BHR Symposium: Bolstering Human Rights within International Economic Agreements–Reconciling Two ‘Separate Regimes’?

[Daniel Uribe is Programme Office of the Sustainable Development, Climate Change and Gender (SDCCG) Programme of the South Centre. The views contained in this brief are attributable to the author/s and do not represent the institutional views of the South Centre or its Member States. Any mistake or omission in this study is the sole responsibility of the author/s.]

On the 6^th of August 2020, the Chair-person Rapporteur of the Open-ended Intergovernmental Working Group on transnational corporations and other business enterprises concerning human rights (OEIWG) presented the second revised draft of the legally binding instrument to regulate, in international human rights law, the activities of transnational corporations and other business enterprises (second revised draft). According to the report of the fifth session of the OEIWG, the second revised draft is prepared based on the discussion held during the fifth session of the working group, the annexes to the report, submissions sent by States and other stakeholders, and views shared during informal consultations organized by the Chairperson Rapporteur. At the same time, some stakeholders have commented that the second revised draft still requires improvements. In particular, there is a need to clarify the obligation of transnational corporations to respect human rights,  the need to strengthen legal mechanisms to implement the treaty and sanctions in case of non-compliance, among others.

One of the elements that has been a source of tension in the negotiation of a legally binding instrument is the recognition of the principle of human rights supremacy in the face of international economic agreements (IEAs). This concern was also raised by a group of civil society organisations recognising the need to include “the primacy of international human rights law above other international instruments, in particular trade and investment agreements.” For these organizations, this provision will strengthen the effectiveness of a legally binding instrument. Similar approaches have been discussed elsewhere through the inclusion of human rights supremacy clauses and human rights obligations in existing IEAs.

The dichotomy between the signature of economic agreements and the protection and promotion of human rights has been notably recognised through the debates of a legally binding instrument. The second revised draft seems to consider this co-relation and incorporates, in Article 14, a provision dealing with the consistency of the legally binding instrument with respect to international law principles and instruments. Besides, it incorporates draft article 14(5) requiring State Parties to ensure that all existing and new bilateral or multilateral agreements, including IEAs, do not undermine or limit States Parties obligations under the legally binding instrument and be compatible with human rights obligations. The inclusion of these draft provisions is an interesting effort to bolster the impact of international human rights law in the sphere of IEAs in at least three levels:

Rebutting the assumption of international investment and trade law as self-contained regimes

International investment and trade law have been traditionally conceived as self-contained regimes in international law. Although this conception is not based on existing principles or disciplines in neither regime, they have been built on a series of restrictive interpretations developed by arbitral tribunals and WTO panel decisions. Tribunals can determine the applicable law in each process, as well as the methods and principles of interpretation. Even in cases where States have relied on international human rights law as a defence, tribunals have rejected such defenses considering that positive obligations, or obligations of performance, can only be assumed by private investors under specific instruments deriving from domestic law (civil or commercial contracts), or through the inclusion of direct obligations in IEAs. In the absence of specific provisions on these agreements, tribunals have considered that investors have no positive human rights obligations under general international law. Although dissenting opinions have endorsed an opposite view recognising that international investment treaties must be interpreted in harmony with rules of international law, a restrictive approach seems to continue rising tensions between the human rights obligations of States and the protection of foreign investors.

The idea that the so-called ‘self-contained regimes’ of international law (like trade or investment law) are above or excluded from the application of general international law has been decried from various angles, and to the contrary, the idea that such regimes should be read in harmony with general international law and not be considered as “closed legal circuits”, has been strongly supported in practice. In Philip Morris vs. Uruguay the tribunal considered that the reasonableness of measures adopted by the State should take as a point of reference the obligations of the State under the Framework Convention on Tobacco Control (FCTC). Therefore, the inclusion of draft article 14(5) could provide a balanced approach on how investment and trade regimes are interpreted in line with other international obligations. Similarly, it gives States sufficient grounds to adopt ‘reasonable and objective’ measures for the protection of human rights vis-à-vis the conduct of business enterprises.

Strengthening the international principles of treaty interpretation and human rights

The Vienna Convention on the Law of the Treaties establishes that articles 31 and 32 are always applicable for interpretation of international treaties “unless specifically set aside by other principles of interpretation.” Once the assumption that regimes stemming from IEAs are ‘self-contained’ regimes is rebutted, the principle of systemic integration of international law opens an important window of opportunity for the protection of human rights in line with the legally binding instrument. The principle of systemic integration considers that the interpretation of a treaty should be consistent with the normative environment where such treaty is being interpreted, which includes other international law.

It is clear that the principle of systemic integration is not an easy endeavour, as it will require to clearly identify the existence of possible conflicts deriving from State obligations contained in different treaties, but dealing with the same facts in a particular dispute. Nonetheless, the relationship between IEAs regime and the need to protect human rights has been recognised by a number of United Nations Human Rights Mechanism establishing that States should maintain “adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts,” and identify any potential conflict between their human rights obligations and those under trade and investment treaties.

Article 14(5) seems to apply the principle of systemic integration of international law. The implementation of such provision could promote a ´mutually supportive´ system between international human rights obligations of States and those obligations under IEAs. At the same time, it  would foster the understanding that trade or investment disputes arising from measures and decisions adopted by States authorities under the legally binding instrument must consider the normative environment where such decision was taken.

In the case of the legally binding instrument, such normative environment will include “all internationally recognized human rights and fundamental freedoms emanating from the Universal Declaration of Human Rights, any core international human rights treaty and fundamental ILO convention to which a state is a party, and customary international law”, as established in Article 3 of the second revised draft.

Reform of the current investment and trade regimes

While the contribution of investment and trade for the achievement of development is necessary, it is also true that the international community must ensure that such contribution materializes in line with international human rights law. Currently, States from all regions of the world are exposed to claims under investor-state dispute settlement mechanisms, that are characterized by excessive compensations awarded by tribunals, coupled with the risk of ‘regulatory chill’ limiting the ability of States to act in their public interest. Although important reforms on the ISDS system are under discussion, the need for promoting responsible investment practices and balance the rights and obligations of investors are still limited to voluntary commitments or best-endeavor approaches.

By requiring State Parties to ensure that all existing and new IEAs, do not undermine or limit States Parties obligations under the legally binding instrument, and are compatible with human rights obligations, can effectively promote and guarantee human rights. It will also advance the attainment of legal certainty for foreign investment and trade, which in turn will contribute to a competitive level-playing field for business enterprises.

Conclusion

Article 14(5) represents an improvement towards recognising the primacy of human rights concerning trade and investment agreements. Nevertheless, the current language of the second revised draft could be strengthened towards clarifying what State’s organs, and international organizations should do to guarantee the respect of human rights above those of other private interests.  

Although the tensions emanating from these negotiations are still palpable, the current language of the draft provisions could strengthen and guarantee States’ regulatory space to design measures intended to the promotion and protection of human rights vis-à-vis business enterprises. Similarly, it will advance States efforts towards the design of a more fair and just international economic system and achieving the objectives included in the 2030 Agenda for Sustainable Development.