Human rights in investor-State arbitration: The human right to water and beyond

Human rights arguments are increasingly being raised by parties in investor-State arbitrations, despite the fact that investment arbitration tribunals arguably “lack the jurisdiction to hold states liable for breach of their human rights obligations”, and the widespread concerns about their suitability to pronounce on such issues in a process that is often viewed as lacking accountability and transparency. Investment arbitration tribunals are also increasingly relying on human rights norms and jurisprudence of human rights courts in evaluating such arguments, thereby implicitly recognizing the interconnectedness between human rights and foreign investment protection and that the former can, and should, inform the latter.

However, one area of investor-State arbitration in which tribunals have thus far failed to adequately address human rights concerns is the water privatization sector. While the existence of an independent human right to water may be controversial, such a right is certainly evolving as a result of the vital importance and growing scarcity of freshwater, and it has been recognized in various domestic and international instruments. Moreover, in several water-related investor-State arbitrations host States and third party amicus curiae have raised the human right to water as a justification for State actions, and this is likely to increase in the future. However, the arbitration tribunals in these cases have refrained from explicitly recognizing this right or discussing in any meaningful way its impact on States’ investment protection obligations. Rather, when it comes to host States’defences, they seem to treat these two areas of international law as entirely separate.

However, as governments generally fail to address human rights issues in investment treaties and agreements, and in light of the considerable influence that investor-State arbitration can exert on domestic policy-making in matters of public interest, arbitration tribunals are uniquely placed to strengthen and promote important human rights norms, such as the human right to water, that may be negatively impacted by investment protection measures. To this end, however, they must be more sensitive not only to the interests of foreign investors but also to those of local populations, and focus on how these interests overlap rather than conflict. By so doing, investment arbitration tribunals can reinforce both the human right to water and their own legitimacy as ultimate arbiters of investor-State disputes affecting the public interest.

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