Human Rights Obligations of Corporations
In a positive move from a human rights perspective, the tribunal countered the claimant’s
argument that the BIT conferred no obligations on the investor [1182]. The tribunal examined
the arbitration clause [1187], the applicable law clause [1188] and Article VII(1) of the Spain-
Argentina BIT (a ‘more favourable law’ clause) [1192], all of which permitted reference to
sources of law external to the BIT, including treaties and general international law.
Consequently, the tribunal found that BIT was not a ‘closed system’ [1191]. Rather, the BIT
enabled the respondent to make reference to certain legal sources external to the BIT when
identifying obligations that would bind the claimant.
Further, the tribunal rejected the claimant’s view that, as a non-state actor, it was not bound by
human rights obligations [1194]. The tribunal considered that, as corporations are the recipients
of rights under BITs, they are subjects of international law and can also bear obligations in
international law [1195]. The tribunal referred to the Universal Declaration on Human
Rights (UDHR) and the International Covenant on Economic, Social and Cultural
Rights (ICESCR) to establish that there were human rights obligations associated with a right to
water [1196] – [1197]. In addition to these rights, the tribunal used Article 30 UDHR and Article
5(1) ICESCR to establish that private parties owe human rights obligations. The tribunal also
relied on the International Labor Office’s Tripartite Declaration of Principles concerning
Multilateral Enterprises and Social Policy to support this position [1198]. Using the terminology
found in these provisions, the tribunal concluded that, in addition to human rights giving effect to
the right to water, there was also ‘an obligation on all parts, public and private parties, not to
engage in activity aimed at destroying such rights’ [1199].
The terms of this obligation suggest that Article 30 UDHR and Article 5(1) ICESCR prevent the
claimant from relying on its rights under the BIT to destroy human rights. However, I would
argue that this obligation cannot be sourced from these provisions. Both Article 30 UDHR and
Article 5(1) ICESCR are aimed at preventing the deliberate misinterpretation of one human
rights obligation to justify the violation of other rights (see Saul, Kinley and Mowbray, The
International Covenant on Economic Social and Cultural Rights: Commentary, Cases, and
Materials (OUP 2014), 263). Hence, Article 5(1) ICESCR uses the terms:
‘Nothing in the present Covenant may be interpreted as implying… any right to engage in any
activity or to perform any act aimed at the destruction of any of the rights or
freedoms recognized herein’ (emphasis added).
Consequently, if the tribunal in Urbaser intended to extend the operation of article 5(1) ICESCR
to rights sourced from other treaties, such as BITs, this interpretation is contrary to its express
terms. Alternatively, if Article 5(1) ICESCR was intended to be applied as it is drafted, a
claimant would need to rely on its own human rights to intentionally destroy the human rights of
others to meet this test. A claimant could potentially invoke the right to property (relying on the
UDHR) but would need to interpret this right so as to deny a human right of the host state
population. This scenario would be unlikely to arise in many investment disputes.
In addition to these problems, the intention behind Article 5(1) ICESCR was to prevent newly
formed fascist groups from relying on human rights as a justification for their activities (see Saul,
Kinley and Mowbray, The International Covenant on Economic Social and Cultural Rights:
Commentary, Cases, and Materials (OUP 2014), 263). Article 17 European Convention on
Human Rights, which serves a similar function to Article 5(1) ICESCR, has only been applied in
cases that fundamentally undermine its goals, such as incitement to hate. Again, it is difficult to
envisage a wide range of circumstances where a comparative policy consideration might be
applied in an investment context.
The tribunal held that their interpretation of Article 5(1) ICESCR could not be applied to the
human right to water. First, the tribunal found that the respondent’s argument conflated the
concessionaire’s provision of water and sewerage services with the obligation to fulfil the human
right to water [1206]. The tribunal noted that, based on the respondent’s argument, the origin of
the human rights obligation would be the concession contract [1206]. Secondly, as the human
right to water provided a duty to perform, the only obligation was placed on the state [1208]. As
it was for the state to regulate the supply of water to fulfil this right, the claimant’s obligation
would also be sourced from the concession contract or domestic law [1209] – [1210]. These
findings were problematic because the tribunal did not have jurisdiction over matters relating to
Argentina’s domestic law (Decision on Jurisdiction). Given that the respondent had not
identified an independent obligation in international law that was binding on the claimant, the
counterclaim could not succeed.
Nonetheless, the tribunal concluded:
The situation would be different in case an obligation to abstain, like a prohibition to commit
acts violating human rights would be at stake. Such an obligation can be of immediate
application, not only upon States, but equally to individuals and other private parties. This is not
a matter for concern in the instant case [1210].
This statement appears to reflect the tribunal’s prior view based on Article 30 UDHR and Article
5(1) ICESCR. Given the difficulties of relying on these provisions outlined above, it is not clear
that the ‘obligation to abstain’ can be of ‘immediate application’. Further, the tribunal did not
construct its concluding statement in the same terms as its previous formulation of the obligation.
It interprets the ‘obligation to abstain’ to include a prohibition on committing acts that violate
human rights. Whilst this encompasses cases of deliberately misinterpreting human rights to
violate the rights of others, what the tribunal suggests arguably extends beyond these cases to
those human rights framed as prohibitions. These are most commonly associated with jus
cogens obligations such as the prohibition on slavery, the prohibition on genocide and the
prohibition on racial discrimination. Although these prohibitions could apply to investment
projects (for example, the dispute in Piero Foresti v South Africa stemmed from the operation of
Black Economic Empowerment legislation) this type of claim is rare and would also not
automatically bind individuals or corporate entities. As such, the tribunal’s statement does not
clarify which human rights bind foreign investors.
