in Private International Law. Oxford: Oxford University Press, 2007.
This monograph conceptualizes investment treaty arbitration as a form of public law. It is critical of the power conferred upon investment arbitrators and their ability to make regulatory decisions without further review. In light of the public function performed by arbitrators, and the enforceability of their awards in most states, the book suggests that an international investment court should be established, composed of tenured judges.
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