(Patrick Dumberry) How To Impose Human Rights Obligations On Corporations Under Investment Treaties? Pragmatic Guidelines For The Amendment of BITs

How
to Impose Human Rights Obligations on

Corporations Under Investment Treaties? Pragmatic
Guidelines for the Amendment of BITs
Patrick Dumberry, Gabrielle Dumas-Aubin
Content type: Yearbook articles

Citation(s): (2013) Yearbook on International Investment Law and Policy 2011–2012
568–600 (Other Reference)
OUP r efer ence: IC-JA 109 (2013)
Pr oduct: Investment Claims [IC]
Subject(s):
Foreign Direct Investment
From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2015. All Rights Reserved. Subscriber: FDI Moot 2018; date: 18 October
2018
Introduction
Bilateral investment treaties for the promotion and protection of investments (BITs) are, at least
in their present form, asymmetrical. Thus, foreign investors (overwhelmingly corporations, but
sometimes individuals) are being accorded substantive rights under these treaties without being
subject to any specific obligations. In this context, one question that has been increasingly debated
in academia is whether there is a need for a greater degree of balance in BITs between the
legitimate interests of investors and host countries. One option envisaged would be for BITs to
impose direct human rights (and other related) obligations upon corporations when they invest in
the host country. At present, BITs are silent on human rights issues. This affects the legitimacy of
the whole investor-state arbitration system, which is perceived by some as inherently biased
toward investors’ interests at the expense of the public interest.
International human rights law and international investment law are often viewed as mutually
exclusive bodies of law. In fact, human rights issues are increasingly addressed by arbitral (p. 570)
tribunals faced with BIT disputes related to, inter alia, the right to water1 and the right to health.2
The aim of this chapter is, however, not to merely restate the obvious fact that BITs should
indeed take into account human rights obligations; other writers have explained very well why this
is so.3 The more complicated question, rarely addressed in doctrine,4 is how BITs could be drafted
(and existing ones be amended) to incorporate “non-investment” obligations.5
The solutions we offer are meant to be practical. We will examine concretely which non-
investment obligations should be included in future BITs, as well as how they should be enforced.
We have also taken a pragmatic approach, limiting our drafting suggestions only to those that
can reasonably be expected to be achieved in coming years. What matters to us is not so much
what academics and non-governmental organizations (NGOs) think should be done in an ideal
world, but rather what countries can realistically do in terms of adopting new language in future
BITs. Many doctrinal suggestions will therefore be found inadequate because they are
impractical, unworkable, and unlikely to ever be endorsed by countries.
This chapter is structured in three parts. Part A briefly examines the question of corporations’
human rights obligations under international law. This is relevant because the lack of obligations
for investors under BITs is part of a broader debate about how to best address human rights
violations committed by corporations doing business abroad. Part B examines whether (p. 571)
corporations have any human rights obligations in the context of BITs. In this part we will also
analyze the limited circumstances under which human rights concerns can be raised before an
arbitral tribunal set up under BITs (in their present form). Part C of this chapter concretely
examines how future BITs should be drafted (and existing ones amended) in order to impose
human rights obligations on corporations. One of the many practical issues examined in this part
is the identification of the types of obligations that should be imposed upon investors. Another
question is how those obligations should be incorporated into BITs. We will also examine the
reasons for choosing to incorporate some international instruments and not others. Another
important aspect of our proposal is the inclusion of an enforcement mechanism to sanction
corporate violations of human rights obligations contained in BITs. We will examine in detail
three different options that can be envisaged: the clean hands doctrine, the offsetting of damages,
and counterclaims .
A. Corporations’ Human Rights Obligations Under International

Law
International human rights treaties require countries not only to refrain from acting in breach of
such rights, but also to exercise due diligence to prevent private persons, including corporations,
to breach them. All countries have a “duty to protect” whereby they are required to “take
measures—such as by legislation and administrative practices—to control, regulate, investigate
and prosecute actions by non-State actors that violate the human rights of those within their
territory [and those subject to the State’s jurisdiction].” 6
As a matter of principle, allegations of human rights violations committed by a corporation should

be addressed by the host country where business is conducted. Relying on the host country to
address human rights violations committed by corporations is, however, generally considered
ineffective.7 Because of the overwhelming economic power of some foreign corporations, many
developing countries simply do not have the resources to effectively regulate and control
corporations operating within their territory.8 Not all host countries are keen on enforcing human
rights compliance against powerful foreign investors.9 Another problematic (p. 572) situation is
when the host country itself is complicit in the commission of human rights violations by a foreign
corporation.10 In any event, the host country will sometimes be reluctant to effectively enforce its
own domestic legislation and regulation on foreign corporations for fear that this may discourage
foreign investments deemed essential to its economic development. In fact, countries may even go
as far as to relax their regulations pertaining to the protection of human rights, labor, and
environment in order to attract more foreign investments.11
Relying on the home countries to address human rights violations is also considered ineffective.
There is indeed no obligation under international law for home countries to sanction investors
breaching international law abroad.12 By and large, home countries have failed to enact
legislation that regulates the conduct of their corporations abroad.13
Some international instruments, including international human rights treaties, are specifically
directed at the activities of corporations. However, the obligations contained in these instruments
are binding on the contracting states and not on corporations themselves. UN Special
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Representative Ruggie concluded in a 2007 Report that international human rights instruments
currently do not “impose direct legal responsibilities on corporations.” 14 Furthermore, some of
the international instruments concerning corporations’ activities do not even impose any
obligations on countries.15 They are not international treaties, but non-binding “soft law”
instruments.
In sum, international law, as it now stands, does not impose any direct legal obligations on
corporations.16 One notable exception is the peremptory norms of international law (jus cogens
(p. 573) norms) for which corporations can be held directly accountable.17 It should be
emphasized that nothing in international law prevents countries from signing treaties (such as
BITs) imposing human rights obligations upon corporations.18
B. Corporations’ Human Rights Obligations Under Bits

Before making any suggestions as to how BITs could be modified (dealt with in Part C), it is first
necessary to briefly examine what is the prevaling BIT regime with respect to human rights
obligations.
There are several features, typically found in the vast majority of BITs that clearly bar host
countries from initiating arbitration proceedings to claim reparation for human rights violations
committed by a foreign investor in their territory.19 Under the vast majority of BITs, arbitral
tribunals only have jurisdiction to adjudicate claims brought by investors, and not those submitted
by the host country.20 Even in rare situations where a BIT expressly allows a host country to
institute arbitral proceedings,21 an arbitral tribunal will normally only have jurisdiction to
adjudicate disputes originating from alleged breaches of a treaty provision.22 In their present
form, BITs are asymmetrical insofar as investors are being accorded substantive rights (without
being subject to any specific obligations) while countries only have obligations. In other words, an
investor simply cannot breach any rights of the host country under these treaties since no such
rights exist. Thus, BITs do not contain any provisions dealing with substantive human rights
obligations or any obligations pertaining to labor or environment standards that must (p. 574) be
respected by investors.23 In fact, it is exceptional to find any reference at all to human rights in
BITs. Only a few BITs contain such references in their preamble.24 A limited number of BITs
contain a provision dealing with non-investment issues.25 These provisions do not impose any
human rights, labor law, or environmental obligations upon foreign investors.
There are nevertheless a number of limited circumstances in which allegations of human rights
violations committed by corporations can be raised before an arbitral tribunal.26 Two of these will
be briefly explored.
The first possibility is for the host country to raise allegations of human rights violations when
acting as respondent in arbitration proceedings.27 It could be argued that the investor had itself
committed human rights violations against its citizens in the context of the investment.28 A
tribunal would have jurisdiction over such a defense provided that the BIT contains a broadly
worded dispute resolution clause29 and that such allegations are related or connected (p. 575) to
the underlying investment to which the claim directly relates.30 In our view, when these conditions
are met, an arbitral tribunal should take into account any credible and independently verified
human rights violations committed by an investor. In fact, based on the doctrine of “clean hands”
(further discussed below), a tribunal could find the investor’s claim inadmissible precisely because
of its unacceptable behavior.31 At the very least, a tribunal should take into account such
allegations when making its determination on the merits of the dispute. These allegations should
also have some impact on the tribunal’s assessment of compensation for damages claimed by the
investor (as well as questions of allocation of costs, fees, etc).32 Another writer has also argued
that a country could invoke exception provisions found in some BITs as a defense. Thus, while
these provisions generally do not specifically refer to human rights, a tribunal could interpret
exception provisions dealing with public policy objectives broadly to consider human rights
concerns as within their ambit.33
The second possibility is for the home country to intervene in arbitration proceedings between its
national and the host country and raise allegations of human rights violations committed by the
investor.34 However, BITs rarely deal with the issue of home countries’ right to intervene.35 It has
been argued that such a right to intervene implicitly exists, even when the BIT is silent on the
issue.36 Also, when home countries do intervene, they seldom defend positions that go against the
interests of their own nationals involved in arbitration proceedings. One scenario where a home
country could intervene against its investor’s interests is when the host country has decided to
turn a blind eye to flagrant and very serious human rights abuses committed against local
populations.37 Another situation could arise when the host country is actually complicit in such
crimes. In these two cases, the home country may have an interest to bring to the tribunal serious
allegations that would otherwise, in all likelihood, remain unaddressed. In fact, the more
appalling the human rights abuses and the more publicity these acts (p. 576) of violence receive
from the media, the more likely a government is to intervene. This is because segments of civil
society may publicly denounce these wrongful acts and request the government to take some
actions. An intervention in arbitration proceedings (by, for instance, writing a formal letter to the
tribunal) is definitely one of the many ways to address these concerns. It is submitted that a
tribunal should examine these allegations proprio motu.
There are other ways by which human rights law can be taken into account by tribunals. For
instance, both parties to arbitration proceedings can agree to the application of international
human rights law to their dispute.38 This scenario will, however, occur very rarely in practice.39
This is because it is doubtful whether an investor would ever agree to the inclusion of such
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obligations once a dispute has arisen and arbitration proceedings have started. NGOs, or any
other third party, may also seek to raise allegations of human rights abuses with the arbitral
tribunal.40
Several authors have suggested that a tribunal should always take into account human rights
violation allegations when a BIT refers to “international law” as the applicable law to the
dispute.41 This is because human rights obligations are part of international law. This is important
because many investment treaties refer to international law as the applicable law for disputes.42
Also, many BITs contain provisions requiring the host country to provide fair and equitable
treatment to the investor in accordance with “international law.” This is, for instance, the case in
NAFTA Article 1105(1). It has been suggested in doctrine that such language opens the doors for
tribunals to take into account human rights law when interpreting such provisions.43 In any event,
an arbitral tribunal could take into account the international law of human rights in its (p. 577)
interpretation of a BIT via the use of Article 31(3)(c) of the Vienna Convention on the Law of
Treaties under which “shall be taken into account, together with the context […] any relevant
rules of international law applicable in the relations between the parties.” 44
Finally, a tribunal could take into account human rights obligations where a BIT provides for the
host country’s law to apply to disputes and where that domestic law includes elements of
international human rights law.45 Moreover, some BIT clauses expressly condition access of an
investor to arbitration on its compliance with the host country’s laws.46 Under such a clause, a
tribunal may deny the admissibility of a claim by an investor that has breached international
human rights obligations that are integrated in the internal legal order of the host country.
C. Guidelines for the Incorporation of Human Rights

Obligations in Bits
This Part will examine different drafting suggestions as to how BITs could be drafted to enable
arbitral tribunals to consider allegations of human rights violations by corporate entities.47 This
approach has been favored in recent years by several scholars,48 as well as by the United Nations
Conference on Trade and Development (UNCTAD).49 Before examining the question of how to
modify BITs, reference will briefly be made to some of the less attractive and, most importantly,
less realistic suggestions that have been put forward ( Section 1).
(p. 578) 1. Some Less Realistic Suggestions

According to some scholars, a multilateral investment agreement would be the most effective way
to address issues of corporate responsibility.50 There is no doubt this solution would have many
advantages, including coherence and uniformity.51 The fact of the matter remains, however, that
it is very unlikely that any such multilateral treaties will be achieved in the near future.52 This
solution has been put forward many times before; and they have all been unsuccessful. The most
notable effort was made by the Organisation for Economic Co-operation and Development
(OECD) in 1995 to negotiate a comprehensive Multilateral Agreement on Investment (MAI).53
Similarly, plans for multilateral investment negotiations under the World Trade Organization
(WTO) never materialized. One reason for such failure is the continuous disagreement between
developed and developing countries on the specific content of any such global agreement.
Another suggestion that has been put forward is to amend the Convention on the Settlement of
Investment Disputes between States and Nationals of other States (ICSID Convention) by
including a provision whereby BIT tribunals would be allowed to consider human rights and other
non-investment concerns in their decisions.54 Some writers suggest that such an amendment
would be a first step toward developing a multilateral treaty.55 The problem is that amending the
ICSID Convention is nearly impossible. In fact, there has never been an amendment since 1965.56
This fact is possibly explained by the amending procedure, which requires all Contracting States
to approve the amendment.57 In our view, it is very doubtful that such a consensus could ever be
reached amongst countries on an issue as controversial as the one discussed here. It should be
noted that changes to the ICSID Regulations and Rules only require a vote of two-thirds of (p.
579) the Administrative Council (which consists of one representative of each Contracting
State).58 Again, it seems improbable that such a majority will be reached anytime soon because of
the disparity of opinions amongst Contracting States on the issue.59
2. Location of Obligations in Bits

The first question to be asked is where in the BIT should those non-investment obligations be
found? Referring to corporations’ responsibilities in the preamble of a BIT would certainly have a
positive impact.
According to Article 31(1) of the Vienna Convention on the Law of Treaties, which reflects
custom, treaty terms are, inter alia, interpreted in light of a treaty’s context, object and purpose.
The preamble is part of a treaty’s context. A reference to human rights law in a preamble could
therefore serve to indicate and color the treaty’s object and purpose.60 As stated by the NAFTA
ADF Tribunal, such general provisions stating the object and purpose of a treaty “may frequently
cast light on a specific interpretive issue; but [are] not to be regarded as overriding and
superseding the [text].” 61 In other words, preamble language does not have the same weight as a
substantive provision.62 Reference in the preamble may be relevant for matters of treaty
interpretation, but will not create any substantive obligations for the investors.63 The inclusion of
corporations’ responsibilities in the preamble of a BIT would nevertheless certainly have a positive
impact on human rights concerns.64 It would certainly lead tribunals to adopt more balanced
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interpretation of treaty clauses.65 One area where a reference to human rights law in a preamble
is likely to have such an impact is on the interpretation of the fair and equitable treatment clause
found in most modern BITs. The interpretation to be given by a tribunal to such a clause will
likely be different in cases where the BIT preamble contains explicit reference to human rights
obligations that are to be respected by investors.
Although, the inclusion of corporations’ responsibilities in the preamble of a BIT may be a useful
tool to enhance the applicability of human rights doctrine, there remains, in our view, a more
promising avenue. We believe that human rights obligations should be expressly referred to in the
main text of the BIT.
(p. 580) 3. Type of Language Used

Another relevant question is what kind of language should be used in the BIT to ensure effective
corporation regulation. Provisions must not only be clear and unambiguous, but they must “create
specific, well-defined mandatory human rights obligations applicable to corporate activity.” 66 For
instance, using language similar to Section 32 of Norway’s (now defunct) Model BIT would be
unsatisfactory. Under that instrument, the Parties merely “agree to encourage investors” to
conduct their investment activities in compliance with non-binding international instruments.67
Merely encouraging investors to do something has not worked in the past and is quite unlikely be
an effective remedy in the future. It is therefore paramount that a treaty provision creates
mandatory legal obligations forcing corporations to adopt a certain behavior. The provision must
also establish a mechanism whereby non-compliance is efficiently sanctioned by an arbitral
tribunal (a point further discussed below).
Other options have also been envisaged.68 One possibility would be to include a provision
specifying that certain human rights treaties will prevail in the event of any inconsistency with the
BIT. NAFTA contains a similar clause dealing with inconsistencies between its text and a list of
environmental treaties.69 For instance, Jacob argues that:
The protection of human rights should feature as a separate clause […] so that its
importance is beyond doubt. States should thereby declare that it is not compatible with
international human rights protection to attract and promote investment by lowering
recognized minimum standards. Furthermore, the parties should assert that nothing in the
agreement can be understood to hinder a state from complying with its human rights
obligations under international law.70
Another option would be to clarify the scope of the country’s obligations under the BIT in order to
take into account human rights concerns.71 Such clarification could take the form of a binding
note of interpretation72 or be done by a treaty amendment. There is no doubt that a clarification
would be a useful tool for a tribunal when interpreting a treaty clause such as the obligation for
the host country to provide a fair and equitable treatment to investors. Yet, the obvious
shortcoming of such a clause is the fact that it does not impose any specific and mandatory
human rights obligations upon corporations.
4. From Which Areas of International Law should the Obligations

be Drawn?
What should be the actual content of obligations imposed upon corporations? A pragmatic
approach is to confine the scope of any future treaty to a limited number of well-defined (p. 581)
obligations existing in only a few areas of international law. In our view, these obligations should
be limited to those found in four distinct areas of law.73 The first area is human rights, whereas
the second is related to labor rights. More specifically, there is consensus amongst scholars that
corporations should respect so-called “core” labor rights, which, according to one writer, “consist
of the freedom of association, the right to organize and bargain collectively, and the prohibitions
against discrimination, bonded and forced labor and child labor.” 74 The third area of
international law from which to draw such obligations concerns the protection of the
environment. A fourth subject matter deals with anti-corruption. This is in fact the approach
which has been adopted by the “United Nations Global Compact,” a non-binding initiative, under
which a large number of companies have committed to respect in their business activities abroad
a set of ten core principles and values.75 These ten principles are drawn from the four above-
mentioned areas of international law.
5. How Should these Obligations be Incorporated into Bits?

A related question is how these obligations should be incorporated into BITs. There are different
ways by which fundamental human rights, and obligations flowing from international labor
rights, anti-corruption and protection of the environment can be incorporated into BITs. The first
obvious option is to simply let Parties determine for themselves, during treaty negotiations, which
of the many fundamental human rights, labor rights, environmental rights, and anti-corruption
obligations they want to include in the BIT. In other words, every single obligation to be imposed
upon corporations would have to be the object of negotiation between the parties. This is not the
most well suited approach as such negotiations would likely take a considerable amount of time
and raise numerous controversial issues. Also, negotiation inevitably involves compromises, which
may not result in an effective reinforcement of human rights obligations. For all these reasons,
countries will likely be very reluctant to embark on such an uncertain journey.
There exists, however, a much more straightforward solution. Essentially, it is simpler for BITs to
refer to those standards that have already been accepted by the vast majority of countries in well-
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recognized international treaties. In fact, it is not uncommon to find specific references to
international agreements in BITs.76 The proposed provisions should therefore directly refer (p.
582) to the instruments that corporations must comply with. One example of such a clause could
be the following:
Investors and investments shall act at all time in accordance with the obligations
contained in the following international instruments: […].77
The IISD Model Agreement on Investment for Sustainable Development includes a much broader
provision, which reads as follows:
Investors and investments should uphold rights in the workplace and in the state and
community in which they are located. Investors shall not undertake or cause to be
undertaken, acts that breach such human rights. Investors and investments shall not be
complicit with, or assist in, the violation of the human rights of others in the host state,
including by public authorities or during civil strife.78
6. The International Instruments that should be Referred to in

Bits
The next question of course becomes which instruments should be listed in the provision. In our
view, BITs should specifically refer to the following instruments:
• Universal Declaration of Human Rights (UDHR) (1948); 79
• United Nations International Covenant on Civil and Political Rights (ICCPR) (1966); 80
• ILO Declaration on Fundamental Principles and Rights at Work (1998); 81
• United Nations Convention Against Corruption (UNCAC) (2003); 82
• Rio Declaration on Environment and Development (1992). 83
(p. 583) A narrower approach has been adopted by UN Special Representative Ruggie in his final
2011 Report (which was endorsed by the UN Human Rights Council84), whereby Principle 12
states that “the responsibility of business enterprises to respect human rights refers to
internationally recognized human rights—understood, at a minimum, as those expressed in the
International Bill of Human Rights and the principles concerning fundamental rights set out in the
International Labour Organization’s Declaration on Fundamental Principles and Rights at
Work.” 85 Ruggie therefore limits the “list” only to human rights and labor rights instruments.
In our view, it is best for BITs to refer only to a handful of treaties. One inadequate option is the
one taken by the Draft Norms on the Responsibilities of Transnational Corporations and other
Business Enterprises with Respect to Human Rights. 86 The Draft Norms, which were adopted by
the UN Sub-Commission on the Promotion and Protection of Human Rights (but not by the
Human Rights Commission87), imposed direct obligations on corporations with respect to, inter
alia, human rights, labor rights, and environmental protection.88 These Draft Norms have been
subject to severe criticism.89 In his Interim Report, UN Special Representative Ruggie considered
the Draft Norms a failed attempt, with “little authoritative basis in international law,” to “take
existing State-based human rights instruments and simply assert that many of their (p. 584)
provisions now are binding on corporations as well.” 90 In his view, international law has not been
“transformed to the point where it can be said that the broad array of international human rights
attach direct legal obligations to corporations.” 91 The Draft Norms provide in its preamble that
corporations are “obligated to respect generally recognized responsibilities and norms” that are
contained in no less than 30 international instruments. It is very unlikely that countries will ever
agree to impose obligations on their national corporations that are found in 30 legal instruments.
7. The Reasons for Choosing these Five Instruments

The first reason for choosing these particular instruments is because they have been ratified or
endorsed by an overwhelming number of countries. It is easier to convince countries to
incorporate human rights obligations when the principles contained in these few instruments are
not controversial and are supported by the vast majority of them. In fact, the content of some of
these instruments is considered as representing customary international law.
One prevailing view in doctrine is that certain core human rights exist as customary international
law.92 In fact, the majority of the provisions of the UDHR are generally considered to reflect
customary international law.93 What about the ICCPR? Thus far, 167 countries have ratified the
ICCPR. The Covenant as a whole is not considered as representing customary international law,94
however, certain rights contained in the ICCPR are considered so important that they are “non-
derogable” even in times of “public emergency which threatens the life of a nation.” 95 Some of
these non-derogable rights are considered as custom. The UN Human Rights (p. 585) Committee
for instance, maintains this position.96 Moreover, the Committee is of the view that some of these
non-derogable rights are in fact considered as jus cogens.97
The ILO Declaration expressly refers to four principles which are themselves embodied in 8 ILO
Conventions that have been ratified by most member states.98 In Article 2 of the Declaration, the
International Labour Conference, “[d]eclares that all Members [of the ILO], even if they have not
ratified the Conventions in question, have an obligation arising from the very fact of membership
in the Organization, to respect, to promote and to realize, in good faith and in accordance with
the Constitution, the principles concerning the fundamental rights which are the subject of those
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Conventions.” The four principles mentioned in the Declaration are the following: “(a) freedom of
association and the effective recognition of the right to collective bargaining; (b) the elimination
of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and (d) the
elimination of discrimination in respect of employment and occupation.” These four principles
therefore find support from the vast majority of countries. Thus, while the ILO Declaration is a
“soft law” instrument, its content must nevertheless (p. 586) be considered “hard law.” This is
clear from Article 2 of the Declaration indicating that the four principles are binding on the 183
ILO member states. In any event, these principles are drawn from 8 international treaties that
themselves impose mandatory legal obligations upon the vast majority of countries.
Do these four principles represent custom? There is little doubt that the abolition of forced labor
is a rule of customary international law.99 There is also some authority to consider “racial”
discrimination100 and the “worst forms” of child labor (such as those consisting of forced labor
and slavery as well as those involving torture, human trafficking, etc.) as norms of customary
international law.101
The United Nations Convention Against Corruption has been ratified by 158 countries. It should
be noted that numerous binding international treaties prohibiting bribery have also been adopted
by countries at the regional level by OECD members,102 the European Union,103 the Council of
Europe,104 the Organization of American States (OAS),105 and the African Union.106 Thus, anti-
corruption treaties bind the vast majority of countries. As a result of such widespread adherence
by countries, some authors now consider the prohibition against bribery as a rule of customary
international law.107
(p. 587) The 1992 United Nations Conference on Environment and Development (the Earth
Summit) took place in Rio de Janeiro and assembled government officials from 178 countries and
a great number of representatives from non-governmental organizations. The Rio Declaration, a
non-binding instrument, was therefore endorsed by a great number of countries. Some of the
principles contained in the Rio Declaration are considered as representing customary
international law. This is, for instance, the case of the obligation for countries not to cause
damage to the environment of other countries or of areas beyond the limits of national
jurisdiction (known as “Principle 21 of the Stockholm Declaration”).108 Some have consequently
argued that “the concept of ‘sustainable development’ has entered the corpus of international
customary law.” 109 Another principle is a country’s responsibility for environmental damages.110
Other authors have concluded that the principle of precaution is also customary.111 Finally, Sands
list a number of other principles of international environmental law that he considers to be
custom.112
(p. 588) The second reason why these five instruments should be selected is simply because they
are already accepted by a large number of corporations as guiding principles of conduct for their
business activities abroad. This is, for instance, the conclusion reached by UN Special
Representative Ruggie in a survey with representatives of multinational corporations.113
Similarly, the “United Nations Global Compact,” a non-binding initiative, is described as a
“strategic policy initiative for businesses that are committed to aligning their operations and
strategies with ten universally accepted principles in the areas of human rights, labour,
environment and anti-corruption.” 114 No less than 8,700 corporate participants and other
stakeholders from over 130 countries115 have committed themselves to respect the ten universal
principles that are drawn from the above-mentioned multilateral instruments. It is submitted that
countries will be more ready to imposing international legal obligations on corporations knowing
that there already exists widespread support for them in the business community.
The above-mentioned five international instruments are, of course, not the only ones that could be
referred to in BITs. Reference could also be made, for instance, to soft law instruments that have
been adopted by countries, such as the ILO Tripartite Declaration of Principles Concerning
Multinational Enterprises 116 or the OECD Guidelines for Multinational Enterprises.117 The main
problem with this suggestion is precisely the non-binding nature of these instruments. It is true
that these soft law instruments include some principles that are themselves contained in other
international treaties that are binding on countries. In other words, while these instruments are
“soft law” by nature, some of its content may actually be “hard” law. But this is not the case for
all principles set out in the ILO Declaration and the OECD Guidelines. Some of the principles
contained in these two instruments simply impose no obligation on anyone. Thus, corporations
have no direct obligations to respect these principles and countries have no binding
responsibilities under international law to ensure corporate compliance with them. For all these
reasons, countries are unlikely to be willing to “transform” these soft law instruments into hard
law ones by simply incorporating them in BITs. To the extent these soft law instruments in fact
refer to hard law contained elsewhere, why not make a direct reference to the binding treaty
where the hard law is to be found in the first place? This is a straightforward solution more likely
to be endorsed by country practice.
The same comment also applies to non-binding documents that have been developed in the context
of international organizations. The ten principles established under the United Nations Global
Compact is a prime example. While clearly not a treaty imposing any obligations on (p. 589)
countries (nor on corporations for that matter), the principles have nevertheless been accepted by
a large number of countries via a UN General Assembly resolution in 2010.118 In fact, the ten
principles established under the United Nations Global Compact are all drawn from international
treaties whose content is binding. Again, to the extent that this “soft law” document does refer to
“hard” law binding obligations contained in other international instruments, it may just be simpler
to make a direct reference in a BIT to the binding treaty where the “hard” law is found.
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8. Different Enforcement Mechanisms
Making reference to specific international treaties in a BIT is only the first step to be considered
when seeking to improve the protection of human rights in the context of BITs. The investor-state
dispute resolution clause of the treaty must also contain a provision indicating specifically how
human rights obligations imposed upon corporations can actually be enforced before an arbitral
tribunal.119 The provision must make it clear that an arbitral tribunal has jurisdiction over
allegations of human rights violations committed by corporations. Setting up a regime of direct
obligations under a BIT without any enforcement mechanism will not only render these rights
totally ineffective, it would in fact, as one author puts it, “not enhance human rights, but trivialize
international law.” 120
There are at least three different enforcement possibilities that can be envisaged in a BIT’s
investor-state dispute resolution clause (they are examined under sections a., b., and c.). We will
subsequently make reference to two other enforcement mechanisms that are less likely to be
successful ( Section d).
a. The clean hands doctrine

As a first option, an investor’s protection under a BIT could be conditioned upon its respect for
human rights (and other non-investment obligations): the “clean hands” doctrine. If a tribunal
comes to the conclusion that a corporation has committed human rights violations contrary to its
obligations under a relevant treaty, it could find the investor’s claim inadmissible.121
Contracting Parties are free to limit consent to arbitration to disputes satisfying specific
characteristics. As one tribunal puts it, “it is clear that States may specifically and expressly
condition access of investors to a chosen dispute settlement mechanism, or the availability of
substantive protection […] one such common condition is an express requirement that the
investment comply with the internal legislation of the host State.” 122 Nothing therefore prevents
(p. 590) countries from conditioning the availability of substantive protections for investors on
their compliance with fundamental human rights obligations.123
The doctrine of “clean hands” has been defined as the “principle that a party cannot seek
equitable relief […] if that party has violated an equitable principle.” 124 The question whether the
doctrine of clean hands truly exists under international law is controversial.125 While the
International Law Commission (ILC) decided that the clean hands doctrine should not apply in the
diplomatic protection context, the ILC Special Rapporteur Dugard nevertheless suggested that the
doctrine could be relevant in other circumstances to assess the admissibility of a claim.126 In the
context of state responsibility, the ILC Special Rapporteur Crawford explained that “if it exist[s]
at all,” the doctrine would operate as a ground of inadmissibility rather than as a circumstance
precluding wrongfulness or responsibility.” 127 He concluded (quoting Rousseau128) that “it is not
possible to consider the ‘clean hands’ theory as an institution of general customary law.” 129
Similarly, in a recent Permanent Court of Arbitration case between Guyana and Suriname, the
Tribunal indicated that “the use of the clean hands doctrine has been sparse, and its application in
the instances in which it has been invoked has been inconsistent.” 130
(p. 591) There is nevertheless some support for the doctrine of clean hands in the opinions of
several individual judges of international tribunals. For instance, Bin Cheng cites several older
arbitration cases where tribunals have applied the doctrine, including the Clark Claim decided by
an Ecuador-U.S. Commission in 1862 where the American Commissioner stated “Can he [the
claimant] be allowed, so far as the United States are concerned, to profit by his own wrong? […]
A party who asks for redress must present himself with clean hands.” 131 In the case of The
Diversion of Water from the Meuse, Judge Hudson made reference in his separate opinion to the
principle that “he who seeks equity must do equity” and concluded that a tribunal will “refus[e]
relief to a plaintiff whose conduct in regard to the subject-matter of the litigation has been
improper.” 132 In his dissenting opinion in the same case, Judge Anzilotti stated that the principle
of inadimplenti non est adimfilendum (one has no need to respect his obligation if the
counterparty has not respected his own) “is so just, so equitable, so universally recognized that it
must be applied in international relations.” 133 Finally, the principle has been endorsed by several
judges of the International Court of Justice (ICJ) in their dissenting opinions, including that of
Judge Schwebel,134 as well as by several scholars.135
However controversial the doctrine of clean hands may be, it is important to note that while it has
never formally been endorsed by the ICJ, it has never been rejected either.136 What matters is the
fact that the doctrine of “clean hands” has been recognized in the domestic orders of many
countries.137 It has rightly been described by many, including Judges Schwebel138 and (p. 592)
Anzilotti,139 as a “general principle of law.” As such, the doctrine of clean hands is a source of law
that can be applied by international tribunals in accordance with Article 38(1)(c) of the ICJ
Statute.140 Arbitral tribunals may therefore refer to the doctrine in the context of investor-state
arbitration.141
Several arbitral tribunals in the context of investor-state arbitration have, to some extent, already
made use of the clean hands doctrine to determine questions of admissibility/jurisdiction.142
Recent ICSID tribunals have held that they either lack jurisdiction or that a claim is inadmissible
when faced with the illegal conduct of an investor, such as misrepresentations made by the
claimant,143 fraud,144 or bribery/corruption.145 Tribunals have also held that substantive
protections offered under BITs cannot apply to investments made contrary to the host country’s
domestic law.146 In Gustav F W Hamester GmbH & Co KG v. Ghana, the Tribunal summarized
the situation as follows: “An investment will not be protected if it has been created in violation of
national or international principles of good faith; by way of corruption, fraud, or deceitful
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conduct; or if its creation itself constitutes a misuse of the system of international investment
protection under the ICSID Convention. It will also not be protected if it is made in violation of
the host State’s law.” 147 Importantly, the Tribunal added that “[t]hese are general principles that
exist independently of specific language to this effect in the Treaty.” 148 Some tribunals have
concluded that such misconducts were in violation of “international public policy.” 149
(p. 593) In our view, a tribunal should be allowed (under new or amended BITs) to take into
account human rights violations committed by an investor when deciding a claim’s
admissibility.150 We believe that this is a matter of admissibility rather than jurisdiction.151 Thus,
while a tribunal would have jurisdiction over the investor’s claim, it should nevertheless refuse to
hear it based on the investor’s breach of human rights obligations contained in the BIT. To the
extent that recent tribunals have denied admissibility of claims based on bribery or
misrepresentations made by the claimant, it is submitted that they should do the same when faced
with human rights violations. In other words, the solution that prevailed so far for bribery, should,
a fortiori, find application when a tribunal finds fundamental human rights abuses by claimant. In
our view, these are precisely the kind of investments not worthy of protection under a BIT.
In fact, several authors,152 as well as UNCTAD,153 believe that under presently drafted BITs, a
tribunal should find inadmissible a claim submitted by an investor having committed jus cogens
violations. These norms are, of course, quite limited in number.154 Support for this proposition is
found in the Phoenix Action case, where the Tribunal held that protection “should not be granted
to investments made in violation of the most fundamental rules of protection of human rights, like
investments made in pursuance of torture or genocide or in support of slavery or trafficking of
human organs.” 155 In our view, inadmissibility of claims should not be limited only to violations of
jus cogens norms, but should be extended to other human rights obligations.
In sum, countries are entirely free to incorporate the clean hands doctrine in their BITs, and it is
submitted that they should. An unambiguous reference to that effect should be expressly (p. 594)
incorporated in the BIT’s investor-state dispute resolution clause.156 The clause could read as
follows:
Where an investor or its investment has breached any of the obligations mentioned at
Article […] of this Agreement, neither the investor nor its investment shall be entitled to
the substantive protections established under this Agreement. A host or home state may
raise these allegations as an objection to the admissibility in any dispute under this
Agreement.157
The inclusion of such a clause where the doctrine of clean hands is considered as a condition of
admissibility (rather than jurisdiction) raises an interesting question: Could an investor invoke the
most-favored-nation treatment (MFN) clause found in the basic BIT to by-pass the clean hands
requirement and claim a “better treatment” found in another BIT? In other words, should an
investor be allowed to invoke a dispute resolution clause found in another BIT entered into by the
host country that does not contain the clean hands requirement? There are reasons to think that
this is doubtful. In this sense, the Plama Tribunal emphasized that an investor-state dispute
resolution provision has been the object of negotiation between sovereigns and therefore cannot
be modified via the use of an MFN clause.158 A dispute settlement clause referring to the doctrine
of clean hands would clearly be the object of intensive negotiation between the Parties. Resorting
to the MFN clause should not be allowed in this case insofar as it would circumvent the express
terms of the clause.159 In any event, in order to avoid any surprises, the parties could specifically
indicate that the MFN clause does not apply in this case.
b. Offsetting of damages
A second available option would be to permit an investor’s claim, even in the face of human rights
violations, but to allow the respondent state to raise any such allegations during the arbitral
proceedings.160 This is the “offsetting of damages” (or “mitigation”) option. A tribunal would thus
take into account such allegations when making its determination on the merits of the dispute.
These allegations should also have some impact on the tribunal’s assessment of compensation for
damages claimed by the investor (as well as questions of allocation of costs, fees, etc). Thus,
compensation should be reduced “proportionally to the investor’s violation” of human rights
obligations.161 There is no doubt that a tribunal has power to take the investor’s behavior (p. 595)
into account when calculating compensation.162 Some arbitral awards have reduced
compensation based on the investor’s behavior (on matters unrelated to human rights
violations).163 Also, nothing prevents a tribunal from taking into account international obligations
arising under other areas of international law than international investment law to determine the
quantum of compensation.164
The investor-state dispute resolution clause should expressly mention that tribunals have the
authority to take into account human rights obligations in the context of the proceedings. One
example of such clause could be the following:
Where an investor or its investment is alleged by a host state to have failed to comply with
its obligation mentioned at Article […] of this Agreement, the tribunal hearing such a
dispute shall consider what effect this breach, if proven, may have on the merits of a
claim or what mitigating or off-setting effects this breach may have on any damages
awarded in the event of such award.165
c. Counterclaims
A third available, “ counterclaim ,” option is a variant of the “mitigation option” examined
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above. Under this option, a claimant investor would be permitted to file a claim, even in the face
of human rights violations, but the host country would be allowed to raise human rights
allegations in a counterclaim .166
As mentioned above, under the vast majority of BITs, arbitral tribunals only have jurisdiction to
adjudicate claims brought by investors, and not those submitted by the host country. Under these
treaties, it is generally recognized that a tribunal’s jurisdiction over a claim brought by an
investor does not imply jurisdiction over a counterclaim submitted by the respondent state.167
Thus, the respondent state will typically not be entitled to submit any counterclaim invoking
human rights violations committed by an investor. In any event, even in favorable circumstances
where a tribunal would have jurisdiction over a counterclaim , “there is still another obstacle to
overcome: the requirement of the ‘connexity’ between the primary claim and the (p. 596)
counterclaim .” 168 Thus, under Article 46 of the ICSID Convention, a tribunal “shall determine
any incidental claims or counterclaims arising directly out of the subject-matter of the
dispute.” A tribunal may ultimately reject a counterclaim on the ground that it is
“disconnected” with the claim submitted by the investor, and thus outside the scope of arbitration.
For all these reasons, in order to entertain the possibility for counterclaims by host countries,
such should be expressly provided for in the BIT’s investor-state dispute resolution clause. One
drafting possibility could be the following clause:
A host state may initiate a counterclaim before any tribunal established pursuant to
this Agreement for damages resulting from an alleged breach of the Agreement.169
One interesting question is which type of remedy the respondent state should seek in a
counterclaim . The obvious answer is monetary compensation. The 2009 cases of Europe
Cement 170 and Cementownia,171 however, raise the unprecedented issue of considering awarding
“moral damages” suffered by a state as a proper remedy under international investment law.172 In
both related cases, Turkey sought an award of monetary compensation for moral damages it
allegedly suffered with regards to its “reputation and international standing” as a result of
baseless claims filed by the investors. These cases raise two fundamental questions.173 The first
one is whether human rights violations committed by a corporation can cause any kind of moral
damages to a country. The second question is whether “satisfaction” per se (or symbolic monetary
compensation as a form of satisfaction, i.e., “pecuniary satisfaction”) could be an appropriate
remedy to redress any moral damages suffered by a country in the context of international
investment law.
d. Other inadequate options

Two other types of enforcement mechanisms have been put forward and will be considered below.
One possibility would be to allow the host country to file an arbitration claim directly against an
investor, based on a breach of human rights or labor obligations. Under this scenario, it is
noteworthy that it would be the host country (not the investor) that could take the initiative of
launching arbitration proceedings against a foreign investor. The IISD Model Agreement, for
instance, includes a provision under which the host country can start arbitration proceedings in
the event that the investor “has persistently failed to comply” with its human right and labor (p.
597) law obligations.174 As mentioned above, most current BITs dispute resolution clauses restrict
the right to bring a claim to investors. The question is whether BITs should be amended in order
to offer host countries the possibility to bring human rights claims against investors. In our view,
this scenario suffers from the probable absence of any consent to arbitration by the investor.175
Consent, both by the investor and host country is a basic requirement for arbitration.176 In the
context of BITs, the host country’s consent to arbitration is given in advance at the time the treaty
enters into force. The investor’s consent to arbitration is given at the moment it decides to initiate
arbitral proceedings against the host country. As a result, full consent to arbitration only exists
when an investor decides to go to arbitration. The investor’s consent to arbitration would
probably not be forthcoming in the event where the host country would be allowed to file an
arbitration claim directly against an investor based on a breach of human rights or labor
obligations.
Another related possibility put forward by some writers seeks to allow any national of the host
country to file a claim directly against a foreign investor who made an investment in the host
country and has breached human rights or other non-investment obligations.177 Again, this option
fails to credibly overcome the basic requirement that the investor must consent to such
arbitration.178
9. Final Observations
Admittedly, the proposed solutions are far from being ideal. They may be perceived by some as
insufficiently ambitious to limit corporate obligations only to those found in a limited number of
international instruments, thereby excluding all the interesting soft law initiatives that have
flourished in recent years. We argue though that a small list of binding treaties (or declarations
containing binding obligations) is probably the only approach that countries can realistically
agree to for the moment. Another potential complication is the fact that the few treaties listed
above were not designed to specifically impose obligations upon corporations. They were drafted
to provide rights to individuals. On this account, initiatives like the United Nations Global
Compact and Ruggie’s Guiding Principles seem better suited as they specifically address
corporate activities. Arbitral tribunals will necessarily have to make some adjustments when
deciding whether or not an allegation of human rights violation committed by a corporation,
breaches obligations contained in these treaties. Another challenge is that some of the provisions
179
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found in these instruments are, in fact, not applicable at all to corporations.179 For instance, the
(p. 598) UDHR does not impose any obligations on corporations to respect individual’s rights to a
fair and public hearing by an independent and impartial tribunal (Article 10), or their rights to be
presumed innocent until proved guilty (Article 11). These provisions will simply not be applicable
before an arbitral tribunal.
Finally, another legitimate concern is whether “ad-hoc Tribunals can be expected to have the
legitimacy to be entrusted with such a critical task.” 180 These tribunals are, at present, not known
for their great knowledge and expertise in international human rights law. One reason is certainly
the tribunal’s general lack of jurisdiction over these issues. Another concern possibly relates to the
legal background of most arbitrators, which is often rooted in commercial law. In our view, that
does not mean that arbitrators are necessarily insensitive about human rights issues. At any rate,
under the ICSID Convention, each party appoints one arbitrator. A respondent state advocating
human rights issues in arbitration proceedings should logically appoint an arbitrator with
extensive expertise, and particular sensitivity toward, international human rights law.
Conclusions
Currently, international law does not impose any direct human rights obligations to corporations.
There is, however, nothing in international law preventing countries from deciding to impose
human rights obligations upon corporations in the context of a treaty. One promising avenue
would be to impose human rights and other non-investment obligations directly upon corporations
in BITs. Very few BITs refer to questions related to human rights. When they do, they clearly do
not impose any binding obligations on foreign corporations. As a result, human rights concerns
can only be raised in a very limited number of circumstances before arbitral tribunals in the
context of BIT arbitration proceedings. There is a growing need for a more radical approach.
The present chapter argues that new provisions should be incorporated in BITs to impose direct
obligations upon corporations. We believe that the timing is right for a radical departure from
what has so far prevailed in investor-state arbitration. In recent years, there has been a notable
backlash against some of the most fundamental aspects at the core of the investor-state
arbitration system.181 Indeed, one clearly discerns mounting concerns regarding the unbalanced
nature of BITs.182 This is further reflected in a growing literature on the (p. 599) “legitimacy
crisis” affecting invest-state arbitration.183 In his 2008 Report, UN Special Representative Ruggie
recognized that the legal rights of multinational enterprises “have been expanded significantly
over the past generation” as a result of BITs, further concluding that “this has encouraged
investment and trade flows,” while recognizing that “it has also created instances of imbalances
between firms and States that may be detrimental to human rights.” 184 This is because “the legal
framework regulating transnational corporations operates much as it did long before the recent
wave of globalization.” 185 One question that has gained some attention from scholars is precisely
how the legal framework regulating transnational corporations should be changed to take into
account human rights violations.
At the moment, the prospect of a new generation of BITs, balancing the rights and obligations of
corporations, is uncertain. There does not seem to be any clear political will amongst countries
for such developments. Ultimately, all countries, both developed and developing, would have a
great interest in pursuing these changes in future treaties. In our view, emerging markets (which
appear as host countries in most cases) will increasingly realize that the proposed changes are to
their benefit insofar as it would provide them with additional tools in defending claims by foreign
investors. At the very least, this should be the case for democratic countries that have adhered to
international human rights instruments.
Objection to the proposed changes may come from capital-exporting countries (often Western
markets). Thus, when signing a BIT, their goal is, after all, to provide extensive legal protection to
their national investors conducting business abroad. They may be reluctant at first to adopt any
BIT provisions that would also impose human rights obligations upon their own nationals. While
this is undoubtedly true, it fails to take into account recent trends. There is a growing concern
about the negative impact that corporate activities may have on local populations with respect to
human rights and related issues. Human rights abuses by foreign corporations are well
documented, as one author succinctly summarized:
Human rights that multinational corporations have been accused of violating include
human rights to life, including the right to enjoy life; freedom from torture and cruel,
inhuman, or degrading treatment; freedom from forced or slave labor; freedom from
arbitrary detention or deprivation of security of person; freedom to enjoy property;
freedom from deprivation of or injury to health; enjoyment of a clean and healthy
environment—the latter also implicating interrelated international law recognizing
private responsibility for pollution;—and freedom from discrimination. One should also
consider private corporate deprivations of rights such as free choice in work; fair (p. 600)
wages, a “decent living,” and equal remuneration for work of equal value; safe and
healthy working conditions; protection of children from economic exploitation; and
protection of mothers.186
In this context, it has become obvious for a growing segment of civil society that BITs, in their
current form, simply do not address these important concerns. In our view, different groups will,
in the near future, increasingly put pressure on governments to take effective measures to control
the activities of corporations abroad. One simple way for capital-exporting markets to respond to
these grievances would be to adopt BITs imposing human rights obligations upon corporations.
Many of these changes are feasible. The work of the United Nations Global Compact (and that of
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UN Special Representative Ruggie) has shown that there is a growing recognition from
multinational enterprises that they must respect the most fundamental human rights when they
conduct business. The inclusion of specific reference to corporate social responsibility in a number
of new BITs is a first step in this direction. It is noteworthy that in the context of the recent
negotiation of Canada’s Free Trade Agreements with Peru, Colombia and Panama references to
corporate social responsibility were in fact pushed by Canada.187 These measures were strongly
supported by civil society as well as by the business community.188 In our view, countries will
eventually and inevitably be pushed toward including corporate social and human rights
responsibilities within their BITs, as a result of the unremitting concerns about the legitimacy of
current generation BITs.
Footnotes:
* The authors wish to thank Ms. Isabel Valenta and two anonymous peer reviewers for their
comments and suggestions on an earlier draft of this chapter . This chapter reflects facts
current as of February 2012.
1. See, Compañía de Aguas del Aconquija S.A. and Vivendi Universal v. Argentine Republic,
ICSID Case No. ARB/97/3; Biwater Gauff (Tanzania) Limited v. United Republic of Tanzania,
ICSID Case No. ARB/05/22.
2. Methanex Corp. v. Unites States, UNICTRAL, final award (August 3, 2005). These questions
are examined in: James D. Fry, “International human rights in investment arbitration: Evidence of
international law’s unity,” 18 Duke Journal of Comparative and International Law 77 (2007–
2008).
3. Marc Jacob, “International investment agreements and human rights,” INEF Research Paper
Series (2010); Fry, Ibid.; OECD, “International Investment Agreements: A Survey of
Environmental, Labour and Anti Corruption Issues,” (Paris: OECD, 2008), available at
http://www.oecd%2Dilibrary.org/finance%2Dand%2Dinvestment/international%2Dinvestment%2Dlaw%2Dunderstanding%2Dconcepts%2Dand%2Dtracking%2Dinnovations/international%2Dinvestment%2Dagreements%2Da%2Dsurvey%2Dof%2Denvironmental%2Dlabour%2Dand%2Danti%2Dcorruption%2Dissues%5F9789264042032–
4%2Den (last visited April 19, 2012); Efraim Chalamish, “The future of bilateral investment
treaties: A de facto multilateral agreement?,” 34(2) Brooklyn Journal of International Law 304
(2009); Howard Mann, “International investment agreements, business and human rights: Key
issues and opportunities” IISD (February 2008), available at
http://www.iisd.org/pdf/2008/iia_business_human_rights.pdf (last visited: April 19, 2012); Luke E.
Peterson and Kevin Gray, “International human rights in bilateral investment treaties and
investment treaty arbitration”, Working Paper for the Swiss Ministry for Foreign Affairs (April
2003), available at http://www.iisd.org/pdf/2003/investment_int_human_rights_bits.pdf (last
visited: April 19, 2012); Surya P. Subedi, International Investment Law: Reconciling Policy and
Principle (Oxford and Portland, Oregon: Hart Publishing, 2008). Ryan Suda “The effect of
bilateral investment treaties on human rights enforcement and realization,” in Olivier De
Schutter, ed., Transnational Corporations and Human Rights (Oxford and Portland: Hart
Publishing, 2006); Barnali Choudhury, “Exception provisions as a gateway to the incorporation of
human rights in international investment law,” 49 Columbia Journal of Transnational Law 670
(2011); Ursula Kriebaum, “Privatizing human rights—The interface between international
investment protection and human rights,” 5 Transnational Dispute Management (TDM) (2006),
available at http://www.transnational-dispute-management.com/article.asp?key=947 (last visited:
April 19, 2012); Abdullah Al Faruque, “Mapping the relationship between investment protection
and human rights,” 11(4) Journal of World Investment and Trade 539 (2010).
4. Notable exceptions include, inter alia, the following: Mann, “International investment
agreements, business and human rights: Key issues and opportunities,” op. cit. note 3; Peterson
and Gray, “International human rights in bilateral investment treaties and investment treaty
arbitration,” op. cit. note 3; Jacob, “International investment agreements and human rights,” op.
cit. note 3.
5. It should be noted at this juncture that in this paper the expression “non-investment
obligations” will refer to human rights, labour rights and environmental obligations, while the
term “human rights obligations” will sometimes be used as shorthand to include all these “non-
investment” obligations.
6. Robert McCorquodale and Penelope Simons, “Responsibility beyond borders: State

responsibility for extraterritorial violations by corporations of international human rights law,”
70(4) Modern Law Review 598 (2007), p. 618; The “State duty to protect human rights” has been
recognised by Principle 1 of the “UN Guiding Principles on Business and Human Rights:
Implementing the United Nations ‘Protect, Respect and Remedy’ Framework,” Report of the
Special Representative of the UN Secretary-General on the issue of human rights and
transnational corporations and other business enterprises, John Ruggie, UN Doc. A/HRC/17/31
(March 21, 2011).
7. Carlos M. Vázquez, “Direct vs. indirect obligations of corporations under international law,”
43 Columbia Journal of Transnational Law 927 (2005), p. 931.
8. “Protect, respect and remedy: A framework for business and human rights,” Report of the
transnational corporations and other business enterprises, John Ruggie, UN Doc. A/HRC/8/5
(April 7, 2008), para. 14.
9. Adefolake Adeyeye, “Corporate responsibility in international law: Which way to go?,” 11

Singapore Year Book of International Law 141–61 (2007), p. 142; Jorge Daniel Taillant and
2018
Jonathan Bonnitcha, “International investment law and human rights,” in Marie-Claire Cordonier
Segger, Markus W. Gehring, and Andrew Newcombe, eds., Sustainable Development in World
Investment Law (Alphen aan den Rijn: Kluwer Law International, 2011), p. 79.
10. Peterson and Gray, “International human rights in bilateral investment treaties and
investment treaty arbitration,” op. cit. note 3, p. 16.
11. Vázquez, “Direct vs. indirect obligations of corporations under international law,” op. cit.
note 7, p. 931.
12. “UN Guiding Principles on Business and Human Rights: Implementing the United Nations
‘Protect, Respect and Remedy’ Framework,” op. cit. note 6, p. 7, commentary to principle 2.
13. Penelope Simons, “Corporate voluntarism and human rights: The adequacy and effectiveness
of voluntary self-regulation regimes,” 59(1) Industrial Relations 101 (2004), p. 104.
14. “Business and Human Rights: Mapping International Standards of Responsibility and
Accountability for Corporate Acts,” Report of the Special Representative of the UN Secretary-
General on the issue of human rights and transnational corporations and other business
enterprises, UN Doc. A/HRC/4/035 (February 9, 2007), para. 44.
15. See, for instance: Organisation for Economic Co-operation and Development (OECD),
Guidelines for Multinational Enterprises, OECD Publishing, 2011 edition, available at
http://www.oecd.org/document/28/0,3746,en_2649_34889_2397532_1_1_1_1,00.html;
ILO Tripartite Declaration of Principles Concerning Multinational Enterprises and Social Policy,
ILO Official Bulletin, Series A, No. 3 (2000), updated in March 2006, available at
http://www.ilo.org/wcmsp5/groups/public/-ed_Emp/-emp_Ent/-
multi/documents/publication/wcms_094386.pdf.
16. David Kinley and Junko Tadaki, “From talk to walk: The emergence of human rights
responsibilities for corporations at international law,” 44(4) Virginia Journal of International Law
931 (2004); Clara Reiner and Christoph Schreuer, “Human rights and international investment
arbitration,” in Pierre-Marie Dupuy, Ernst-Ulrich Petersmann, and Francesco Francioni, eds.,
Human Rights in International Investment Law and Arbitration (New York: Oxford University
Press, 2009), pp. 86–87; Mann, “International investment agreements, business and human rights:
Key issues and opportunities,” op. cit. note 3, p. 9; Adeyeye, “Corporate responsibility in
international law: Which way to go?,” op. cit. note 9, p. 148; Luke Eric Peterson, “Human Rights
and Bilateral Investment Treaties. Mapping the Role of Human Rights Law within Investor-State
Arbitration,” Rights & Democracy Report (Montreal 2009), p. 15, available at
http://publications.gc.ca/collections/collection%5F2012/dd%2Drd/E84–36–2009%2Deng.pdf (last
visited: October 20, 2012).
note 7, p. 927. This issue is further discussed below.
18. Id., p. 930; “[i]nternational law imposes no conceptual obstacle to an agreement among
states to impose obligations directly on private parties.”; “Interim Report of the Special
Representative of the Secretary-General of the United Nations on the issue of human rights and
transnational corporations and other business enterprises,” John Ruggie, E/CN.4/2006/97
(February 22, 2006), 65, indicating not only that there are “legitimate arguments in support of the
proposition that it may be desirable in some circumstances for corporations to become direct
bearers of international human rights obligations,” but, most importantly, that “there are no
inherent conceptual barriers to States deciding to hold corporations directly responsible.” See
also, Mann, “International investment agreements, business and human rights: Key issues and
opportunities,” op. cit. note 3, p. 13.
19. Peterson, “Human Rights and Bilateral Investment Treaties. Mapping the Role of Human
Rights Law within Investor-State Arbitration,” op. cit. note 16, p. 3; Jacob, “International
investment agreements and human rights,” op. cit. note 3, p. 26.
20. Mehmet Toral and Thomas Schultz, “The state, a perpetual respondent in investment
arbitration? Some unorthodox considerations,” in Michael Waibel, Asha Kaushal, Kyo-Hwa Liz
Chung, and Claire Balchin, The Backlash against Investment Arbitration: Perceptions and Reality
(Alpena aan den Rijn: Kluwer Law International, 2010) pp. 577–602.
21. These treaties generally contain broadly worded dispute resolution clauses referring, for
instance, to “disputes with respect to investments,” “all disputes,” “any disputes” or “any legal
disputes.”
22. A good example is art. 1116(1)(a) from the North American Free Trade Agreement
[hereinafter NAFTA]: “An investor of a Party may submit to arbitration under this Section a
claim that another Party has breached an obligation under [NAFTA],” available at
http://www.nafta-sec-alena.org/en/view.aspx?x=343 (last visited April 21, 2012).
23. Peterson, “Human Rights and Bilateral Investment Treaties. Mapping the Role of Human
Rights Law within Investor-State Arbitration,” op. cit. note 16, p. 3; Mann, “International
investment agreements, business and human rights: Key issues and opportunities,” op. cit. note 3,
p. 9; OECD, “International Investment Agreements: A Survey of Environmental, Labour and Anti
Corruption Issues,” op. cit. note 3; Lahra Liberti, “Investissements et droits de l’homme,” in
Philippe Kahn and Thomas Waelde, eds., New Aspects of International Investment Law (Hague
Academy of International Law, 2007) p. 820; Jacob, “International investment agreements and
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human rights,” op. cit. note 3, p. 26; Suda, “The effect of bilateral investment treaties on human
rights enforcement and realization,” op. cit. note 3, p. 23.
24. 2007 Draft version of the Norway Model BIT, available at

http://www.asil.org/ilib080421.cfm (last visted April 21, 2012), which was later abandoned by the
Norwegian government [hereinafter Norway Model BIT]; 2002 European Free Trade Area–
Singapore Free Trade Agreement, signed on June 26 2002, entered into force on January 1, 2003,
and available at http://www.fta.gov.sg/fta_Esfta.asp?hl=11 (last visited: April 21, 2012); 2008
Canada–Colombia Free Trade Agreement [hereinafter Canada-Colombia FTA], signed on
November 21, 2008, entered into force on August 15, 2011, and is available at
http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/colombia-
colombie/can-colombia-toc-tdm-can-colombie.aspx?view=d (last visited April 21, 2012).
25. For example, see 2004 United States Model BIT, available at
http://www.state.gov/documents/organization/117601.pdf (last visited: April 21, 2012), art. 12;
2004 Canada Model Foreign Investment Promotion and Protection Agreements, art. 11; Canada–
Colombia FTA, art. 816; 2009 Canada-Peru Free Trade Agreement [hereinafter Canada-Peru
FTA], entered into force on August 1, 2009, available at http://www.international.gc.ca/trade-
agreements-accords-commerciaux/agr-acc/peru-perou/peru-toc-perou-tdm.aspx?
lang=eng&view=d (last visited April 21, 2012), art. 810.
26. This question is examined in detail in Patrick Dumberry and Gabrielle Dumas-Aubin, “When
and how allegations of human rights violations can be raised in investor-state arbitration,” 13(3)
Journal of World Investment & Trade, 349 (2012).
27. Fry, “International human rights in investment arbitration: Evidence of international law’s
unity,” op. cit. note 2, p. 107.
28. Another argument in defense that could be used by the respondent state is to argue that it
acted in accordance with its own international obligations as existing under a human rights
treaty. In other words, the host country could raise human rights arguments to justify its own
actions taken against a claimant investor. See, in doctrine: Annika Wythes, “Investor–state
arbitrations: Can the ‘fair and equitable treatment’ clause consider international human rights
obligations?” 23 Leiden Journal of International Law 241 (2010); Ioana Knoll-Tudor, “The fair
and equitable treatment standard and human rights norms,” in Human Rights in International
Investment Law and Arbitration, op. cit. note 16; Filip Balcerzak, “Fair and equitable treatment
in investor-state arbitrations: Is there a place for human rights considerations?,” Research Paper,
University of Ottawa (2011), on file with author.
29. Referring, for instance, to “disputes with respect to investments,” “all disputes,” etc.; See,
Reiner and Schreuer, “Human rights and international investment arbitration,” op. cit. note 16, p.
84.
30. In our view, the situation is different when human rights violations are not directly related to
the investor’s investment examined by the tribunal. This would be the case, for instance, if
violations were committed in the context of another (previous or concomitant) unrelated
investment project in the country. In our view, a tribunal would lack jurisdiction over such a
defense since the investor’s consent to arbitration (when it files an arbitration request) is limited
to the specific investment to which the claim is related; it is not a “general” consent for anything
involving the investor in the country.
31. What is clear is that a tribunal should find inadmissible a claim submitted by an investor
having committed jus cogens violations. This is further discussed below.
32. Peter Muchlinski, “‘Caveat investor’? The relevance of the conduct of the investor under the
fair and equitable treatment standard,” 55(3) International and Comparative Law Quarterly, 527
(2006), p. 530; Knoll-Tudor, “The fair and equitable treatment standard and human rights
norms,” op. cit. note 28.
33. Choudhury, “Exception provisions as a gateway to the incorporation of human rights in

international investment law,” op. cit. note 3. See also: Liberti, “Investissements et droits de
l’homme,” op. cit. note 23, pp. 815–19; Jacob, “International investment agreements and human
rights,” op. cit. note 3, p. 35; Anne Van Aaken, “Fragmentation of international law: The case of
international investment protection,” 2008(1) University of St. Gallen, Law and Economics
Research Paper Series, p. 19.
35. One notable exception is in the context of NAFTA, wherein art. 1128 expressly allows
interventions by non-disputing states (including the home state) on questions of interpretation.
36. Anthea Roberts, “Power and persuasion in investment treaty interpretation: The dual role of
states” 104 American Journal of International Law 179 (2010), p. 220.
38. Reiner and Schreuer, “Human rights and international investment arbitration,” op. cit. note
16, p. 84.
39. Bruno Simma and Theodore Kill, “Harmonizing investment protection and human rights:
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First steps towards a methodology,” in Christina Binder, Ursula Kriebaum, August Reinisch, and
Stephan Wittich, eds., International Investment Law for the 21st Century: Essays in Honour of
Christoph Schreuer (New York: Oxford University Press, 2009), p. 680; Jacob, “International
investment agreements and human rights,” op. cit. note 3, p. 27.
40. Mann, “International investment agreements, business and human rights: Key issues and
opportunities,” op. cit. note 3, p. 27; Reiner and Schreuer, “Human rights and international
investment arbitration,” op. cit. note 16, p. 90; Fry, “International human rights in investment
arbitration: Evidence of international law’s unity,” op. cit. note 2, p. 96, 109; James Harrison,
“Human rights arguments in Amicus Curiae submissions: Promoting social justice?,” in Human
Rights in International Investment Law and Arbitration, op. cit. note 16, p. 413.
41. Van Aaken, “Fragmentation of international law: The case of international investment
protection,” op. cit. note 33, pp. 10–16; Liberti, “Investissements et droits de l’homme,” op. cit.
note 23, p. 823; Jacob, “International investment agreements and human rights,” op. cit. note 3,
pp. 27, 36; Fry, “International human rights in investment arbitration: Evidence of international
law’s unity,” op. cit. note 2, p. 108; Suda, “The effect of bilateral investment treaties on human
rights enforcement and realization,” op. cit. note 3, p. 66; Peterson and Gray, “International
human rights in bilateral investment treaties and investment treaty arbitration,” op. cit. note 3, p.
10.
42. See, inter alia, art. 42(1), ICSID Convention; art. 1131, NAFTA; art. 26(6), Energy Charter
Treaty. A number of BITs also contain such a clause; These treaties are further examined by Van
Aaken, ibid., p. 12–14.
protection,” op. cit. note 33, p. 14. It should be noted that the NAFTA Free Trade Commission
issued an interpretative note clearly stating that “international law” should be understood only as
a reference to “customary international law” (NAFTA Free Trade Commission, Notes of
Interpretation of Certain Chapter 11 Provisions, pt. B (July 31, 2001). The NAFTA Tribunal in
Mondev International, Ltd. v. United States, ICSID Case No. ARB(AF)/99/2, award (October 11,
2002), at 121, stated in no uncertain terms that “Article 1105(1) refers to a standard existing
under customary international law, and not to standards established by other treaties of the three
NAFTA parties.” Even under this restrictive interpretation of art. 1105, it remains that a tribunal
may still consider those elements of international human rights law that have acquired the status
of customary international law.
protection,” op. cit. note 33, p. 16–19; Simma and Kill, “Harmonizing investment protection and
human rights: First steps towards a methodology,” op. cit. note 39, p. 678. See also: Jacob,
“International investment agreements and human rights,” op. cit. note 3, p. 27–29.
protection,” op. cit. note 33, p. 12.
46. In fact, the Tribunal in Phoenix Action, Ltd. v. Czech Republic, ICSID Case No. ARB/06/5,
award (April 15, 2009), 101, stated that the requirement of conformity with host country law “is
implicit even when not expressly stated in the relevant BIT.” See further Rahim Moloo and Alex
Khachaturian, “The compliance with the law requirement in international investment law,” 34
Fordham International Law Journal 1473 (2011), p. 1475: “Under international investment law,
there is an emerging principle requiring compliance with the law of the host state, and at times
international legal principles, in order to be granted the substantive legal protections provided by
an investment treaty.”
47. Some of these ideas have been briefly outlined in Patrick Dumberry, “Corporate investors’
international legal personality and their accountability for human rights violations under
investment treaties,” in Armand De Mestral and Céline Lévesque, eds., Improving International
Investment Treaties: Negotiation, Substantive Obligations and Dispute Resolution (London:
Routledge, 2012) (forthcoming).
48. Liberti, “Investissements et droits de l’homme,” op. cit. note 23, pp. 842, 846; Peterson and
Gray, “International human rights in bilateral investment treaties and investment treaty
arbitration,” op. cit. note 3, p. 46; Vaughan Lowe, “Corporations as international actors and
international law makers,” 14 Italian Yearbook of International Law 23 (2004), p. 31; Choudhury,
“Exception provisions as a gateway to the incorporation of human rights in international
investment law,” op. cit. note 3; Contra: Jacob, “International investment agreements and human
rights,” op. cit. note 3, pp. 35–36.
49. UNCTAD, Development Implications of International Investment Agreements, IIA Monitor

No. 2 (2007) (UNCTAD/WEB/ITE/IIA/2007/2), p. 6, available at
http://unctad.org/en/docs/webiteiia20072_En.pdf (last visited April 23, 2012).
50. Chalamish, “The future of bilateral investment treaties: A de facto multilateral agreement?,”
op. cit. note 3, p. 348; Glen Kelley, “Multilateral investment treaties: A balanced approach to
multinational corporations,” 39 Columbia Journal of Transnational Law 483 (2001).
51. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 40
(“Coherence and uniformity could be greatly enhanced. Wildly oscillating bilateral power
imbalances might arguably be restrained, thereby promoting fairness and legitimacy through
wider participation. Treaty – shopping (via MFN clauses or home states of convenience) could be
curtailed. All of this could result in tangible stability and predictability benefits, simplify planning
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for businesses and states alike, and perhaps drive down legal and regulatory costs.”).
52. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 40; Kate
M. Supnik, “Making amends: Amending the ICSID Convention to reconcile competing interests in
international investment law,” 59 Duke Law Journal 343 (2009–2010) p. 357.
53. OECD, Negotiating Group on the Multilateral Agreement on Investment, Draft Consolidated
Text of February 11, 1998, DAFFE/MAI (98)7, pp. 58–64.
54. Supnik, “Making amends: Amending the ICSID Convention to reconcile competing interests
in international investment law,” op. cit. note 52, p. 343.
55. Id.
56. Christoph Schreuer, The ICSID Convention: A Commentary (Cambridge, UK: Cambridge
University Press, 2009); Antonio Parra, “The development of the regulations and rules of the
International Centre for Settlement of Investment Disputes,” 22(1) ICSID Review—Foreign
Investment Law Journal 55 (2007), p. 57.
57. Convention on the Settlement of Investment Disputes between States and Nationals of Other
States (2006) [hereinafter: ICSID Convention], art. 66(1), available at
http://icsid.worldbank.org/ICSID/ICSID/RulesMain.jsp (last visited April 21, 2012).
58. Parra, “The development of the regulations and rules of the International Centre for
Settlement of Investment Disputes,” op. cit. note 56, p. 57. The “Rules” were thus amended in
2006 in order to make ICSID more transparent, to increase third-party participation as well as to
provide a mechanism to dismiss frivolous claims; See also: J. Anthony VanDuzer, “Enhancing the
procedural legitimacy of investor-state arbitration through transparency and Amicus Curiae
participation,” 52 McGill Law Journal 681 (2007), p. 687.
59. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 36;
Contra: Supnik, “Making amends: Amending the ICSID Convention to reconcile competing
interests in international investment law,” op. cit. note 52, p. 368.
60. S.D. Myers, Inc. v. Canada, UNCITRAL/NAFTA, first partial award (November 13, 2000), at
196.
61. ADF Group Inc. v. United States, ICSID Case No. ARB(AF)/00/1 (NAFTA), award (January 9,
2003), at 147.
62. Jacob, “International investment agreements and human rights,” op. cit. note 3, pp. 10, 34.
63. Mann, “International investment agreements, business and human rights: Key issues and
64. Liberti, “Investissements et droits de l’homme,” op. cit. note 23, p. 808.
65. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 44.
66. Simons, “Corporate voluntarism and human rights: The adequacy and effectiveness of
voluntary self-regulation regimes,” op. cit. note 13, p. 130.
67. Norway Model BIT, op. cit. note 24, art. 32.
68. Choudhury, “Exception provisions as a gateway to the incorporation of human rights in

international investment law,” op. cit. note 3, p. 25 (paper version as on file with author).
69. NAFTA, op. cit. note 22, art. 104.
70. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 44.
71. This is, for instance, the option favored by Jacob, ibid., pp. 33–35.
72. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 33–35;
Mann, “International investment agreements, business and human rights: Key issues and
73. OECD, “International Investment Agreements: A Survey of Environmental, Labour and Anti
Corruption Issues,” op. cit. note 3; Mann, “International investment agreements, business and
human rights: Key issues and opportunities,” op. cit. note 3, p. 8.
74. Kinley and Tadaki, “From talk to walk: The emergence of human rights responsibilities for
corporations at international law,” op. cit. note 16, p. 973.
75. United Nations, Global Compact—The Ten Principles: (Principle 1) Businesses should
support and respect the protection of internationally proclaimed human rights; and (Principle 2)
make sure that they are not complicit in human rights abuses; (Principle 3) Businesses should
uphold the freedom of association and the effective recognition of the right to collective
bargaining; and (Principle 4) the elimination of all forms of forced and compulsory labour; and
(Principle 5) the effective abolition of child labour; and (Principle 6) the elimination of
discrimination in respect of employment and occupation; (Principle 7) Businesses should support a
precautionary approach to environmental challenges; and (Principle 8) undertake initiatives to
promote greater environmental responsibility; and (Principle 9) encourage the development and
diffusion of environmentally friendly technologies; (Principle 10) Businesses should work against
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corruption in all its forms, including extortion and bribery—available at
http://www.unglobalcompact.org/aboutthegc/thetenprinciples/index.html (last visited April 21,
2012).
76. OECD, “International Investment Agreements: A Survey of Environmental, Labour and Anti
Corruption Issues,” op. cit. note 3, p. 150, citing many examples.
77. For UNCTAD, Development Implications of International Investment Agreements, op. cit.
note 49, p. 6, one drafting option would be to include an obligation for investors to refrain from
“activity that would violate human or labour rights, damage the environment, or constitute
corruption.”
78. International Institute for Sustainable Development (IISD), IISD Model Agreement on
Investment for Sustainable Development (April 2005), art. 14(B), available at
http://www.iisd.org/pdf/2005/investment_model_int_agreement.pdf (last visited April 21, 2012).
79. United Nations, Universal Declaration of Human Rights, Adopted on December 10, 1948 by
the UN General Assembly: GA Res. 271 A (III) UN Doc A/810.
80. United Nations, United Nations International Covenant on Civil and Political Rights,
Adopted on December 16, 1966, entered into force March 23, 1976, GA Res. 2200 A (XXI) UN
Doc A/6316 (1966).
81. International Labour Organisation, Declaration on Fundamental Principles and Rights at

Work, Adopted on June 18, 1998 by the International Labour Conference.
82. United Nations, United Nations Convention Against Corruption, Adopted on October 31,
2003 by the UN General Assembly: GA Res. 58/4. (2012–10–21).
83. Adopted by consensus at the United Nations Conference on Environment and Development
by 178 countries in Rio de Janeiro, Brazil, in June 1992.
84. Guiding Principles on Business and Human Rights: Implementing the United Nations
“Protect, Respect and Remedy” Framework, as endorsed by Human Rights Council,
A/HRC/RES/17/4 (July 6, 2011), available at http://www.business-
humanrights.org/media/documents/ruggie/ruggie-guiding-principles-21-mar-2011.pdf (last visited
April 21, 2012).
85. Id., p. 14. The Commentary to Principle 12 further indicates that “An authoritative list of the
core internationally recognized human rights is contained in the International Bill of Human
Rights (consisting of the Universal Declaration of Human Rights and the main instruments
through which it has been codified: the International Covenant on Civil and Political Rights and
the International Covenant on Economic, Social and Cultural Rights), coupled with the principles
concerning fundamental rights in the eight ILO core conventions as set out in the Declaration on
Fundamental Principles and Rights at Work.”
86. UN Sub-Commission on the Promotion and Protection of Human Rights, Draft Norms on the
Responsibilities of Transnational Corporations and other Business Enterprises with Respect to
Human Rights, E/CN.4/Sub.2/2003/12/Rev.2 (August 26, 2003). The Norms were adopted by the
UN Sub-Commission, but were never formally adopted by the Human Rights Commission and
therefore have no legal standing (Human Rights Commission, decision 2004/116, April 20, 2004).
87. Human Rights Commission, decision 2004/116, April 20, 2004. The Draft Norms were never
formally adopted by the Commission and so have no firm legal standing.
88. Although the preamble of the Draft Norms “recognize” that “States have the primary
responsibility to promote, secure the fulfilment of, respect, ensure respect of and protect human
rights,” it adds that “transnational corporations and other business enterprises, as organs of
society, are also responsible for promoting and securing the human rights set forth in the
Universal Declaration of Human Rights.” It also states that “transnational corporations and other
business enterprises, their officers and persons working for them are also obligated to respect
generally recognized responsibilities and norms contained in United Nations treaties and other
international instruments.” Art. 1 of the Norms states that “transnational corporations and other
business enterprises have the obligation to promote, secure the fulfilment of, respect, ensure
respect of and protect human rights recognized in international as well as national law, including
the rights and interests of indigenous peoples and other vulnerable groups.”
89. A succinct summary of the main arguments both against and in favour of the Draft Norms is
found in: Report of the United Nations High Commissioner on Human Rights on the
Responsibilities of Transnational Corporations and Related Business Enterprises with Regard to
Human Rights (February 15, 2005), available at http://www.business-
humanrights.org/Links/Repository/761345 (last visited April 22, 2012), 20–21. See also, Kinley
and Tadaki, “From talk to walk: The emergence of human rights responsibilities for corporations
at international law,” op. cit. note 16, pp. 946–47.
90. Interim Report of the Special Representative, op. cit. note 18, 60.
91. Id., 64.
92. Bruno Simma and Philip Alston, “The sources of human rights law: Custom, jus cogens and
general principles,” 12 Australian Yearbook of International Law 82 (1988–1989); Theodor
Meron, Human Rights and Humanitarian Norms as Customary Law (Oxford: Clarendon Press,
2018
1989).
93. John H. Currie, Craig Forcese and Valerie Oosterveld, International Law: Doctrine, Practice,
and Theory (Toronto: Irwin Law, 2007), p. 558; John Ruggie, “Current developments. Business
and human rights: The evolving international agenda,” 101 American Journal of International
Law 819 (2007), p. 833; Andrew Clapham, Human Rights Obligations of Non State Actors (New
York: Oxford University Press, 2006), p. 86; Javaid Rehman, International Human Rights Law. A
Practical Approach (Essex: Longman Pub Grub, 2003), pp. 59–60; Louis Sohn, “The human rights
law of the charter,” 12 Texas International Law Journal 129 (1977), p. 133; John P. Humphrey
“The international bill of rights: Scope and implementation,” 17 William & Mary Law Review 527
(1975–1976), p. 529; Richard B. Lilich “The growing importance of customary international
human rights law,” 25 Georgia Journal of International and Comparative Law 1 (1995–1996), p.
3; Hurst Hannum, “The status of the Universal Declaration of Human Rights in national and
international law,” 25 Georgia Journal of International and Comparative Law 287 (1995–1996),
p. 289.
94. This conclusion also applies to the International Covenant on Economic, Social and Cultural
Rights (ICESCR), UNGA Res. 2200A (XXI) (December 16,1966), entry into force on January 1,
1976, available at http://www2.ohchr.org/english/law/cescr.htm (last visited April 22, 2012),
adopted by 160 countries. Thus, a great number of countries have failed to constitutionally
entrench the rights set out in the ICESCR in their own domestic law and to provide any effective
remedies in case of violations; see, Henry J. Steiner, Philip Alston, and Ryan Goodman,
International Human Rights in Context. Law, Politics, Morals (New York: Oxford University
Press, 2008), pp. 263–64.
95. Art. 4(2) of the ICCPR refers to the following non-derogable rights: the “Right to Life” (art.
6), the right not to be “subjected to torture or to cruel, inhuman or degrading treatment or
punishment” (art. 7), the right not to be “held in slavery” (art. 8(1)), the right not to be “held in
servitude” (art. 8(2)), the right not to be “imprisoned merely on the ground of inability to fulfil a
contractual obligation” (art. 11), the right not to be “held guilty of any criminal offence on
account of any act or omission which did not constitute a criminal offence, under national or
international law, at the time when it was committed” (art. 15), “the right to recognition
everywhere as a person before the law” (art. 16) and the “right to freedom of thought, conscience
and religion” (art. 18).
96. UN Human Rights Committee, General Comment No. 24: Issues Relating to Reservations
made upon Ratification or Accession to the Covenant or the Optional Protocols thereto, or in
Relation to Declarations under article 41 of the Covenant, UN Doc. CCPR/C/21/Rev.1/Add.6,
1994: “[a]lthough treaties that are mere exchanges of obligations between States allow them to
reserve inter se application of rules of general international law, it is otherwise in human rights
treaties, which are for the benefit of persons within their jurisdiction. Accordingly, provisions in
the Covenant that represent customary international law (and a fortiori when they have the
character of peremptory norms) may not be the subject of reservations. Accordingly, a State may
not reserve the right to engage in slavery, to torture, to subject persons to cruel, inhuman or
degrading treatment or punishment, to arbitrarily deprive persons of their lives, to arbitrarily
arrest and detain persons, to deny freedom of thought, conscience and religion, to presume a
person guilty unless he proves his innocence, to execute pregnant women or children, to permit
the advocacy of national, racial or religious hatred, to deny to persons of marriageable age the
right to marry, or to deny to minorities the right to enjoy their own culture, profess their own
religion, or use their own language. And while reservations to particular clauses of art. 14 may be
acceptable, a general reservation to the right to a fair trial would not be.” (8, emphasis added).
97. UN Human Rights Committee, General Comment No. 29: States of Emergency (art. 4), UN
Doc. CCPR/C/21/Rev.1/Add.11 (August 31, 2001), 11: “The enumeration of non-derogable
provisions in article 4 is related to, but not identical with, the question whether certain human
rights obligations bear the nature of peremptory norms of international law. The proclamation of
certain provisions of the Covenant as being of a non-derogable nature, in article 4, paragraph 2,
is to be seen partly as recognition of the peremptory nature of some fundamental rights ensured in
treaty form in the Covenant (e.g., articles 6 and 7).”
98. Convention concerning Freedom of Association and Protection of the Right to Organise
(Convention No. C087, 1948, 150 ratifications); Convention concerning the Application of the
Principles of the Right to Organise and to Bargain Collectively (Convention no. C098, 1949, 160
ratifications); Convention concerning Forced or Compulsory Labour (Convention no. C029, 1930,
175 ratifications); Convention concerning the Abolition of Forced Labour (Convention no, C105,
1957, 169 ratifications); Convention concerning Equal Remuneration for Men and Women
Workers for Work of Equal Value (Convention no. C100, 1951, 168 ratifications); Convention
concerning Discrimination in Respect of Employment and Occupation (Convention no. C111,
1958, 169 ratifications); Convention concerning Minimum Age for Admission to Employment
(Convention no. C138, 1973, 161 ratifications); Convention concerning the Prohibition and
Immediate Action for the Elimination of the Worst Forms of Child Labour (Convention no. C182,
1999, 174 ratifications)—all available at http://www.ilo.org/ilolex/english/convdisp1.htm (last
visited April 22, 2012).
99. Claire La Hovary, Les Droits Fondamentaux au Travail. Origines, Statut et Impact en Droit
International (Genève: Institut de hautes études internationales et du développement/Paris: PUF,
2009), pp. 158, 171–73. In fact, an ILO Report qualified it as a jus cogens norm: ILO, Forced
labour in Myanmar (Burma), Report of the Commission of Inquiry appointed under article 26 of
the Constitution of the International Labour Organization to examine the observance by
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Myanmar of the Forced Labour Convention, 1930 (No. 29) (July 2, 1998), available at
http://www.ilo.org/public/english/standards/relm/gb/docs/gb273/myanmar.htm (last visited April
22, 2012), 203: “The Commission concludes that there exists now in international law a
peremptory norm prohibiting any recourse to forced labour and that the right not to be compelled
to perform forced or compulsory labour is one of the basic human rights.” See also: Lauri
Hannikainen, Peremptory Norms (Jus Cogens) in International Law—Historical Development,
Criteria, Present Status (Helsinki: Finnish Lawyers’ Publishing Company, 1988), p. 456.
100. La Hovary, Les Droits Fondamentaux au Travail, op. cit. note 99, pp. 176–79.
101. Id., pp. 174–76.
102. OECD, Convention on Combating Bribery of Foreign Public Officials in International

Business Transactions, Adopted by the Negotiating Conference on November 21 1997, available
at http://www.oecd.org/dataoecd/4/18/38028044.pdf (last visted April 22, 2012).
103. Council of the European Union, Convention on the Fight against Corruption involving
Officials of the European Communities or Officials of Member States of the EU, OJ C195 (June
25, 1997), available at
http://europa.eu/legislation_summaries/fight_against_fraud/fight_against_corruption/l33027_En.htm
(last visited April 22, 2012).
104. Council of Europe, Criminal Law Convention on Corruption, opened of signature on

January 27, 1999 (CETS No. 173), available at
http://conventions.coe.int/Treaty/Commun/QueVoulezVous.asp?CL=ENG&NT=173 (last visited
April 22, 2012); Civil Law Convention on Corruption, opened of signature on November 4, 1999
(CETS No. 174), available at http://conventions.coe.int/Treaty/Commun/QueVoulezVous.asp?
NT=174&CL=ENG (last visited April 22, 2012).
105. Organization of American States, Inter-American Convention against Corruption, adopted

at the third plenary session, held on March 29, 1996, available at
http://www.oas.org/juridico/english/treaties/b-58.html (last visited April 22, 2012).
106. African Union, African Union Convention on Preventing and Combating Corruption and
related offences, adopted July 11, 2003, available at http://www.africa-
union.org/official_documents/Treaties_%20Conventions_%20Protocols/Convention%20on%20Combating%20Corruption.pdf
(last visited April 22, 2012).
107. Richard Kreindler, “Corruption in international investment arbitration: Jurisdiction and the
unclean hands doctrine,” in Kaj Hober, Annette Magnusson and Marie Öhrström, eds., Between
East and West: Essays in Honour of Ulf Franke (Huntington: Juris Publishing, 2010), pp. 309–10.
108. Alexandre Kiss and Dinah Shelton, International Environmental Law (New York:
Transnational Publishers, 1991), pp. 106–107; Howard Mann, “The Rio Declaration,” 40
Proceedings of the Annual Meeting (American Society of International Law) 405 (1992), p. 410;
Peter H. Sand, “International environmental law after Rio,” 4(1) European Journal of
International Law 377 (1993), p. 382.
109. Philippe Sands, Principles of International Environmental Law, 2d ed. (Cambridge, UK:
Cambridge University Press, 2003), p. 254. See also, Judge Weeramantry’s separate opinion in the
ICJ Gabcíkovo-Nagymaros Case (Hungary/Slovakia) (1997) ICJ Rep. 7, where he considered
sustainable development to be “a principle with normative value” (p. 88) that “is a part of modern
international law by reason not only of its inescapable logical necessity, but also by reason of its
wide and general acceptance by the global community” (p. 95). Other writers are not convinced of
the customary character of this principle: Vaughan Lowe, “Sustainable development and
unsustainable arguments,” in Alan E. Boyle and David Freestone, eds., International Law and
Sustainable Development: Past Achievements and Future Challenges (New York: Oxford
University Press, 1999), pp. 26, 30, 31, 34.
110. Winfried Lang, “UN Principles and international environmental law,” 3 Max Planck
Yearbook of United Nations Law 157 (1999), pp. 165, 171.
111. Michael Bothe, “Environment, Development, Resources” 318 Recueil des cours (2005), pp.
496–500; Arie Trouwborst, Evolution and Status of the Precautionary Principle in International
Law (The Hague: Kluwer, 2002) p. 286; Nicolas De Sadeleer, “Le statut juridique du principe de
précaution,” in: F. Ewald, C. Gollier, and N. De Sadeleer, eds., Le Principe de Précaution (Paris:
PUF, 2008), pp. 73–103; Kiss and Shelton, International Environmental Law, op. cit. note 108, pp.
130–31; James Cameron and Julie Abouchar, “The status of the precautionary principle in
international law,” in David Freestone and Ellen Hey, eds., The Precautionary Principle and
International Law: The Challenge of Implementation (The Hague: Kluwer, 1996), p. 29; Owen
Mclntyre and Thomas Mosedale, “The precautionary principle as a norm of customary
international law,” 9 Journal of Environmental Law 221 (1997); Contra: Malgosia A. Fitzmaurice,
“International environmental law as a special field,” 25 Netherlands Yearbook of International
Law 181 (1994) p. 220; Pierre-Marie Dupuy, “Où en est le droit international de l’environnement
à la fin du siècle?,” 101 Revue Générale de Droit International Public 873 (1997), p. 889.
112. Sands, Principles of International Environmental Law, op. cit. note 109, p. 148: “For
environmental treaties, provisions of a fundamentally norm-creating character which are capable
of being considered as rules of customary law include those of a substantive nature, as well as
principles which inform and guide decision-making. Examples of substantive obligations reflected
in many treaties include: Principle 21 of the Stockholm Declaration; the obligation to co-operate
2018
on environmental problems associated with shared natural resources; the obligation to adopt
general measures to protect the marine environment from significant damage; and the obligation
to take measures to ensure the conservation of, and prevention of harm to, endangered species of
flora and fauna. More specific examples of treaty rules which can be considered as having a
‘fundamentally norm-creating character’ arguably include: the obligation to use a shared
international watercourse in an ‘equitable and reasonable’ manner; the obligation not to dump
high-level radioactive waste in the marine environment; the obligation not to engage in
commercial whaling; and the general obligation of developed states to limit emissions of gases
such as sulphur dioxide. Guiding principles which may, through treaty practice, reflect existing or
emerging norms of customary law might include the polluter-pays principle, the principle of
precautionary action, and the principle of common but differentiated responsibilities of developed
and developing countries. Procedural obligations which may be binding under customary law, at
least within certain regions, include consultation, the provision of information on the environment
and the obligation to carry out an environmental impact assessment for activities likely to cause
significant environmental damage.”
113. Interim Report of the Special Representative, op. cit. note 18, 34. He mentions that he
conducted a survey of the “Fortune Global 500,” the world’s largest corporations: “When asked
which if any international human rights instruments the company references in its policy, three
fourths say International Labour Organization (ILO) declarations or conventions, 62% cite the
Universal Declaration on Human Rights, and 57% the United Nations Global Compact. The
Guidelines for Multinational Enterprises of the Organization for Economic Cooperation and
Development (OECD) are referenced by 4 out of 10.”
114. United Nations, Global Compact, op. cit. note 75.
115. Id.
116. ILO, Tripartite Declaration of Principles Concerning Multinational Enterprises, op. cit. note
15.
117. OECD, Guidelines for Multinational Enterprises, op. cit. note 15.
118. United Nations, Global Compact, UN GA Res. 64/223, March 25, 2010.
119. Jacob, “International investment agreements and human rights,” op. cit. note 3, pp. 36, 45;
Peterson and Gray, “International human rights in bilateral investment treaties and investment
treaty arbitration,” op. cit. note 3, p. 36.
note 7, p. 958.
121. Liberti, “Investissements et droits de l’homme,” op. cit. note 23, p. 839.
122. Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24,
award (June 18, 2010) at 125.
123. Similarly, Jean J.A. Salmon, “Des ‘mains propres’ comme condition de recevabilité des
réclamations internationales,” 10 Annuaire Français de Droit International 225 (1964), pp. 225,
240, provides several examples of 19th century international treaties setting up mixed claims
commissions which specifically excluded from their jurisdiction claims by individuals who had
participated in wars, revolutions, etc.
124. Black’s Law Dictionary 268 (8th ed. 2004).
125. In doctrine see, Adolfo Miaja de la Muela, “Le rôle de la condition des mains propres de la
personne lésée dans les réclamations devant les tribunaux internationaux,” in Mélanges
offertsàJuraj Andrassy (The Hague: Martinus Nijhoff, 1968), p. 189; Salmon, “Des ‘mains propres’
comme condition de recevabilité des réclamations internationales,” op. cit. note 123, p. 249;
Stephen M. Schwebel, “Clean hands in the court,” in Edith Brown Weiss, Andres Rigo Sureda and
Laurence Boisson de Chazournes, eds., The World Bank, International Financial Institutions, and
the Development of International Law: A Symposium held in Honor of Dr. Ibrahim F.I. Shihata,
Studies in Transnational Legal Policy, Vol. 31 (ASIL 1999); Aleksandr Shapovalov, “Should a
requirement of “Clean Hands” be a prerequisite to the exercise of diplomatic protection? Human
rights implications of the International Law Commission’s debate,” 20 American University
International Law Revue 830 (2005), pp. 834–35.
126. Report of the International Law Commission, 57th Session, UN Doc. A/60/10, 236: “the
clean hands doctrine [i]s an important principle of international law that ha[s] to be taken into
account whenever there [i]s evidence that an applicant State ha[s] not acted in good faith and
that it ha[s] come to court with unclean hands,” available at
http://untreaty.un.org/ilc/reports/2005/2005report.htm (last visited April 23, 2012).
127. James Crawford, Second Report on State Responsibility (1999) Yearbook of the
International Law Commission, vol. II (part 2), A/CN.4/SER.A/1999/Add.1 (Part 1), p. 83, 333,
336.
128. Charles Rousseau, Droit international public. Tome V. Les rapports conflictuels, 5th ed.
(Paris: Sirey, 1983), p. 170.
129. Crawford, Second Report on State Responsibility, op. cit. note 127, p. 83, 334. See also:
James Crawford, The International Law Commission’s Articles on State Responsibility:
2018
Introduction, Text and Commentaries (Cambridge, UK: Cambridge University Press, 2002), p. 162
(“The so-called ‘clean hands’ Doctrine has been invoked principally in the context of the
admissibility of claims before international courts and tribunals, though rarely applied”).
130. Guyana v. Suriname, Arbitral Tribunal constituted under Annex VII of the United Nations
Convention on the Law of the Sea (UNCLOS), award (September 17, 2007) 418, available at
http://www.pca-cpa.org/showfile.asp?fil_id=664 (last visited October 20, 2012). Some of the
Award’s passages clearly show that the Tribunal was reluctant to recognise the existence of the
doctrine (see 421: “to the extent that such a doctrine may exist in international law”; “even if it
were recognised as a rule of international law”).
131. Clark Claim of 1862, cited in Bin Cheng, General Principles of Law as Applied by
International Courts and Tribunals (Cambridge, UK: Cambridge University Press, 1953), p. 155.
132. The Diversion of Water from the Meuse, PCIJ (1937) Series A/B No. p. 70, opinion of Judge
Hudson, p. 77 (quoting from 13 Halsbury’s Laws of England (2d ed., 1934), p. 87.
133. The Diversion of Water from the Meuse, op. cit. note 132, dissenting opinion of Judge
Anzilotti, p. 50.
134. Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States
of America), [1986] ICJ Rep., dissenting opinion of Judge Schwebel (June 27, 1986) p. 392, 268.
See also; Arrest Warrant of April 11, 2000 (Democratic Republic of the Congo v. Belgium),
judgment (February 14, 2002), ICJ Reports 2002, p. 3, dissenting opinion of Judge ad hoc Van den
Wyngaert, 35; Tehran Hostages (United States v. Iran) [1980] ICJ Rep 3, dissenting opinion Judge
Morozov.
135. Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals, op.
cit. note 131, p. 155, “A Party who asks for redress must present himself with clean hands.”;
Elisabeth Zoller, La Bonne Foi en Droit International Public (Paris: Pedone, 1977) p. 298; Gerald
Fitzmaurice, “The General Principles of International Law Considered from the Standpoint of the
Rule of Law,” 92 Rec. Hague Academy, (1957), p. 119 “He who comes to equity for relief must
come with clean hands. Thus a State Which is guilty of illegal conduct may be deprived of the
necessary locus standi injudicio for complaining of corresponding illegalities on the part of other
States, especially if these were consequential on or were embarked upon in order to counter its
own illegality—in short were provoked by it.”; Rahim Moloo, “A comment on the Clean Hands
doctrine in international law,” 1 Transnational Dispute Management (TDM) (2011), available at
http://www.transnational-dispute-management.com/article.asp?key=1646 (last visited April 23,
2012); Ian Brownlie, Principles of Public International Law 7th ed. (New York: Oxford University
Press, 2008) p. 503; Hersch Lauterpacht, Recognition in International Law (Cambridge, UK:
Cambridge University Press, 1947), pp. 420–21.
136. In only a few cases the respondent State raised the doctrine as a defence. See, inter alia,
Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, advisory
opinion (July 9, 2004), I.C.J. Reports 2004, pp. 136, 63–64; Case Concerning the Oil Platforms
(Islamic Republic of Iran United States of America), judgment (November 6, 2003), I.C.J. Reports
2003, p. 161, 29–30.
137. Kreindler, “Corruption in international investment arbitration: Jurisdiction and the unclean
hands doctrine,” op. cit. note 107, p. 317.
138. Military and Paramilitary Activities in and against Nicaragua (Nicaragua v. United States
of America), dissenting opinion of Judge Schwebel, op. cit. note 134, 269.
139. The Diversion of Water from the Meuse, dissenting opinion of Judge Anzilotti, op. cit. note
133, p. 50.
140. Kreindler, “Corruption in international investment arbitration: Jurisdiction and the unclean
hands doctrine,” op. cit. note 107, p. 318.
141. This is the case when the BIT provides for “international law” as the applicable law for the
settlement of disputes.
142. Moloo, “A comment on the Clean Hands doctrine in international law,” op. cit. note 135. In
a series of recent cases related to Yukos, Tribunals have decided at the jurisdictional stage not to
dismiss allegations raised by Russia that the claimants’ claims should not be admitted as a result
of their “unclean hands” (the Tribunals held that such allegations should be addressed at the
merits phase of the arbitration): Hulley Enters Ltd. (Cyprus) v. Russian Federation, PCA Case No.
AA 226, interim award on jurisdiction and admissibility (November 30, 2009), 435, 492; Veteran
Petroleum Ltd. (Cyprus) v. Russian Federation, PCA Case No. AA 228, interim award on
jurisdiction and admissibility (November 30, 2009), 492; Yukos Universal Ltd. (Isle of Man) v.
Russian Federation, PCA Case No. AA 227, interim award on jurisdiction and admissibility
(November 30, 2009), 436.
143. Plama Consortium Limited v. Bulgaria, ICSID Case No. ARB (AF)/03/24, award (August 28,
2008), 130–46.
144. Inceysa Vallisoletana S.L. v. Republic of El Salvador, ICSID Case No. ARB/03/26, award
(August 2, 2006), 248–52.
145. World Duty Free Company Limited v. Kenya, ICSID Case No. ARB (AF)/00/7, award
(October 4, 2006). The Tribunal concluded that “in light of domestic laws and international
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conventions relating to corruption, and in light of the decisions taken in this matter by courts and
arbitral tribunals, this Tribunal is convinced that bribery is contrary to the international public
policy of most, if not all, States or, to use another formula, to transnational public policy” (157).
Accordingly, the Tribunal held that claims based “on contracts of corruption or on contracts
obtained by corruption cannot be upheld by this Arbitral Tribunal.” (id.).
146. Plama Consortium Limited v. Bulgaria, award, op. cit. note 143, 138–39; Phoenix Action,
Ltd. v. Czech Republic, ICSID Case No. ARB/06/5, award (April 15, 2009), 101; Fraport AG
Frankfurt Airport Services Worldwide v. Philippines, ICSID Case No. ARB/03/25, award (August
16, 2007), 397, 402.
147. Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24,
award (June 10, 2010), 123.
148. Id., 124.
149. Inceysa Vallisoletana S.L. v. Republic of El Salvador, award, op. cit. note 144, 252; World
Duty Free Company Limited v. Kenya, award, op. cit. note 145, 157.
investment treaty arbitration,” op. cit. note 3, pp. 33, 36.
151. The distinction between admissibility and jurisdiction is well-explained by Keith Highet in his
dissenting opinion in Waste Management, Inc. v. United Mexican States, ICSID Case No.
ARB(AF)/00/3, dissenting opion (April 30, 2004), 57–58: “International decisions are replete with
fine distinctions between jurisdiction and admissibility. For the purpose of the present proceedings
it will suffice to observe that lack of jurisdiction refers to the jurisdiction of the Tribunal and
inadmissibility refers to the admissibility of the case. […] Jurisdiction is the power of the tribunal
to hear the case; admissibility is whether the case itself is defective—whether it is appropriate for
the tribunal to hear it. If there is no title of jurisdiction, then the tribunal cannot act.” See also,
Jan Paulsson, “Jurisdiction and admissibility,” in Gerald Aksen, Karl-Heinz Böckstiegel, Michael J.
Mustill, eds., Global Reflections on International Law, Commerce and Dispute Resolution, Liber
Amicorum in Honour of Robert Briner (Paris: ICC, 2005) p. 601; Andrew Newcombe, “Investor
misconduct in investment treaty arbitration,” in De Mestral and Lévesque, eds., Improving
International Investment Treaties: Negotiation, Substantive Obligations and Dispute Resolution,
op. cit. note 47.
investment treaty arbitration,” op. cit. note 3, p. 18 (referring to “certain egregious human rights
violations”); Liberti, “Investissements et droits de l’homme,” op. cit. note 23, pp. 830–31 (speaking
of “graves violations des droits de l’homme”), p. 840.
153. UNCTAD, Selected Recent Developments in IIA Arbitration and Human Rights, IIA Monitor
No. 2 (2009) (UNCTAD/WEB/DIAE/IA/2009/7), available at
http://unctad.org/en/docs/webdiaeia20097_En.pdf (last visited April 23, 2012), p. 15: “arbitrators
might decline, on jurisdictional grounds, to hear disputes where the investments are predicated on
certain grave forms of human rights abuse (e.g., slavery, genocide and human trafficking).”
154. Interim Report of the Special Representative, op. cit. note 18, p. 61 “under customary
international law, emerging practice and expert opinion increasingly do suggest that corporations
may be held liable for committing, or for complicity in, the most heinous human rights violations
amounting to international crimes, including genocide, slavery, human trafficking, forced labour,
torture and some crimes against humanity.”
155. Phoenix Action Ltd. v. Czech Republic, award, op. cit. note 146, 78.
157. The clause is adapted from art. 18(A) of the IISD Model International Agreement on
Investment for Sustainable Development, op. cit. note 78, It should be noted, however, that the
IISD clause refers to a tribunal’s jurisdiction over such claim, rather than its admissibility.
158. Plama Consortium Limited v. Bulgaria, award, op. cit. note 143, 207: “dispute resolution
provisions in a specific treaty have been negotiated with a view to resolving disputes under that
treaty. Contracting States cannot be presumed to have agreed that those provisions can be
enlarged by incorporating dispute resolution provisions from other treaties negotiated in an
entirely different context.”
159. Zachary Douglas, The International Law of Investment Claims (Cambridge, UK: Cambridge
University Press, 2009), p. 362.
160. Jacob, “International investment agreements and human rights,” op. cit. note 3, pp. 36, 45.
161. Knoll-Tudor, “The fair and equitable treatment standard and human rights norms,” op. cit.
note 28, p. 28 (paper version on file with author). See also, Filip Balcerzak, “Fair and equitable
treatment in investor-state arbitrations: Is there a place for human rights considerations?,” op. cit.
note 28, pp. 75–78; Muchlinski, “‘Caveat investor’? The relevance of the conduct of the investor
under the fair and equitable treatment standard,” op. cit. note 32, p. 530.
162. Rudolf Dolzer and Christopher Schreuer, Principles of International Investment Law (New
York: Oxford University Press, 2008), p. 273.
2018
163. MTD Equity Sdn. Bhd. & MTD Chile S.A. v. Chile, ICSID Case No. ARB/01/7, award (May
25, 2004), 243; Iurii Bogdanov v. Republic of Moldova, Ad hoc—SCC Arbitration Rules; IIC 33
(2005), award (September 22, 2005), 84.
164. Lahra Liberti, “The relevance of non-investment treaty obligations in assessing

compensation,” in Human Rights in International Investment Law and Arbitration, op. cit. note
16.
165. The clause is adapted from art. 18(B) of the IISD Model International Agreement on
Investment for Sustainable Development, op. cit. note 78.
166. Chalamish, “The future of bilateral investment treaties: A de facto multilateral

agreement?,” op. cit. note 3, p. 348; Liberti, “Investissements et droits de l’homme,” op. cit. note
23, p. 840.
167. Hege Elisabeth Veenstra-Kjos, “ Counterclaims by host states in investment treaty

arbitration,” 4 Transnational Dispute Management (TDM) (2007), p. 9, available at
http://www.transnational-dispute-management.com/article.asp?key=1026 (last visited April 23,
2012); Schreuer, The ICSID Convention: A Commentary, op. cit. note 56, p. 754.
168. Helene Bubrowski, “ Counterclaims ,” in De Mestral and Lévesque (ed.), Improving

International Investment Treaties: Negotiation, Substantive Obligations and Dispute Resolution,
op. cit. note 47, p. 16 (of the paper version on file with author); Schreuer, The ICSID Convention:
A Commentary, op. cit. note 56, p. 743.
169. The clause is adapted from art. 18(E) of the IISD Model International Agreement on
Investment for Sustainable Development, op. cit. note 78.
170. Europe Cement Investment & Trade S.A. v. Turkey, ICSID Case No. ARB(AF)/07/2, award
(August 13, 2009).
171. Cementownia “Nowa Huta” S.A. v. Turkey, ICSID Case No. ARB(AF)/06/2, award
(September 17, 2009).
172. Patrick Dumberry, “Compensation for moral damages in investor-state arbitration

disputes,” 27(3) Journal of International Arbitration 247 (2010).
173. These issues are discussed in: Patrick Dumberry, “Satisfaction as a form of reparation for
moral damages suffered by investors and respondent states in investor-state arbitration disputes,”
3(1) Journal of International Dispute Settlement 205 (2012).
174. IISD Model International Agreement on Investment for Sustainable Development art. 18(C),
op. cit. note 78.
175. See also Peterson and Gray, “International human rights in bilateral investment treaties
and investment treaty arbitration,” op. cit. note 3, p. 33; Mann, “International investment
agreements, business and human rights: Key issues and opportunities,” op. cit. note 3, p. 14;
Kriebaum, “Privatizing human rights—The interface between international investment protection
and human rights,” op. cit. note 3, p. 24.
176. Reiner and Schreuer, “Human rights and international investment arbitration,” op. cit. note
16, p. 83.
177. Todd Weiler, “Balancing human rights & investor protection: A new approach for a
different legal order,” 27 Boston College International & Comparative Law Review 429 (2004), p.
449; Chalamish, “The future of bilateral investment treaties: A de facto multilateral agreement?,”
op. cit. note 3, pp. 351, 354.
investment treaty arbitration,” op. cit. note 3, pp. 28, 33; Mann, “International investment
agreements, business and human rights: Key issues and opportunities,” op. cit. note 3, p. 14.
179. Kinley and Tadaki, “From talk to walk: The emergence of human rights responsibilities for
corporations at international law,” op. cit. note 16, p. 966.
investment treaty arbitration,” op. cit. note 3, p. 36. See also: Knoll-Tudor, “The fair and equitable
treatment standard and human rights norms,” op. cit. note 28, pp. 24–25.
181. See, e.g., Michael Waibel, Asha Kaushal, Kyo-Hwa Liz Chung, and Claire Balchin, The
Backlash against Investment Arbitration, op. cit. note 20.
182. Jacob, “International investment agreements and human rights,” op. cit. note 3, p. 21; Jose
E. Alvarez, “Critical theory and the North American Free Trade Agreement’s Chapter Eleven,”
28(2) University of Miami Inter-American Law Review 303 (1997); Kelley, “Multilateral
investment treaties: A balanced approach to multinational corporations,” op. cit. note 50; Lowe,
“Corporations as international actors and international law makers,” op. cit. note 48, p. 31;
Chalamish, “The future of bilateral investment treaties: A de facto multilateral agreement?,” op.
cit. note 3, p. 346; R. Bachand and S. Rousseau, “International investment and human rights:
Political and legal issues—A background paper” (Ottawa: Rights and Democracy, 2003), p. 16;
Joseph E. Stiglitz, “Regulating multinational corporations: Towards principles of cross-border
legal frameworks in a globalized world,” 23(2) American University International Law Review
451 (2008), pp. 468, 536.
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183. William W. Burke-White, “The Argentine financial crisis: State liability under BITs and the
legitimacy of the ICSID system,” in Michael Waibel et al., The Backlash against Investment
Arbitration op. cit. note 20; Susan D. Franck, “The Legitimacy Crisis in Investment Treaty
Arbitration: Privatizing Public International Law through Inconsistent Decisions,” 73 Fordham
Law Review 1521 (2005); A. Afilalo, “Towards a common law of international investment: How
NAFTA Chapter 11 panels should solve their legitimacy crisis,” 17(1) Georgetown International
Environmental Law Review 51 (2004); Charles N. Brower and Stephan Schill, “Is arbitration a
threat or a boom to the legitimacy of international investment law?,” 9 Chicago Journal of
International Law 471 (2009).
184. Protect, Respect and Remedy: a Framework for Business and Human Rights, Report of the
transnational corporations and other business enterprises, John Ruggie, A/HRC/8/5 (April 7,
2008), available at http://daccess-dds-
ny.un.org/doc/UNDOC/GEN/G08/128/61/PDF/G0812861.pdf?OpenElement (last visited April 23,
2012), 12.
185. Id., 13.
186. Jordan J. Paust, “Human rights responsibilities of private corporations,” 35 Vanderbilt

Journal of Transnational Law 801 (2002), pp. 817–19. See also, Steven R. Ratner, “Corporations
and human rights: A theory of legal responsibility,” 111 Yale Law Journal 443 (2001), p. 512;
Anita Ramasastry, “Corporate complicity: From Nuremberg to Rangoon—An examination of
forced labor cases and their impact on the liability of multinational corporations,” 20 Berkeley
Journal of International Law 91 (2002), p. 131–36; Beth Stephens, “The amorality of profit:
Transnational corporations and human rights,” 20 Berkeley Journal of International Law 45
(2002), pp. 51–53; Ariadne K. Sacharoff, “Multinationals in host countries: Can they be held liable
under the Alien Tort Claims Act for human rights violations?,” 23 Brooklyn Journal of
International Law 927 (1998), pp. 958–64; John C. Anderson, “Respecting human rights:
Multinational corporations strike out,” 2 University of Pennsylvania Journal of Labor &
Employment Law 463 (2000), p. 464–65; Lena Ayoub, “Nike just does it and why the United
States shouldn’t: The United States’ international obligation to hold MNCs accountable for their
labor rights violations abroad,” 11 DePaul Business Law Journal 395 (1999), pp. 400–411.
187. Canada-Peru FTA, op. cit. note 25, art. 810; Canada-Colombia FTA, op. cit. note 24, art.
816; Free Trade Agreement between Canada and the Republic of Panama, signed May 14, 2010,
available at http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-
acc/panama/panama-toc-panama-tdm.aspx?lang=eng&view=d (last visited April 23, 2012), art.
9.17. The website of the Canada’s Ministry of foreign affairs explains that “Canada’s FIPA
negotiating programme is complemented by promotion of corporate social responsibility
principles and standards. Through corporate social responsibility initiatives, Canadian investors
abroad are contributing to broader developmental objectives, including social and environmental
dimensions, of the communities in which they operate.” (http://www.international.gc.ca/trade-
agreements-accords-commerciaux/agr-acc/fipa-apie/what_fipa.aspx?lang=eng&view=d). In
doctrine: Jarrod Hepburn and Vuyelwa Kuuya, “Corporate social responsibility and investment
treaties,” in Marie-Claire Cordonier Segger, Markus W. Gehring, and Andrew Newcombe, eds.,
Sustainable Development in World Investment Law, op. cit. note 9, p. 607; Jean-Michel Marcoux,
“La recherche d’un équilibre—Évolution des protections et des obligations des sociétés minières
canadiennes dans les Amériques,” 24(1) Revue québécoise de droit international (2011).
188. Hepburn and Kuuya, “Corporate social responsibility and investment treaties,” Ibid., pp.
602–603.
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(Patrick Dumberry) How To Impose Human Rights Obligations On Corporations Under Investment Treaties? Pragmatic Guidelines For The Amendment of BITs

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(Patrick Dumberry) How To Impose Human Rights Obligations On Corporations Under Investment Treaties? Pragmatic Guidelines For The Amendment of BITs

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How

to Impose Human Rights Obligations on

Content type: Yearbook articles

A. Corporations’ Human Rights Obligations Under International

As a matter of principle, allegations of human rights violations committed by a corporation should

B. Corporations’ Human Rights Obligations Under Bits

C. Guidelines for the Incorporation of Human Rights

(p. 578) 1. Some Less Realistic Suggestions

2. Location of Obligations in Bits

(p. 580) 3. Type of Language Used

4. From Which Areas of International Law should the Obligations

5. How Should these Obligations be Incorporated into Bits?

6. The International Instruments that should be Referred to in

• Universal Declaration of Human Rights (UDHR) (1948); 79

• ILO Declaration on Fundamental Principles and Rights at Work (1998); 81

• United Nations Convention Against Corruption (UNCAC) (2003); 82

• Rio Declaration on Environment and Development (1992). 83

7. The Reasons for Choosing these Five Instruments

a. The clean hands doctrine

d. Other inadequate options

6. Robert McCorquodale and Penelope Simons, “Responsibility beyond borders: State

9. Adefolake Adeyeye, “Corporate responsibility in international law: Which way to go?,” 11

24. 2007 Draft version of the Norway Model BIT, available at

33. Choudhury, “Exception provisions as a gateway to the incorporation of human rights in

49. UNCTAD, Development Implications of International Investment Agreements, IIA Monitor

68. Choudhury, “Exception provisions as a gateway to the incorporation of human rights in

69. NAFTA, op. cit. note 22, art. 104.

81. International Labour Organisation, Declaration on Fundamental Principles and Rights at

91. Id., 64.

101. Id., pp. 174–76.

102. OECD, Convention on Combating Bribery of Foreign Public Officials in International

104. Council of Europe, Criminal Law Convention on Corruption, opened of signature on

105. Organization of American States, Inter-American Convention against Corruption, adopted

114. United Nations, Global Compact, op. cit. note 75.

124. Black’s Law Dictionary 268 (8th ed. 2004).

148. Id., 124.

164. Lahra Liberti, “The relevance of non-investment treaty obligations in assessing

166. Chalamish, “The future of bilateral investment treaties: A de facto multilateral

167. Hege Elisabeth Veenstra-Kjos, “ Counterclaims by host states in investment treaty

168. Helene Bubrowski, “ Counterclaims ,” in De Mestral and Lévesque (ed.), Improving

172. Patrick Dumberry, “Compensation for moral damages in investor-state arbitration

185. Id., 13.

186. Jordan J. Paust, “Human rights responsibilities of private corporations,” 35 Vanderbilt

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