Document Type : Original Independent Original Article
Highlights
Introduction
With the beginning of the globalization process, world trade increased and the trend of foreign investment grew significantly. Since then, less developed and developing countries have started to compete with each other to attract foreign investors with the aim of having access to technology. In this competitive arena, some countries have tried to gain the trust of foreign investors by adopting reasonable solutions such as reforming the economic system and enacting some laws. However, some other countries, seeking to attract more foreign investors, have resorted to adopting unreasonable solutions such as deliberately remaining silent about foreign investors' obligations to respect human rights and even limiting or neutralizing their regulatory power in this regard.
Now, considering the importance of protecting, respecting, and realizing human rights by governments in today's world, the main question of the present study is that if the investment contract is silent regarding the foreign investor's obligations regarding the need to respect human rights and the foreign investor violates human rights standards while implementing the investment project, what approaches will the host state adopt towards him and, based on those approaches, what will be the position of the arbitration institution as a reference for resolving investment disputes? Our hypothesis is based on the assumption that the host state’s stance depends on its level of development and its need to retain and attract foreign investors, and it is expected that the arbitral institution will neither consider the limitation or neutralization of the host state’s regulatory power as a license to violate human rights by foreign investors, nor will it consider the host state’s commitment to protect, respect, and fulfill human rights as a license to adopt any approach against foreign investors. The authors have used a descriptive-analytical method in order to find a reasonable and argumentative answer for latter question. The overall results of the study, while identifying three approaches that may be adopted by the host state against a foreign investor, point to the fact that the arbitral institution has the necessary basis for adopting two neutral or positive approaches, and the adoption of either of the latter two approaches is not contrary to the principles of adversarial arbitration. However, adopting a neutral approach will entail many challenges, and adopting a positive approach requires multiple considerations.
Methodology
In this study, the authors used a descriptive-analytical method.
Results and Discussion
1- Possible approaches of the host government towards foreign investors:
A- Not taking a position in favor of the foreign investor and preferring economic benefits from the continuation of the investment project.
B- Taking a position towards the foreign investor in order to pay attention to human rights obligations.
C- Adopting a moderate approach based on trying to achieve a balance between human rights obligations and protecting the rights of the foreign investor.
2- Possible approaches of the arbitral institution in the event of a dispute referral:
A- Adopting a neutral approach based on not recognizing its competence to address human rights claims.
B- Adopting a positive approach based on recognizing its competence to address human rights claims.
Conclusion
We knew that one of the most important reasons for not mentioning the obligations of the parties, especially the foreign investor, to respect human rights in bilateral investment treaties, contracts covered by bilateral investment treaties, and arbitration agreements is to provide the most ideal platform for attracting foreign investors. Following the above model in writing, drafting, and approving contracts related to investment projects usually dates back to a time when human rights did not have much influence in the field of investment contracts, and it is likely that the host government, by remaining silent, limiting, or neutralizing its regulatory power to implement human rights standards in contracts; or the investor, by making such a demand a prerequisite for choosing the host government, did not have the necessary awareness of the need and how to create a balance between human rights obligations and the financial benefits resulting from attracting foreign investors. Over time, human rights have permeated investment contracts, but many governments continue to follow the same pattern in writing, drafting, and ratifying investment contracts, which has resulted in nothing less than what has been discussed in this study. The most important tool for preventing such conflicts is the genuine will of governments seeking to attract foreign investors to adhere to human rights obligations. However, it should be noted that adherence does not necessarily mean prioritizing human rights, because in this case, many foreign investors will not be willing to invest there. Adherence means creating the maximum balance between human rights obligations and the financial benefits of attracting foreign investors, given the context. In other words, governments should take into account that their actions do not lead to an unjustifiable decrease in their regulatory power vis-à-vis foreign investors in terms of human rights protection.
In view of the above framework, the first preventive measure is to include human rights standards in the preamble of a bilateral investment treaty or a contract covered by a bilateral investment treaty. According to Article 31, paragraph 2, of the Convention on the Law of Treaties, the preamble of a treaty will play an important role in interpreting its provisions. In this case, if a foreign investor claims that it has not expressly made an obligation to comply with human rights standards, the arbitral institution should, by reference to the latter provision, interpret the provisions of the contract and the obligations of the parties in the light of human rights standards. Including human rights standards in the objectives section, repeating them in the text and finally attaching a human rights document to the investment contract and explicitly referring to the jurisdiction of the arbitral institution to address issues related to the interpretation and implementation of human rights standards in the arbitration agreement will certainly be effective in preventing the emergence of conflicts. The second measure is to create restrictions on the powers of governments to limit their regulatory power. As long as governments do not consider themselves obligated to publish the text of investment contracts, we will always see them limiting or neutralizing their regulatory power at the cost of attracting foreign investors, and subsequently, foreign investors, with the aim of gaining more profit and benefits, will have no hesitation in committing such acts as discrimination in hiring, training employees, inequality in paying wages, producing pollution above the permitted limit, or violating other instances of human rights that the host government is considered responsible for protecting. In this regard, the presence of representatives of the people, NGOs, human rights activists, and environmentalists during negotiations and the publication of non-confidential texts related to investment contracts will be effective. If a government knows that restricting or neutralizing regulatory power in an unacceptable manner will result in the aforementioned institutions taking a position, or if it observes that the aforementioned institutions consider the failure to publish non-confidential texts related to investment contracts to be an example of a violation of the right to access information, it will have less opportunity to restrict or neutralize regulatory power. Finally, we draw the attention of those interested in research in this field to a question. Would it not be better for the host government to file a lawsuit against the foreign investor before an arbitration institution on the basis of a violation of human rights standards by the foreign investor, in order to first determine the position of the arbitration institution regarding the need to achieve a balance between human rights and international investment law and, based on that, adopt the most reasonable positions against the foreign investor?
