THE AUTHORS: Ana Milena Vives, Paralegal at Xtrategy LLP, Munia El Harti Alonso, Senior Consultant at Xtrategy LLP, and Jose Antonio Rivas, Founding Partner of Xtrategy LLP,
The World Arbitration Update (WAU) addresses key and novel topics of investment and international commercial arbitration, as well as public international law. WAU has an objective to connect the different regions with the global community, creating a unique space for practitioners, private parties, arbitrators, academics and students to discuss and network. WAU nourishes the conversation by following a distinct format, in a decentralized forum in which each day the focus is on a specific region, starting with the Americas (covered in this post), Africa and MENA (Tuesday), Asia Oceania (Wednesday), Europe (Thursday), and lastly Friday was dedicated to diverse topics.
Launching WAU 2022 and the Day of the Americas coincided with the first panel: “Community Consultations, Environmental Protection and Investment Projects in International Arbitration”.
The panel was moderated by Jose Antonio Rivas (Xtrategy LLP), with presenter Ana Milena Vives (Xtrategy LLP), and panelists Justice Natalia Angel (Constitutional Court of the Republic of Colombia), Rene Ureña (Universidad de los Andes), James Anaya (Former Special Rapporteur on the indigenous peoples’ rights 2008-2014/ University of Colorado), and Andrea Bjorklund (L. Yves Fortier Chair in International Arbitration).
Milena Vives set the stage by providing a crash-course on the Social License to Operate (SLO). The first part of her presentation focused on answering the fundamental question: what is the SLO? In a nutshell, the SLO refers to the informal acceptance or approval given by local communities and other stakeholders of a given industrial activity, and it holds four main characteristics:
- it cannot be obtained by simply requesting it from a governmental authority or by paying a fee;
- it is intangible and informal;
- the SLO is context-specific; and
- even though it is intangible, it could be enforced from a legal and economic perspective.
Vives then clarified that even though, prima facie, not obtaining an SLO does not constitute a breach of an investor’s obligation under international investment law, there could still be de facto practical consequences in the shape of protests, consumer boycotts and legal challenges.
The second part of her presentation focused on the concept of SLO under international investment law. Vives first looked at two cases – Cooper Mesa (Copper Mesa Mining Corporation v. Republic of Ecuador, PCA No. 2012-2) and South American Silver (South American Silver Limited v. Bolivia, PCA Case No. 2013-15) – in which although the term “social license” was not expressly formulated by the tribunal, it looked at the SLO through the prism of contributory negligence, in order to assess the social conflict surrounding the projects.
Vives then shifted the focus to the Bear Creek Mining decision (Bear Creek Mining Corporation v. Republic of Peru, ICSID Case No. ARB/14/21), the first international investment arbitration case in which the concept of the SLO was clearly articulated by the tribunal. In Bear Creek Mining, the tribunal found the actions taken by the investor were pertinent regarding its community outreach and development endeavors. Nevertheless, the tribunal ultimately concluded that it is the obligation of the State to closely monitor the efforts conducted by the investor to obtain consent from the Indigenous communities, as well as to voice its concerns throughout the consultation phase of the project. This is in contrast with the Dissenting Opinion of Philip Sands, which pointed out that obtaining a social license is the responsibility of the investor, and that failure to secure this license should have been taken into consideration by the tribunal in its decision.
Justice Natalia Angel confined her analysis to the Colombian Constitutional Law perspective, with a focus on the right to prior and informed consultations of ethnic and tribal communities in Colombia, and on municipal community consultations regarding mining projects. Justice Angel walked the audience through the process of how cases reach the Colombian courts through two main types of public actions – the action of unconstitutionality before the Constitutional Court (also known as “amparo”) and the individual rights “tutela” actions before the common jurisdictions (lower courts).
Then moving to the jurisprudence that the Constitutional Court has crafted along the years, she made a special mention to the judgment of unconstitutionality C-030/08 (C-030-08 Corte Constitucional de Colombia), and tutela decisions SU039/97 (SU039-97 Corte Constitucional de Colombia), T-129/11 (T-129-11 Corte Constitucional de Colombia), SU-095/08 (T-095-08 Corte Constitucional de Colombia), SU-217/17 (SU217-17 Corte Constitucional de Colombia), and SU-123/18 (SU123-18 Corte Constitucional de Colombia). Justice Angel listed Colombia’s current constitutional standards for prior consultations, stressing that it is a fundamental right and a mandatory requirement in the event that an administrative or legislative measure has the potential to directly impact ethnic communities.
Professor Rene Urueña pointed out that the binding nature of obligations to respect human rights under the jurisprudence of the Inter-American Court of Human Rights includes those concerning consultations. Urueña identified that domestic courts are increasingly engaging with international investment law through four main vectors. The first one is the domestic constitutional review of BITs, this situation has already occurred in Ecuador where the Constitutional Court notably found 17 BITs unconstitutional between 2010 –2014.
The second vector is concurrent jurisdiction, and this divides into two other sub-vectors: first when the Domestic court’s decision is a denial of justice, triggering international responsibility; second when an Inter-American decision on the topic conflicts with an investment award.
The third and fourth vectors, are the review of non-ICSID international investment awards by domestic courts and the review of State/private actions to comply with an award.. Part of Professor Urueña’s argument was that via jurisprudence of the Inter-American Court of Human Rights’ jurisprudence and international law, the right and obligation to prior community consultations is obligatory in constitutional law of various Latin American States.
Professor James Anaya referred to the ILO Convention No. 169, the Indigenous and Tribal Peoples Convention, which provides for consultations at Article 15.2:
- In cases in which the State retains the ownership of mineral or sub-surface resources or rights to other resources pertaining to lands, governments shall establish or maintain procedures through which they shall consult these peoples, with a view to ascertaining whether and to what degree their interests would be prejudiced, before undertaking or permitting any programmes for the exploration or exploitation of such resources pertaining to their lands. The peoples concerned shall wherever possible participate in the benefits of such activities, and shall receive fair compensation for any damages which they may sustain as a result of such activities.
He emphasized that consulting those who would be affected by an investment project is a right reasonably expected by any human being and community—not only of indigenous communities—which should be respected even if the amorphous notion of social license to operate is not fully embraced. Anaya emphasized that ILO 169 other instruments are relevant to the discussion – such as the UN Guiding Principles on Business and Human Rights, also containing provisions on the matter.
Professor Andrea Bjorklund focused on the challenges that the concept brings. The first challenge lies in identifying the community, which in practice is not as simple as it may appear. “Communities and stakeholders” are a very broad and abstract concept that may very well define a particularly small population, a whole city or even the whole country.
Professor Bjorklund explained that the second challenge refers to the difficulties of establishing the specific timing at which the community support must be successfully achieved. It would be simple to conclude that the SLO must be obtained after the formal legal license is issued. Nevertheless, given that the SLO is broader than just consultations, opinions on the exact time period differ vastly.
The primary focus of the panel was the discussion around the right to consultations of communities, the obligation of the State concerning consultations, and the emerging concept of the SLO that is exponentially adduced to. The discussions on Day 1 concluded that the right to free, prior and informed consultations with communities appear to stand as an international law obligation and is already included in most of the domestic legislations of Latin American countries, either by express mention in their Constitution or derived from other constitutional rights, and that it is being constantly developed through the Inter-American system.
Regarding the SLO, panelists expressed a more reserved prognosis, and pragmatically found that even though the concept withholds a strong appeal, there are still many practical difficulties that remain to be addressed for its effective implementation in projects involving communities.
ABOUT THE AUTHORS
Ana Milena Vives is an International Paralegal of the Arbitration and International Law practice at Xtrategy LLP in Bogota. Currently, she is carrying out her undergraduate studies in Economics and Law at the Universidad de los Andes. Ana Milena has academic experience in public international law by having been a teacher assistant of Public International Law, participating in international law research groups, and by participating in Moot Court competitions.
Munia El Harti Alonso is a senior consultant at boutique law firm Xtrategy LLP in Washington DC specialized in international arbitration. She is an attorney admitted to the New York Bar, holds an LLM from Georgetown Law and is currently pursuing her PhD at Universidad de Madrid on international renewable energy disputes where she lectures on the subject.
Jose Antonio Rivas is Founding Partner of Xtrategy LLP, a boutique law firm in international arbitration and public international law based in Washington DC and Bogota; and co-founder of the World Arbitration Update (WAU) and Washington Arbitration Week (WAW). He has 18 years of experience in international investment arbitration and currently represents clients before US courts on enforcement of investment arbitration awards, and in international commercial arbitration under the rules of the JCAA (Japan Commercial Arbitration Association). He has worked in various capacities, including as counsel for sovereign clients and investors in ICSID, UNCITRAL and ICC cases, arbitrator in international and domestic arbitrations, former lead negotiator of investment treaties for the Republic of Colombia, and former ICSID Legal Counsel. He is Adjunct Professor of Investment Treaty Arbitration at Georgetown Law, and has authored and co-edited several publications on investment arbitration and public international law. He is a member of the ICSID panels of conciliators, and member of the panels of arbitrators of various arbitration centers.