Investor-state Contracts Research Articles

The Relationality of Community Development Agreements towards a Human Rights Due Diligence Good Faith Requirement

Abstract Human rights due diligence (HRDD) is a buzzword in business and human rights (BHR) activities. However, multinational corporations (MNCs) often conduct it as a tick-box exercise without transparency. Using a relational contract theory, this article argues that when MNCs contract with local communities through community development agreements (CDAs) to perform HRDD, such contracts are internationalized relational contracts that attract a level of good faith. An established principle in international economic law, good faith serves as a standard for assessing conduct designed to discharge obligations in international contracts between states and MNCs (investor-state contracts). Similar to how investor-state arbitration tribunals use good faith jurisprudence in regulating the relationship between states and MNCs, this article proposes a BHR good faith jurisprudence to prescribe how HRDD obligations should be discharged. The article concludes that a good faith interpretational exercise in BHR would (1) reduce MNCs’ cosmetic compliance with HRDD principles; (2) increase transparency in the HRDD exercise; and (3) become a source of rights for local communities to enforce corporate accountability.

Reshaping International Investment Regime from Human Rights Perspective

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.

CONFIDENTIALITY CLAUSES IN INVESTOR-STATE CONTRACTS FOR THE PROTECTION OF TRADE SECRETS AFTER PROMULGATION OF THE INDONESIAN ACT ON PUBLIC INFORMATION DISCLOSURE

A confidentiality clause is a clause in investor-state contracts which is in the operative part of the contract to guarantee adequate protection of the trade secrets of the contracting parties. This article argues that there is a need to change the current practice where investor-state contracts in Indonesia utilizes broadly defined confidentiality clauses as a means to protect trade secrets in international business transactions. This is because a broadly defined confidentiality clause is contradictory to the provisions of the Act on Public Information Disclosure (APID). APID is aimed mainly at providing public information disclosure. The public information includes public contracts, such as investor-state contracts. Therefore, a new model of the confidentiality clause is needed for the protection of trade secrets as intended by the Act on Trade Secrets (ATS) and contract law as well as public information disclosure as intended by APID. This article employs doctrinal legal research. The research utilized, primary, secondary, and tertiary legal authorities. The primary legal material intensively used in this article consists of mandatory-primary legal authorities, in the form of statutes and contracts. The contracts used are the investor-state contracts of Aceh Province, Indonesia. The finding shows that a new model of the confidentiality clause can be created by accommodating both the interest of the state for providing public information disclosure based on APID and the interest of investors for the protection of trade secrets based on ATS and contract law. Investor-state contracts are a specific type of contract which has specific characteristics that apply to both private law and public law. They are different from purely international commercial contracts which only apply private law. Investor-state contract drafters need to be aware of this difference and provide a more balanced confidentiality clause in the contracts.

Obsolescence of the Obsolescing Bargain: Why Governments Must Get Investor-State Contracts Right

Gone are the days when governments could easily renegotiate natural resource and other investment contracts if foreign investors, e.g., reaped bonanzas from rising resource prices, surprisingly rich discoveries, or terms that were too favorable. Today, international investment agreements protect investors from renegotiation if they do not wish to do so. Hence, governments must get initial contracts right, including providing for possible future events.

Obsolescence of the obsolescing bargain: Why governments must get investor-state contracts right

Gone are the days when governments could easily renegotiate natural resource and other investment contracts if foreign investors, e.g., reaped bonanzas from rising resource prices, surprisingly rich discoveries, or terms that were too favorable. Today, international investment agreements protect investors from renegotiation if they do not wish to do so. Hence, governments must get initial contracts right, including providing for possible future events.

The Impact of Investment Treaties on Governance of Private Investment in Infrastructure

Governments are increasingly turning to the private sector to provide the capital, resources and/or know-how necessary for development and operation of infrastructure. In some cases, the involvement by the private sector will trigger coverage by an international investment treaty that overlies, and can override, the domestic law and contract that would otherwise be applicable to the project. This paper discusses the circumstances affecting when an investment treaty will apply and also highlights some of the ways that investment treaties can impact governance of infrastructure development and operation. While focusing on the relationship between investment treaties and investments in infrastructure, this paper is also relevant for the connections between investment treaties and other activities involving investor-state contracts (or quasi-contractual relationships) such as investments in the extractive industries.

Human Rights Provisions in International Investment Treaties and Investor-State Contracts

Today there is ample recognition that corporations have responsibilities to protect human rights in the context of their business operations. However, there is less recognition that foreign investors have concomitant duties in the context of foreign investment, despite the fact that many foreign investors operate as corporations. Nevertheless, an increasing number of states are beginning to include references to human rights in their investment treaties and investor-state contracts. While in some instances, states refer to human rights generally in their treaties or contracts, a small but growing number of states address specific human rights such as indigenous and gender rights within the ambit of their treaty or contract. Often treaties or contracts only refer to human rights in vague or non-obligatory language. Yet, gradually more and more states are beginning to include more stringent language. Nowhere is this more apparent than in some investor-state contracts, which are now beginning to include both positive and negative obligations for foreign investors in regards to human rights. Yet regardless of the approach, references to human rights in investment treaties and investor-state contracts offer three advantages. They can help protect states’ regulatory sovereignty, work towards establishing human rights obligations for foreign investors, and provide context for their interpretation. All three of these benefits work towards reducing the asymmetries inherent in international investment law.

International Investment Agreements and National Governance: The Case of Egypt

Abstract The current international investment legal regime results from the interplay between international investment norms, embodied mainly in international investment agreements (IIAs), and the legal regime of the host country. This article will outline two major impacts IIAs can exert on national governance in Egypt: first, the domestic reform impact that refers to domestically initiated reform measures taken to compliment IIAs objectives, such as establishment of Economic Courts as well as limitation of third-party challenge of Investor–State contracts; and, second, the Supra-National Impact which involves situations where IIAs constrain the regulatory powers of the host state usually by imposing legal obligations that go beyond international standards, such as alternative dispute resolution (ADR) mechanisms as well as trade-related investment measures-plus (TRIMS-Plus) and trade-related aspects of intellectual property rights-plus (TRIPS-Plus) provisions. Understanding the profound effects of IIAs on national governance will beneficially inform policy makers when concluding IIAs.

Mechanisms for Consultation and Free, Prior and Informed Consent in the Negotiation of Investment Contracts

Investor-state contracts are regularly used in low- and middle-income countries to grant concessions for land-based and natural resource investments, such as agricultural, extractive industry, forestry, or renewable energy projects. These contracts are rarely negotiated in the presence of, or with meaningful input from, the people who risk being adversely affected by the project. This practice will usually risk violating requirements for meaningful consultation, and, where applicable, free, prior and informed consent (FPIC), and is particularly concerning when the investor-state contract gives the investor company rights to lands or resources over which local communities have legitimate claims. This article explores how consultation and FPIC processes can be practically integrated into investor-state contract negotiations to better safeguard the land rights and human rights of members of project-affected communities. Based on a review of relevant international law standards and guidance documents, a close analysis of typical investor-state negotiations and of consultation and consent processes in other contexts, and a workshop with Indigenous and civil society representatives, the article provides three options for integrating consultation and consent processes into contract negotiations, the appropriateness of which will vary depending on local contexts and communities’ resources and decision-making structures.

Contractual Rights as Protected Investments in International Investment Law

This paper is focused on issues regarding contractual rights as investments in international investment law. The text is divided into three main parts. The first part examines the existing definitions of investments, stemming from various sources of investment law, and the role of contractual rights in those definitions. Following that, the author sets out a classification of issues concerning contractual rights into three groups – investor-State contracts, contracts usually recognized as investments, and sales contracts. This creates the structure for the discussion in further text. A short overview of these groups is then given. The second part is focused on examining the most important contemporary issues regarding each of the three groups in more detail and suggesting possible solutions for certain problems. These issues mostly concern the treaty versus contract claims problems, the scope of umbrella clauses, the search for criteria for recognizing investments, and the status of sales contracts in international investment law. A special emphasis is put on suggesting the model for recognizing investments under the ICSID Convention which should promote predictability in recognizing contractual rights and also on arguing that sales contracts existing in the context of an overall recognized investment should be given investment protection themselves. The final part of the paper contains concluding remarks regarding the topics dealt with in the work and also proposed guidelines for the future.