Human rights and international investment arbitration

Abstract

Recent investment arbitration disputes have raised several human rights related issues, which do not form part of the traditional scope of investment treaties. Obligations in investment treaties can impair human rights if interpreted too broadly during arbitration. Therefore, it is necessary to determine whether investor-state dispute settlement (ISDS) tribunals are adequately equipped to resolve treaty disputes where the human rights obligations of states clash with a state’s investment treaty obligations. In some states, such as South Africa, there are competing interests between the state’s constitutional rights obligations and treaty-imposed investment obligations. In seeking to balance these competing interests and to ensure that the constitutional rights as well as responsibilities of the state are not undermined, this article proposes an interpretive approach in ISDS tribunals that applies a hybrid approach that considers both domestic and international law. The paper argues that the use of global administrative law principles, particularly the principle of deference, can achieve the consideration of both domestic and international law. In building this argument, the author explores the emerging trends in ISDS, such as new rules on transparency and public participation and the scope of their application, which has led to the claims that ISDS arbitration is undergoing a legitimacy crisis. This paper proposes an alternative approach where ISDS tribunals defer to domestic law when determining the content and scope of treaty obligations.