Community rights; International investment law; Investment arbitration; Investor obligations; Vulnerability theory; Business and International Management; Industrial Relations; Sociology and Political Science; Law
Abstract :
[en] This article argues for a fundamental raison d'être reconceptualization of international investment law (IIL) through Martha Fineman's 'vulnerability theory'. The theory helps identify the structural sources of IIL's shortcomings, whilst philosophically challenging the one-sided view that foreign investors are entitled to protections, but are free from obligations vis-à-vis the communities affected by their undertakings. Emphasizing the productive power of the state to take positive action that acknowledges ordinary citizens' embeddedness within, and dependence upon, surrounding structures, the vulnerability theory challenges the hegemonic perception of the state as a source of danger - a view which has hitherto undermined both the potency and the enforceability of investor obligations. Used as a heuristic device in studying both IIL's existing structures and the potential avenues for reimagining it, Fineman's theory not only shines a novel light on the foundational premises of IIL, but also grants theoretical traction to existing ideas about improving the system.
Disciplines :
European & international law
Author, co-author :
KÜÇÜKSU, Aysel ; Centre of Excellence for International Courts (iCourts), University of Copenhagen, Denmark
ÜNÜVAR, Günes ; University of Luxembourg > Luxembourg Centre for European Law (LCEL) > LCEL Research
External co-authors :
yes
Language :
English
Title :
Vulnerability Theory as a Paradigm Shift in International Investment Law: Reimagining the Role of the State
Horizon 2020 Framework Programme Danmarks Grundforskningsfond
Funding text :
This research has received funding from the European Union's Horizon 2020 research and innovation programme under the Marie Sklodowska-Curie Grant Agreement No. 722826 and the Danish National Research Foundation, Danmarks Grundforskningsfond, Grant No. DNRF105.
See, for example, Declaration on the Establishment of a New International Economic Order, UNGA Res 3201 (S-V1) (1 May 1974).
For an exhaustive study of the historic origins of these presumptions and their far-reaching consequences, see Jean Ho, 'International Law's Opportunities for Investor Accountability' in Jean Ho and Mavluda Sattorova (eds.), Investors' International Law (London: Bloomsbury Publishing, 2021) 29;
Stephan W Schill, Christian J Tams and Rainer Hofmann, 'International Investment Law and History: An Introduction' in Stephan W Schill, Christian J Tams and Rainer Hofmann (eds.), International Investment Law and History (Cheltenham: Edward Elgar, 2018) 3;
Kate Miles, The Origins of International Investment Law: Empire, Environment and the Safeguarding of Capital (Cambridge: Cambridge University Press, 2013).
Nicolás M Perrone, 'Bridging the Gap between Foreign Investor Rights and Obligations: Towards Reimagining the International Law on Foreign Investment' (2022) 7 Business and Human Rights Journal 375.
There is a growing body of literature that demonstrates the relentless rise of the corporation in the 19th and early 20th centuries. See, for example, Doreen Lustig, Veiled Power: International Law and the Private Corporation 1885-1981 (Oxford: Oxford University Press, 2020);
Grietje Baars, The Corporation, Law and Capitalism: A Radical Perspective on the Role of Law in the Global Political Economy (Leiden: Brill Publishing, 2019);
Sundhya Pahuja and Anna Sounders, 'Rival Worlds and the Place of the Corporation in International Law' in Jochen von Bernstorff and Philipp Dann (eds.), The Battle for International Law: South-North Perspectives on the Decolonization Era (Oxford: Oxford University Press, 2019) 141.
Perrone, note 3, 375.
On the active separation between investor rights and responsibilities, see Surya Deva, 'International Investment Agreements and Human Rights: Assessing the Role of the UN's Business and Human Rights Regulatory Initiatives' in Julien Chaisse, Leïla Choukroune and Sufian Jusoh (eds.), Handbook of International Investment Law and Policy (Berlin: Springer, 2021) 1733.
For an overview of recent trends in investment treaty practice that demands more responsible behaviour from foreign investors, see Prabhash Ranjan, 'Investor Obligations in Investment Treaties: Missing Text or a Matter of Application?', Investors' International Law in Ho and Sattorova, note 2, 131.
See for example, Article 12 of the Model Indian BIT, Article 12 of the India-Belarus BIT and the India-Taiwan BIT. Article 21 Article 10(3) of the Iran-Slovakia BIT (where the onus is on the investor to incorporate CSR considerations into their practices). In contrast, Article 17 of the Japan-Argentina BIT puts on the contracting states to encourage the foreign investors to do so. See also Ho and Sattorova, note 2, 19.
The Nigeria-Morocco BIT seems to be the only investment treaty to currently impose binding human rights obligations on foreign investors. See also Ranjan, note 7, 140.
Ranjan, note 7, 133.
The 2016 Morocco-Nigeria investment treaty explicitly refers to investor obligations to respect human rights, but this line of thought was not pursued in subsequent treaties entered by these states. See Markus Krajewski, 'A Nightmare or a Noble Dream? Establishing Investor Obligations Through Treaty-Making and Treaty-Application' (2020) 5 Business and Human Rights Journal 105, 114-116;
Barnali Choudhury, 'Investor Obligations for Human Rights' (2020) 35 ICSID Review 82.
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Miles, note 2.
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Ho and Sattorova, note 2, 20.
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van Harten, note 16, 34-55.
The debates concerning ISDS picked up as early as the first NAFTA awards. See Brower II, 'Structure, Legitimacy, and NAFTA's Investment Chapter' (2003) 36 Vanderbilt Journal of Transnational Law 37, 75.
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On why current balancing methods are 'misplaced and short-sighted', see Daria Davitti, 'On Proportionality, Again: Domesticating International Investment Law and Managing Vulnerability' (23 March 2021), https://www.iisd.org/itn/en/2021/03/23/on-proportionality-again-domesticating-international-investment-law-andmanaging-vulnerability-daria-davitti/ (accessed 29 July 2022).
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Andreas Kulick, Global Public Interest in International Investment Law (Cambridge: Cambridge University Press, 2012);
Eric de Brabandere, Investment Treaty Arbitration as Public International Law: Procedural Aspects and Implications (Cambridge: Cambridge University Press, 2014).
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Martins Paparinskis, The International Minimum Standard and Fair and Equitable Treatment (Oxford: Oxford University Press, 2013);
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Margie-Lys Jaime, 'Could an Appellate Review Mechanism 'Fix' the ISDS System?', Kluwer Arbitration Blog (11 February 2021), http://arbitrationblog.kluwerarbitration.com/2021/02/11/could-an-appellate-review-mechanism-fix-the-isds-system/ (accessed 29 July 2022);
Anna de Luca et al, 'Responding to Incorrect ISDS Decision-Making: Policy Options' (2020) 21 Journal of World Investment and Trade 374.
Tara Van Ho, 'Is It Already Too Late for Colombia's Land Restitution Process? The Impact of International Investment Law on Transitional Justice Initiatives' (2016) 5 International Human Rights Law Review 60.
Tarald Laudal Berge and Axel Berger, 'Does Investor-State Dispute Settlement Lead to Regulatory Chill? Global Evidence From Environmental Regulation' (2019), https://www.peio.me/wp-content/uploads/2019/01/PEIO12_Paper_78.pdf (accessed 29 July 2022);
Kyla Tienhaara, 'Regulatory Chill and the Threat of Arbitration: A View from Political Science' in Chester Brown and Kate Miles (eds.), Evolution in Investment Treaty Law and Arbitration (Cambridge: Cambridge University Press, 2011) 606.
Joanna Lam and Güneş Ünüvar, 'Transparency and Participatory Aspects of Investor-State Dispute Settlement in the EU 'New Wave' Trade Agreements' (2019) 32 Leiden Journal of International Law 781.
Lorenzo Cotula, 'Public Participation and Investment Treaties: Towards a New Settlement?' in Eric De Brabandere, Tarcisio Gazzini and Avidan Kent (eds.), Public Participation and Foreign Investment Law (Leiden: Lorenzo Cotula, 'Public Participation and Investment Treaties: Towards a New Settlement?' in Eric De Brabandere, Tarcisio Gazzini and Avidan Kent (eds.), Public Participation and Foreign Investment Law (Leiden: Brill, 2021) 36. David Schneiderman, 'Investing in Democracy: Political Process and International Investment Law' (2010) 60 University of Toronto Law Journal 909.
Julian Arato, 'The Private Law Critique of International Investment Law' (2019) 113 American Journal of International Law 1.
Van Harten, note 16; Leon E Trakman and Muthucumaraswamy Sornarajah, 'A Polemic: The Case For and Against Investment Liberalization' in Leon E Trakman and Nicola Ranieri (eds.), Regionalism in International Investment Law (Oxford: Oxford University Press, 2013) 499, 505;
Barnali Choudhury, 'Investor Obligations for Human Rights' (2020) ICSID Review 1;Gus van Harten, 'Reforming the System of International Investment Dispute Settlement' in Chin L Lim (ed.), Alternative Visions of the International Law on Foreign Investment: Essays in Honour of Muthucumaraswamy Sornarajah (Cambridge: Cambridge University Press, 2016) 103, 110;
Frank J Garcia et al, 'Reforming the International Investment Law Regime: Lessons from International Trade Law' (2015) 18:4 Journal of International Economic Law 861, 869.
van Harten, note 16, 56.
Steven R Ratner, 'Corporations and Human Rights: A Theory of Legal Responsibility' (2001) 111 The Yale Law Journal 443, 542.
See also Ludovica Chiussi, 'The Role of International Investment Law in the Business and Human Rights Legal Process' (2019) 21:1 International Community Law Review 35 (on how improving the legitimacy of IIL is being put forward by some scholars as an avenue towards 'giving teeth to corporate human rights accountability').
Tara van Ho, 'The Creation of Elusive Investor Responsibility' (2019) 113 AJIL Unbound 10, 13-14.
Maya Steinitz, The Case for an International Court of Civil Justice (Cambridge: Cambridge University Press, 2018) 83.
Andrew Sanger, 'Transnational Corporate Responsibility in Domestic Courts: Still out of Reach?' (2019) 113 AJIL Unbound 4.
Steinitz, note 43, 53.
Gustavo Laborde, 'The Case for Host State Claims in Investment Arbitration' (2010) 1 Journal of International Dispute Settlement 97, 98; Mehmet Toral and Thomas Schultz, 'The State, a Perpetual Respondent in Investment Arbitration? Some Unorthodox Considerations' in Michael Waibel et al (eds.), The Backlash Against Investment Arbitration: Perceptions and Reality (The Hague: Wolters Kluwer, 2010) 577.
Sanger, note 44, 4.
See, for example, Chevron v Ecuador, UNCITRAL, PCA Case No. 2009-23 and Shell v Nigeria, ICSID Case No. ARB/21/7 (examples of investors relying on ISDS to block domestic proceedings mandating that they pay human rights violations-related compensation to local communities).
Anna Grear, 'Embracing Vulnerability: Notes Towards Human Rights for a More-Than-Human World' in Daniel Bedford and Jonathan Herring (eds.), Embracing Vulnerability: The Challenges and Implications for Law (London: Routledge, 2020) 3881, 3933.
Jayanth K Krishnan, 'Bhopal in the Federal Courts: How Indian Victims Failed to Get Justice', Maurer School of Law Digital Repository (2020), https://www.repository.law.indiana.edu/cgi/viewcontent.cgi?article=3946&context=facpub (accessed 29 July 2022).
In international investment arbitration, separate legal identities and corporate veil present a wealth of controversies, including abusive treaty shopping. See, for instance, KT Asia Investment Group B.V. v Kazakhstan, ICSID Case No. ARB/09/8.
Ibrahim F I Shihata, 'Towards a Greater Depoliticization of Investment Disputes: The Roles of ICSID and MIGA' (1986) 1 ICSID Review - Foreign Investment Law Journal 1, 3.
Perrone, note 15, 18.
van Harten, note 16, 79.
Martha A Fineman, 'Vulnerability and Inevitable Equality' (2017) 4 Oslo Law Review 133, 134;
see also Fineman, note 19, 1.
See generally John Locke, Two Treatises of Government (1689), Ian Shapiro (ed.) (Yale: Yale University Press, 2003).
Fineman, note 19, 1.
Fineman, note 56, 149.
Ranjan, note 7, 132 (explaining how first-generation bilateral international agreements (BITs) favoured a minimalist state).
Marius Emberland, The Human Rights of Companies: Exploring the Structure of ECHR Protection (Oxford: Oxford University Press, 2012) 46.
European Convention of Human Rights (1950), Art 1, Protocol 1.
Van Harten, note 16, 1.
Fineman, note 19, 11.
Martha A Fineman, 'Vulnerability and Social Justice' (2019) 53 Valparaiso University Law Review 341, 342.
Martha A Fineman and Anna Grear, 'Introduction' in Martha A Fineman and Anna Grear (eds.), Vulnerability: Reflections on a New Ethical Foundation for Law and Politics (London: Routledge, 2013) 4.
Martha A Fineman and Anna Grear, 'Introduction' in Martha A Fineman and Anna Grear (eds.), Vulnerability: Reflections on a New Ethical Foundation for Law and Politics (London: Routledge, 2013) 3.
Martha A Fineman and Anna Grear, 'Introduction' in Martha A Fineman and Anna Grear (eds.), Vulnerability: Reflections on a New Ethical Foundation for Law and Politics (London: Routledge, 2013) 23.
Under its Chapter III, 2016 Indian Model BIT prescribes a series of soft obligations. For example, Article 12 provides that investors 'shall endeavour to voluntarily incorporate internationally recognized standards of corporate social responsibility'. Similarly, pursuant to Article 10 of the Iran-Slovakia BIT of 2017, '[i]nvestors and investments should apply national, and internationally accepted, standards of corporate governance' (emphasis added).
Martha A Fineman, 'The Vulnerable Subject and the Responsive State' (2010) 60 Emory Law Journal 1, 31.
Fineman, note 19, 12.
It is also these elements of her theory that add to its concreteness and comprehensiveness that make it preferable to other alternative theories to the classical liberal paradigm.
Fineman, note 67, 360-363.
Fineman, note 19, 13.
van Harten, note 16, 4.
Ivar Alvik, 'The Justification of Privilege in International Investment Law: Preferential Treatment of Foreign Investors as a Problem of Legitimacy' (2020) 31 European Journal of International Law 289, 290 (challenging the position that foreign investor 'privilege' is unjustified);
Jürgen Kurtz, 'On Foreign Investor 'Privilege' and the Limits of the Law: A Reply to Ivar Alvik' (2020) 31 European Journal of International Law 313;
Anıl Yılmaz Vastardis, 'Justice Bubbles for the Privileged: A Critique of the Investor-State Dispute Settlement Proposals for the EU's Investment Agreements' (2018) 6:2 London Review of International Law 279;
Gus van Harten, 'Private Authority and Transnational Governance: The Contours of the International System of Investor Protection' (2004) 12:4 Review of International Political Economy 600.
Fineman, note 56, 134.
Fineman, note 19, 13.
Peadar Kirby, Vulnerability and Violence: The Impact of Globalisation (London: Pluto Press, 2006) 55.
For a discussion of state responsibility in international law, see René Provost, State Responsibility in International Law (New York: Ashgate Publishing, 2002).
Fineman, note 19, 13-15.
Katharina Pistor, The Code of Capital: How the Law Creates Wealth and Inequality (Princeton: Princeton University Press, 2019) 18.
Fineman, note 19, 6.
Wenhua Shan and Sheng Zhang, 'The Treaty of Lisbon: Half Way Toward a Common Investment Policy' (2010) 21 European Journal of International Law 1049, 1050.
Aysel Küçüksu, 'Fineman in Luxembourg: Empirical Lessons in Asylum Seeker Vulnerability from the CJEU' (2022) Netherlands Quarterly of Human Rights 1, 6-7;
Fiona De Londras, 'Response: On Some Problems with Rights' in Daniel Bedford and Jonathan Herring (eds.), Embracing Vulnerability: The Challenge and Implications for Law (London: Routledge, 2020) 175.
Tomoko Ishikawa, 'Counterclaims in Investment Arbitration: Is the Host State the Right Claimant?' in Ho and Sattorova, note 2, 200.
See also James T Gathii and Ibironke Odumosu-Ayanu, 'The Turn to Contractual Responsibility in the Global Extractive Industry' (2016) 1 Business and Human Rights Journal 69 (discussing how viewing governments as trustees of local resources can help ensure investments surrounding such resources benefit their public).
Kenneth Vandevelde, 'A Unified Theory of Fair and Equitable Treatment' (2010) 43 International Law and Politics 43, 53.
This is perhaps the most evident in the analysis of investors' legitimate expectations. Already a controversial subset of expropriation and fair and equitable treatment obligations particularly on what expectations are 'legitimate' (therefore protected), some Tribunals asserted that if foreign investors' legitimate expectations are frustrated, this can be a violation of FET obligation. See El Paso Energy International Company v Argentina, ICSID Case No. ARB/03/15, Award (31 October 2011), para 227.
Perrone, notes 13 and 15.
Although some arbitral tribunals have indicated that the standard also covers the protection of legal rights through judicial mechanisms. See Lauder v Czech Republic, UNCITRAL, Final Award (3 September 2001), para 214.
Ntina Tzouvala, 'Full Protection and Security (for Racial Capitalism)' (2022) 25:1 Journal of International Economic Law 224, 234-235.
Perrone, note 15, 16.
Perrone, note 13, 404-405.
This was a key issue in Bear Creek Mining Corporation v Peru, ICSID Case No. ARB/14/21. The factual background of the dispute makes it evident that social approval of such large-scale industrial operations can spark social unrest, if pressed on against the local communities' will.
Norms mandating prior consultations with local communities already exist in international law. See ECOSOC, 'An Overview of the Principle of Free, Prior and Informed Consent and Indigenous People in International and Domestic Law and Practices', Document No. PFII/2004/WS.2/8 (2005).
For the development of good practices in mining industry, see Angus MacInnes, Marcus Colchester and Andrew Whitmore, 'Free, Prior and Informed Consent: How to Rectify the Devastating Consequences of Harmful Mining for Indigenous Peoples' (2017) 15 Perspectives in Ecology and Conservation 152.
Furthermore, local communities are permitted to submit amicus curiae briefs. See Lorenzo Cotula and Nicolás M Perrone, 'Reforming Investor-State Dispute Settlement: What About Third Party Rights?' (IIED 2019), https://pubs.iied.org/pdfs/17638IIED.pdf (accessed 29 July 2022).
For a similar point, see van Harten, note 16.
Sam Szoke-Burke and Kaitlin Cordes, 'Mechanisms for Consultation and Free, Prior and Informed Consent in the Negotiation of Investment Contracts' (2020) 41 Northwestern Journal of International Law and Business 49, 57-58.
Neve Adrienne Campbell, 'House of Cards: The Relevance of Legitimate Expectations under Fair and Equitable Treatment Provisions in Investment Treaty Law' (2013) 30 Journal of International Arbitration 361;
Vattenfall AB and others v Germany, ICSID Case No. ARB/12/12;
Philip Morris Asia Limited v Australia, Final Award, 2015, PCA Case No. 2012-12;
Philip Morris Brands Sarl, Philip Morris Products SA and Abal Hermanos SA v Uruguay, Final Award (8 July 2016), ICSID Case No. ARB/10/7.
Convention on the Settlement of Investment Disputes between States and Nationals of Other States 1965, art 25.
Agreement between Bosnia and Herzegovina and the Council of Ministers of the Republic of Albania on the Reciprocal Promotion and Protection of Investments (2009), art 10.
For some examples of what investor obligations could look like, see Report of the Expert Meeting, 'Integrating Investor Obligations and Corporate Accountability Provisions in Trade and Investment Agreements' (11-12 January 2018), https://www.iisd.org/system/files/publications/report-expert-meeting-versoix-switzerland-january2018.pdf (accessed 8 August 2023). The debates, as evident from the Report, often entertain the idea of pursuing justice through domestic courts. The document offers examples of concrete items that can improve the rights of local communities (and incorporate concrete investor obligations) if included in IIAs.
See, for example, Article 37(4) of the United Nations Economic and Social Council (ECOSOC) and African Union, 'Draft Pan-African Investment Code' (26 March 2016) E/ECA/COE/35/18, repository.uneca.org/bitstream/handle/10855/23009/b11560526.pdf?sequence=1&isAllowed=y (accessed 8 August 2023);
Article 14 of the Nigeria-Morocco BIT; Human Rights Council, 'Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework', A/HRC/17/31 (21 March 2011).
See Ranjan, note 7, 142-147 (discussing some ISDS decisions in which investor obligations were interpreted into the signed BITs).
Urbaser SA and Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v The Argentine Republic, ICSID Case No. ARB/07/26.
Hesham T Al Warraq v Republic of Indonesia, UNCITRAL, Award (15 December 2014); David R Aven and Others v Republic of Costa Rica, Award (18 September 2018), ICSID Case No. UNCT/15/3.
In other cases, respondents brought counterclaims for domestic law violations, e.g., Tethyan Copper Company Pty Limited v Islamic Republic of Pakistan, Award (12 July 2019), ICSID Case No. ARB/12/1.
For a recent work on different possibilities for incorporating investor accountability in IIL, see Martin Jarrett, Sergio Puig and Steven Ratner, 'Towards Greater Investor Accountability: Indirect Actions, Direct Actions by States and Direct Actions by Individuals' (2021) 14:2 Journal of International Dispute Settlement 259.
Jackson Shaw Kern, 'Investor Responsibility as Familiar Frontier' (2019) 113 AJIL Unbound (2019) 28.
Ranjan, note 7, 143.
See also Güneş Ünüvar, 'The “Object and Purpose” and Incrementalism of Investment Treaties: Can International Investment Law Reinvent its Identity?' in Michelle Egan et al (eds.), Contestation and Polarization in Global Governance - European Responses (Cheltenham: Edward Elgar, 2023) 378.
Sergio Puig, 'International Indigenous Economic Law' (2019) 52 UC Davis Law Review 1243, 1244.
