THE AUTHOR<\/strong>: On 25 September 2024, the Latin American Arbitration Practitioners EU (\u201cLATAP EU<\/strong>\u201d) organised its second Annual Conference<\/a> in Paris, France<\/a>, which was hosted by Freshfields.<\/a> The conference program included a keynote speech by Patricio Gran\u00e9 Labat<\/a> and discussions on four different topics related to Latin America (\u201cLATAM<\/strong>\u201d), with the first panel considering the impact of investment treaties on human rights and climate change.<\/p>\n\n\n\n The panel featured Monica Feria-Tinta<\/strong><\/a> (Twenty Essex<\/a>), \u00c1lvaro Nistal<\/strong><\/a> (Arnold & Porter Kaye Scholer LLP<\/a>), Patricia Nacimiento<\/strong><\/a> (Herbert Smith Freehills<\/a>) and Esperanza Barr\u00f3n-Baratech<\/strong><\/a> (de Gaulle Fleurance & Associ\u00e9s<\/a>) as panelists, and Guillermina Huber<\/strong><\/a> as moderator.<\/p>\n\n\n\n Ms. Feria-Tinta<\/strong> considered different approaches through which human rights and environmental protection are reflected in Investor-State Dispute Settlement (\u201cISDS<\/strong>\u201d).<\/p>\n\n\n\n She pointed out that originally public international law (of which human rights is a part) and international investment law were seen as having \u201cstructural differences\u201d (M. Hirsch<\/a>, \u201cInteractions between Investment and Non-Investment Obligations\u201d in Muchlinski, Ortino & Schreuer (eds), The Oxford Handbook of International Investment Law<\/em> (2008) at p. 179) which led investment tribunals to grant precedence to the contractual rules that have been agreed upon by host states and investors (M. Hirsch, Ibid<\/em>.). This led to the view that human rights<\/a>, are \u201ca marginal issue in investment law\u201d (B. Simma, \u201cForeign Investment Arbitration: A Place for Human Rights?\u201d ICLQ<\/em> vol 60, July 2011 pp. 573-596, at p. 578), \u201cperipheral at best\u201d (C. Reiner & C. Schreuer, \u201cHuman Rights and International Investment Arbitration\u201d in PM Dupuy, F Francioni & EU Petersmann (eds), Human Rights in International Investment Law and Arbitration, <\/em>p. 83), to fulfil \u201cno more than an ancillary role in the settlement of investor-state disputes\u201d (B. Simma, \u201cForeign Investment Arbitration: A Place for Human Rights?\u201d ICLQ<\/em> vol 60, July 2011 573-596, at p. 578).<\/p>\n\n\n\n Arbitrators (mostly from a pure commercial background), historically, did not deal with that \u2018other law\u2019 alleging not to have jurisdiction to do so, which Feria-Tinta<\/strong> points out reflected a wrong approach. As the International Law Commission<\/a> (\u201cILC<\/strong>\u201d) has noted, issues of treaty interpretation and \u2018other law\u2019, are not a jurisdictional matter, but an interpretative matter.<\/p>\n\n\n\n She also noted an evolution in the new generation of treaty law in revamped Bilateral Investment Treaties (\u201cBITs<\/strong>\u201d). She stated that there are at least three ways in which human rights, environmental protection and other public law areas are being brought into the realm of investment law via this new generation of treaties. By way of:<\/p>\n\n\n\n In relation to treaty interpretation, she explained that the principle of \u201csystemic integration\u201d enshrined in Article 31(3)(c) of the Vienna Convention on the Law of Treaties<\/a> (1969) (\u201cVCLT<\/strong>\u201d) is available to litigants when elements of human rights and environmental norms are contemplated in disputes. The principle\u2019s rationale can be traced to the International Court of Justice<\/a> (\u201cICJ<\/strong>\u201d)\u2019s Oil Platform<\/a> case, and is an important feature of public international law\u2019s unity.<\/p>\n\n\n\n She referred to Prof. Mclachlan\u2019s article<\/a> to advocate that international law is, in essence, a system, and systemic integration enables the interpreter of the law to integrate different systems of law. In ISDS, a tribunal will have jurisdiction to interpret the law in the normative context of obligations binding on States. She referred to case law where this was successfully advocated, in particular NAFTA<\/a> cases (e.g.<\/em>, Glamis Gold v. USA<\/em><\/a>). Useful precedents showcase the entanglement of human rights and investment norms, i.e.<\/em> Phillip Morris v. Australia<\/em><\/a>, Urbaser v. Argentina<\/em><\/a> <\/em>or La Oroya v. Peru<\/em><\/a>. This will be a turning point of investment disputes in LATAM, in particular when discussing investors\u2019 accountability for human rights and environmental violations.<\/p>\n\n\n\n When asked about systemic integration in the context of recent developments around ISDS and the Energy Charter Treaty (1994)<\/a> (\u201cECT<\/strong>\u201d), and the work of ILC<\/a> working group, Ms. Feria-Tinta <\/strong>underlined a rearrangement of international law, notably on climate change and the role of Environmental Impact Assessment (\u201cEIA<\/strong>\u201d, a recent illustration being Cortec Mining v. Kenya<\/em><\/a>), referring to recent cases brought before ITLOS<\/a> and the ICJ<\/a>.<\/p>\n\n\n\n Mr. Nistal<\/strong> focused on Customary International Law (\u201cCIL<\/strong>\u201d)-based defences that States may invoke to justify regulatory measures regarding climate change and human rights. He made six general remarks.<\/p>\n\n\n\n Mr. Nistal<\/strong> concluded by noting that, given its public international law nature, international investment law is not and should not be an obstacle to States\u2019 pursuit of legitimate public welfare objectives. Thus, the interpretation of investment treaties must take into account that drastic reforms are needed to reduce greenhouse gas emissions and address the very serious consequences that climate change is already having on human rights.<\/p>\n\n\n\n Dr. Nacimiento<\/strong> introduced the topic by explaining that the idea of States acting as respondents only is slowly fading.<\/p>\n\n\n\n The early practice of counterclaims in ISDS reveals a systematic dismissal, but the trend is now evolving. Recently, tribunals have tweaked the \u201cconnection to principal claims\u201d (as held in Saluk<\/em><\/a>a<\/a><\/em> v. Czech Republic<\/em><\/a>) prong of the test to admit counterclaims, and their admissibility when grounded on non-treaty sources (CIL and domestic law) is also contemplated.<\/p>\n\n\n\n On intervention of amicus curiae<\/em>, Dr. Nacimiento<\/strong> warned against the risk of disrupting the proceedings if they are limited to throwing blanket statements to tribunals. She underlined a tendency of tribunals refining the scope of their intervention, to admit amicus curiae<\/em> really assisting in the decision-making process.<\/p>\n\n\n\n Tribunals may use amicus curiae<\/em> participation to hear the voice of third parties that could be affected by investments (e.g.<\/em>, Phillip Morris<\/em><\/a>, where third party intervention brought health data that had an impact on the decision itself).<\/p>\n\n\n\n Dr. Nacimiento<\/strong> opined that standards for intervention of amicus curiae<\/em><\/a> could be interpreted otherwise when a third-party seeking to intervene has environmental or human rights expertise, as those considerations are almost always of general interest (e.g.<\/em>, Odyssey Marine Exploration v. Mexico<\/em><\/a> applied the Apotex v. USA<\/em><\/a> test and refused intervention because of lack of significant interest).<\/p>\n\n\n\n Panelists also raised the issue of intervention costs, questioning whether amicus <\/em>interventions or tribunal-appointed experts would be more efficient when human rights and environmental concerns were at stake.<\/p>\n\n\n\n Ms. Barr\u00f3n-Baratech<\/strong> remarked that ISDS is sometimes perceived as a threat undermining States\u2019 efforts to mitigate climate change, referring to the phasing out of coal-fired power plants and the Uniper v. Netherlands<\/em><\/a> case, or the ban implemented by Italy regarding offshore gas exploitation and claims by Rockhopper v. Italy<\/em><\/a> that followed.<\/p>\n\n\n\n She started by defining carveouts, which consist of \u201creserving certain matters or applications of certain obligations perceived as sensible out of the scope of the treaty.\u201d<\/p>\n\n\n\n Carveouts are gaining popularity in treaties, e.g.<\/em> concerning taxation measures, or, after Phillip Morris<\/em><\/a>, the carveout of tobacco-related issues from ISDS in Australian treaties.<\/p>\n\n\n\n Environmental carveouts in a treaty are tantamount to a total withdrawal of environmental questions from ISDS. In this scenario, ISDS is not perceived as being fit to address environmental questions. Ms. Barr\u00f3n-Baratech<\/strong> questioned whether environmental carveouts would favour or not measures enacted for the preservation of the environment.<\/p>\n\n\n\n She exposed that two types of carveouts are found in practice: sector or industry-based carveouts (e.g.<\/em>, fossil fuels), or purpose-based carveouts.<\/p>\n\n\n\n Ms. Barr\u00f3n-Baratech<\/strong> considered that sector-based carveouts are radical and maximalist, as States would escape accountability for a sector, regardless of the purpose of the measure. Not all regulatory measures are bona fide,<\/em> and some can be discriminatory or arbitrary.<\/p>\n\n\n\n She mentioned an example of sector-based carve out in the context of the ECT<\/a> reform negotiations, where the agreement between the UK and EU Member States excludes some fossil fuel investments.<\/p>\n\n\n\n Regarding purpose-based carveouts, it was opined that interpretation discrepancies make them difficult to implement.<\/p>\n\n\n\n Ms. Barr\u00f3n-Baratech<\/strong> then drew a comparison of environmental carveouts with environmental exceptions. Present in approximatively 10% of investment agreements and originated in WTO<\/a> practice, exceptions are affirmative defences not affecting jurisdiction, whereas carveouts limit the scope of the treaty. She cited examples such as Bear Creek Mining v. Peru<\/em><\/a> or Eco Oro v. Colombia<\/em><\/a> and considered that exceptions were more balanced than carveouts.<\/p>\n\n\n\n International courts and tribunals are yet to rule on this question, whilst the European Court of Human Rights<\/a> touches upon States\u2019 obligation to tackle climate change.<\/p>\n\n\n\n Panelists opined that negative aspects and shortcomings of ISDS were often exacerbated when talking about environment protection. They dismantled the very idea of ISDS protecting fossil fuel investors only, referring to investments in renewable energies. They agreed that bona fide<\/em> measures damaging an investment should not lead to compensation, whilst investors should remain protected from States\u2019 irrational decisions.<\/p>\n\n\n\n
Pierre Nosewicz<\/strong>,\u00a0<\/a>Associate at ArbBoutique <\/strong><\/p>\n\n\n\n
\n\n\n\nThe Interaction of Human Rights and Environmental Law with International Investment Law and Agreements<\/strong><\/h2>\n\n\n\n
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State Defences, Climate Change and Human Rights<\/strong><\/h2>\n\n\n\n
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Unlike the ARSIWA defences, the police powers doctrine is not premised on the existence of otherwise unlawful conduct. Rather, such doctrine and the underlying right to regulate, concern and delimit the constituent elements of investment treaty obligations. In that sense, the ICJ recently confirmed that, pursuant to the police powers doctrine, the bona fide<\/em>, non-discriminatory exercise of certain regulatory powers aimed at the protection of legitimate public welfare objectives does not constitute an internationally wrongful act (Certain Iranian Assets<\/a>).<\/li>\n<\/ul>\n<\/li>\n\n\n\nCounterclaims and Third-Party Submissions<\/strong><\/h2>\n\n\n\n
Carveout Provisions and the Reform of International Investment Agreements<\/strong><\/h2>\n\n\n\n
Conclusion: Sustainability and Suitability of ISDS to Address Human Rights Issues and Climate Change?<\/strong><\/h2>\n\n\n\n