Investor-State Arbitrations and the Human Rights of the Host State’s Population: An Empirical Approach to the Impact of Amicus Curiae Submissions

© Springer International Publishing Switzerland 2015
Norman Weiß and Jean-Marc Thouvenin (eds.)The Influence of Human Rights on International Law10.1007/978-3-319-12021-8_12

12. Investor-State Arbitrations and the Human Rights of the Host State’s Population: An Empirical Approach to the Impact of Amicus Curiae Submissions

Sarah Schadendorf 

Bucerius Law School, Hamburg, Germany



Sarah Schadendorf

12.1 Introduction

Foreign investment activities bear the potential to negatively affect the human rights of the people living under the host State’s jurisdiction. Projects of foreign investors might mainly interfere with the rights to life and human health, the economic and social rights of the population, with indigenous peoples’ collective rights or labour rights.1 Legislative and administrative measures that the host State adopts in furtherance of its human rights obligations towards the population potentially violate investment protection standards. A conflict between the State’s human rights obligations and its investment treaty obligations, between inhabitants’ human rights and the investor’s rights (possibly human rights by themselves2) arises.

12.1.1 The Negligence of Human Rights Arguments in Investor-State Arbitration

Human rights concerns of the host State’s population can be invoked in international investor-State arbitration either by directly using them as arguments, for example in favour of a certain interpretation of investment rules, or by relying on the host State’s human rights obligations in order to justify its measures. In several investor-State disputes, the host State employed its human rights obligations as a defence.3 However, in a number of arbitrations, host States did not make use of obvious human rights arguments.4 This omission of human-rights-based reasoning might result from the States’ fear of acknowledging obligations for themselves in other settings.5 It might also be due to the fact that many human rights violations by the investor occur in complicity with the host State.6

12.1.2 Amicus Curiae Submissions as a Potential Remedy?

Since the 1990s, the practice of submitting amicus curiae briefs has been more and more recognised by international courts and tribunals.7 During the last decade, a number of international investment tribunals have been faced with written statements and other claims of participation by various actors of civil society in its broadest sense, such as NGOs, trade unions, business associations, and indigenous communities. The admission of amicus briefs has entailed a scholarly debate about their compatibility with the features of investment arbitration (e.g., confidentiality, consensual nature) and about their potential benefits for the arbitration process (e.g., improved quality of the awards, increased transparency, and legitimacy).8 With regard to the human rights implications of international investment disputes, amicus briefs offer an opportunity to present facts about the human rights situation or elaborate a human-rights-based reasoning. If the host State leaves out the human rights dimensions of the case in its pleadings, amici submissions are the main “legal avenue” by which human rights considerations enter investor-State arbitrations and the main mechanism to represent the affected citizens, consumers, or workers.

12.1.3 Empirical Approach to the Impact of Amicus Curiae Submissions

This chapter will examine the existing practice of dealing with those amicus submissions whose purpose is to promote human rights concerns of the host State’s population. The aim is to evaluate whether amicus briefs by civil society actors are an effective means for incorporating human rights issues in international investment arbitrations. If so, we will discover how human rights arguments influence arbitral decisions on investors’ rights. If, on the contrary, amicus briefs prove to be ineffective, there will be a need to reconsider the amicus mechanism and possibly think of other ways to introduce human rights arguments to investment arbitration.

In its first part, the chapter will explore the rationale for accepting amicus submissions and take stock of amicus submissions in NAFTA and ICSID investor-State arbitration. The second part will be dedicated to an analysis of the cases in which human rights of the host State’s population were invoked by amici in substantive submissions. The analysis will extend to the submitted amicus briefs, as well as to the procedural orders, decisions, and awards of NAFTA and ICSID investment tribunals–as far as they have already been issued and are publicly available. This section will explore which human rights the amici refer to and in how far the tribunals respond to the alleged human rights arguments. This rather empirical approach is supposed to evaluate the relevance of amicus briefs containing human rights arguments related to the host State’s population. Their actual influence is hard to measure. Nevertheless, the results will help to assess the impact of human-rights-related amicus submissions on contemporary investment arbitration and international investment law in general.

12.2 Amicus Curiae Submissions in NAFTA and ICSID Investor-State Arbitration

12.2.1 Legal Basis and Conditions for Admitting Amicus Curiae Submissions

During the last decade, investor-State tribunals adjudicating under UNCITRAL and ICSID Arbitration Rules have consistently relied on their procedural powers to admit submissions by various civil society actors as amici curiae. The pioneer tribunal in the Methanex v. US arbitration (governed by NAFTA Chapter 11 and UNCITRAL Arbitration Rules) inferred from its general procedural powers under Art. 15(1) UNCITRAL Arbitration Rules the discretionary power to allow amicus submissions.9 In contrast to the first ICSID tribunal confronted with amicus applications (Aguas del Tunari, S.A. v. Bolivia),10 the ICSID tribunal in Suez/Vivendi v. Argentina came to the conclusion that its procedural powers under Art. 44 ICSID Convention granted the same power.11

Both the NAFTA and the ICSID regimes have reacted to this development in non-disputing party participation by issuing the NAFTA Free Trade Commission (FTC) Statement in 2003 and by introducing Rule 37(2) ICSID Arbitration Rules in 2006, respectively. UNCITRAL Working Group II currently discusses the adoption of an explicit rule on amicus participation.12 According to the FTC Statement and the Suez/Vivendi jurisprudence, one of the criteria that tribunals should consider in exercising their discretion is a public interest in the subject matter.13

The increasing admission of amicus briefs by subsequent tribunals suffered a setback in 2012. Two identically composed tribunals (Pezold/Border Timbers v. Zimbabwe) adopted a very restrictive reading of certain criteria of Rule 37(2) ICSID Arbitration Rules and found, among others, that the human-rights-related content of the amicus submissions was unrelated to the matters before the tribunal and outside the scope of the dispute.14 This narrow understanding of the conditions of Rule 37(2) precludes civil society actors from initiating human rights arguments.15 It has to be awaited whether this strict view will be upheld by other ICSID tribunals.

12.2.2 Public Interest as a Rationale for Admitting Amicus Curiae Submissions

In the very first case, Methanex, the tribunal’s discretion in admitting amicus applications was co-determined by the fact that the subject matter of the case implied a public interest in this arbitration.16 The UPS tribunal picked up the “important public character of the matters” and stated that it was of importance to consider whether amici petitioners are able to provide assistance beyond that provided by the disputing parties.17 In Glamis Gold, the tribunal held the view that “given the public and remedial purposes of non-disputing submissions, leave to file and acceptance of submissions should be granted liberally”.18 Another NAFTA tribunal that rejected an amicus application argued that, in matters of public interest, the tribunal should have “access to the widest possible range of views” and should ensure “that all angles on, and all interests in, a given dispute are properly canvassed”.19

The ICSID tribunals in Suez/Vivendi and Suez/InterAguas reasoned that courts “have traditionally accepted the intervention of amicus curiae in ostensibly private litigation because those cases have involved issues of public interest and because decisions in those cases have the potential, directly or indirectly, to affect persons beyond those immediately involved as parties in the case”. The particular public interest in the cases originated from the fact that the investments at issue concerned “basic public services to millions of people” that may raise “complex public and international law questions, including human rights considerations”.20 After the introduction of Rule 37(2) ICSID Arbitration Rules, the Biwater Gauff tribunal stated that granting leave to file amicus submissions is “an important element in the overall discharge of the Arbitral Tribunal’s mandate”21 and cited passages from the Methanex and Suez decisions relating to the public interest dimension of the disputes.22 The tribunals in Pezold/Border Timbers, on the contrary, recognised that the indigenous communities had “some interest in the land” and that therefore the determinations in the case would probably have an “impact on the interests of the indigenous communities”23 but rejected any human rights considerations.

Hence, the pioneer tribunals, as well as most of the following decisions on amicus applications, seem to have been guided by the potential impacts of investment projects and investor-State arbitrations on the rights of other than the disputing parties. In many cases, the public interest and human rights implications were one of the main considerations when accepting amicus submissions.

12.2.3 Stocktaking of Amicus Curiae Submissions

All in all, there are seven cases under ICSID Arbitration Rules, six cases under NAFTA Chapter 11 and UNCITRAL Arbitration Rules, and one case governed by NAFTA Chapter 11 and ICSID Arbitration Rules with amicus applications from civil society (status: August 2013). The number of arbitrations where tribunals authorised and actually received substantive amicus submissions amounts to three governed by ICSID Arbitration Rules and three under NAFTA Chapter 11 and UNCITRAL Arbitration Rules. Set in relation to the total number of known ICSID and NAFTA Chapter 11 arbitrations,24 these cases represent less than 1 % of all ICSID and approximately 6 % of all NAFTA arbitrations.

12.3 Human Rights Arguments in Amicus Curiae Submissions in NAFTA and ICSID Arbitrations

In six out of the seven arbitration cases with authorised substantive amicus briefs, at least one of the submissions used international human rights law as an argument for their position.

12.3.1 Methanex Corp. v. US

In the NAFTA case Methanex, several amici argued in favour of a Californian ban on the gasoline additive MTBE. The leakage of MTBE into the groundwater posed danger to the environment and human health. In their joint submission, the amici pointed to obligations of States to protect human rights, in this case the right to water and linked rights like the rights to health, to life, and to own means of subsistence. They shortly asserted that California’s measures to protect the integrity of groundwater sources were thus mandated by international law.25

In its Award, the Methanex tribunal mentioned the amicus submissions only as part of the procedural history and stated that it would not summarise the contents of the submissions as they “were detailed and covered many of the important legal issues that have been developed by the disputing parties”.26 In the merits, the tribunal did not deal with any human rights arguments.

12.3.2 United Parcel Services of America, Inc. v. Canada

The claimant UPS itself argued that a Canadian law prohibiting certain postal workers from exercising collective bargaining rights constituted a breach of Canada’s international human rights and labour rights obligations and therefore a breach of Art. 1105 NAFTA.27 In a joint amici submission, the Canadian Union of Postal Workers and the Council of Canadians agreed with the claimant that the Canadian law violated international labour law obligations. They supported Canada’s position by arguing that the NAFTA dispute settlement procedure was an inappropriate forum for claims based on violations of international labour law provisions as the most directly affected persons, the workers, had no rights in these proceedings at all. Only the International Labour Organization with its special tripartite structure should be able to adjudicate labour rights infringements. Otherwise, Canada’s obligations under NAFTA and those under the ILO would be placed in conflict.28 Therefore, from the amici’s perspective, the tribunal “must seek an interpretation of NAFTA investment disciplines that most readily accords with Canada’s obligations under ILO and other treaties”.29 With regard to the other human rights instruments invoked by UPS, the amici reinforced their argument concerning the exclusion of victims of human rights violations by citing Art. 26 ICCPR. They stated that the claims offended the spirit and “letter of the very human rights instruments it [UPS] seeks to rely on”.30

In its Award, the UPS tribunal briefly mentioned the submission in the procedural history31 yet did not respond to the amici’s arguments. The labour rights arguments raised by the claimant failed because UPS did not provide sufficient factual or legal arguments.32

12.3.3 Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v. Argentina

At the core of the arbitration Suez/Vivendi was Argentina’s privatisation of water and sewerage systems in the area of Buenos Aires. The claimants, holding the concession for running these systems, brought a claim under the relevant BITs against several measures Argentina had taken during the Argentine financial crisis. In their joint submission, five NGOs described in detail the human rights implications of the dispute and their legal relevance to the adjudication. They demonstrated the recognition and importance of the right to water and linked rights and Argentina’s obligation to respect and protect these human rights.33 They argued that the measure of freezing the water tariffs served to fulfil Argentina’s human rights obligations and that, for this reason, human rights law should be applicable to the dispute as part of the “international law as may be applicable” under Art. 42(1) ICSID Convention.34 Amici

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