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*Karl P. Sauvant, PhD* *Resident Senior Fellow* *Columbia Center on Sustainable Investment* Columbia Law School - The Earth Institute, Columbia University 435 West 116th St., Rm. JGH 825, New York, NY 10027 | p: (212) 854 0689 | cell: (646) 724 5600 e: [log in to unmask] | w: www.ccsi.columbia.edu | t: @CCSI_Columbia <https://twitter.com/CCSI_Columbia> "International Investment Facilitation: By Whom and for What?", "Moving the G20's Investment Agenda Forward", "Emerging Markets and the International Investment Law and Policy Regime", "Sustainable FDI for Sustainable Development", "Towards an Investment Facilitation Framework: Why? What? When?", "Beware of FDI Statistics!", "Towards an Indicative List of FDI Sustainability Characteristics", “The Importance of Negotiating Good Contracts", "A New Challenge for Emerging Markets: the Need to Develop an Outward FDI Policy”, "China Moves the G20 toward an International Investment Framework and Investment Facilitation", "The Next Step in Governance: The Need for Global Micro-regulatory Frameworks", and "The Evolving International Investment Law and Policy Regime: Ways Forward" *are* available at https://ssrn.com/author=2461782 and http://www.works.bepress.com/karl_sauvant/. View this email in your browser <https://mailchi.mp/law/perspective-229?e=763bcf158c> 哥伦比亚大学国际直接投资展望中文版都可以在我们的网站查看：http://ccsi.columbia.edu/ publications/columbia-fdi-perspectives. *Columbia FDI Perspectives* Perspectives on topical foreign direct investment issues No. 229 July 2, 2018 Editor-in-Chief: Karl P. Sauvant ([log in to unmask]) Managing Editor: Marion A. Creach ([log in to unmask]) *Could BITs and BATs be combined to ensure access to human rights remedies?* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=a3d9673689&e=763bcf158c> * <#m_-2162004342729134014__edn1> by John Gaffney** <#m_-2162004342729134014__edn2> The United Nations Guiding Principles on Business and Human Rights (UNGPs) restate the obligation of governments to ensure, through judicial, administrative, legislative, or other means that, when human rights abuses occur in the context of business activities within their territory, the victims of such abuses have access to effective remedies.[1] <#m_-2162004342729134014__edn3> The UNGPs build upon an earlier policy framework comprising the following so-called “pillars”: (a) countries are obliged to protect human rights, including against business-related abuse; (b) business enterprises have a responsibility to respect human rights; and (c) victims of business-related human rights abuses must have access effective remedies.[2] <#m_-2162004342729134014__edn4> Whilst countries and businesses have made some progress toward implementing the UNGPs, victims of human rights abuses still face significant obstacles in gaining access to effective remedies. One notable exception has been the Accord on Fire and Building Safety in Bangladesh of May 2013 (Accord),[3] <#m_-2162004342729134014__edn5> an agreement between global brands and trade unions that requires brands to provide a means of redress in the event of a breach of the Accord. In 2016, two labor unions commenced arbitrations under the Accord against two global fashion brands. The arbitrations, which were administered by the Permanent Court of Arbitration (PCA) and heard by an ad hoc tribunal, were settled in recent months on favorable terms.[4] <#m_-2162004342729134014__edn6> How then can countries replicate in an investment context the success achieved under the Accord and require investors to provide an effective means of redress for human rights abuses, in compliance with their obligations under the UNGPs and the underlying legal framework? They may do so by revising existing bilateral investment treaties (BITs) to ensure victims can access international arbitration to resolve claims relating to investment-related human rights abuses and obtain appropriate redress. BITs enable foreign investors to arbitrate their investment disputes with a host country without a traditional arbitration agreement contained in an underlying commercial contract (known as “arbitration without privity” [5] <#m_-2162004342729134014__edn7>). This is achieved by having the host country make an open offer in a BIT to arbitrate with any foreign investor that falls within a defined category in that treaty. If a foreign investor wishes to commence arbitration, it merely has to accept the standing offer from the host country to constitute a binding arbitration agreement with the host country. There seems to be no reason in principle why this concept of “arbitration without privity” (or constructive consent), developed in BITs, could not be utilized to enhance access to human rights remedies in future BITs. How so? By analogy with Gary Born’s innovative concept of a “bilateral arbitration treaty” (BAT).[6] <#m_-2162004342729134014__edn8> Born has proposed that, in any given BAT, two countries would provide that all of a particular category of commercial disputes between their respective nationals would be resolved—as a default mechanism—by international commercial arbitration in accordance with whichever institutional or non-institutional rules they wished. The BAT concept could be adapted to help secure compliance with the UNGPs and the underlying legal framework by revising future BITs to: (a) require a home country’s investors to comply with specified human rights standards in connection with their investments in the host country (a requirement that is already beginning to feature in new investment treaties); and (b) provide that claims by a host country’s nationals relating to alleged violations of those human rights standards by the home country’s investors shall be resolved by arbitration pursuant to specified institutional (or non-institutional) rules; [7] <#m_-2162004342729134014__edn9> (c) condition the host country’s standing consent to arbitration of investor-state claims on the mechanism referenced in (b). It is suggested that the categories of disputes referenced in (b) would not directly involve the contracting states, in consistency with the BAT concept. However, the contracting states could support human rights victims by providing for financial and/or technical support to pursue claims against foreign investors. Successful claimants ought to be entitled to appropriate reparation for injuries caused by investors, including restitution and financial compensation. The establishment by the home country of its investors’ standing constructive consent to international arbitration for the resolution of human rights claims by host country’s nationals in connection with their investments in the host country—in consideration of host country’s standing consent to arbitration of investor-state claims—would thus contribute in an investment context to compliance with their obligations under the UNGPs by requiring investors to provide an effective means of redress for human rights abuses. ------------------------------ * <#m_-2162004342729134014__ednref1> *The Columbia FDI Perspectives are a forum for public debate. The views expressed by the author(s) do not reflect the opinions of CCSI or Columbia University or our partners and supporters. Columbia FDI Perspectives (ISSN 2158-3579) is a peer-reviewed series.* ** <#m_-2162004342729134014__ednref2> John Gaffney ([log in to unmask]) is a Senior Counsel with Al Tamimi & Co., specializing in international arbitration. The author is grateful to Klaus Leisinger, Andrew Newcombe and two anonymous peer reviewers for their helpful peer reviews. The author also acknowledges his discussions with Jelena Solovjova, intern at Al Tamimi & Co., who contributed to shape the ideas underlying the *Perspective*. [1] <#m_-2162004342729134014__ednref3> UN, *Guiding Principles on Business and Human Rights: Implementing the United Nations “Protect, Respect and Remedy” Framework* (New York: UN, 2011). [2] <#m_-2162004342729134014__ednref4> UN, “Guidelines on a principle-based approach to the cooperation between the United Nations and the business sector,” (2009), available at https://business.un.org/en/documents/5292. [3] <#m_-2162004342729134014__ednref5> See, http://bangladeshaccord.org/. [4] <#m_-2162004342729134014__ednref6> A. Ross, “Second dispute under Bangladesh accord settles,” *Global Arbitration Review*, January 23, 2018, https://globalarbitrationreview.com/article/1152965/second- dispute-under-bangladesh-accord-settles. [5] <#m_-2162004342729134014__ednref7> J. Paulsson, “Arbitration without privity,” *ICSID Review - Foreign Investment Law Journal*, vol. 10 (1995), pp. 232-257. [6] <#m_-2162004342729134014__ednref8> G. Born, “BITS, BATS and buts: reflections on international dispute resolution”, available at www.wilmerhale.com/uploadedFiles/Shared_Content/Editorial/News/ Documents/BITs-BATs-and-Buts.pdf. [7] <#m_-2162004342729134014__ednref9> The revised 2010 UNCITRAL Arbitration Rules could serve as suitable institutional rules, available at https://www.uncitral.org/pdf/english/texts/arbitration/arb- rules-revised/arb-rules-revised-2010-e.pdf, and the PCA could serve as an administering institution, as it did in the Accord cases. *The material in this Perspective may be reprinted if accompanied by the following acknowledgment: “John Gaffney, ‘Could BITs and BATs be combined to ensure access to human rights remedies?,’ Columbia FDI Perspectives, No. 229, July 2, 2018. Reprinted with permission from the Columbia Center on Sustainable Investment (**www.ccsi.columbia.edu <http://www.ccsi.columbia.edu>**).” A copy should kindly be sent to the Columbia Center on Sustainable Investment at **[log in to unmask]* <[log in to unmask]>*.* For further information, including information regarding submission to the *Perspectives*, please contact: Columbia Center on Sustainable Investment, Marion A. Creach, [log in to unmask] *Most recent Columbia FDI Perspectives* <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=7d09f3ef13&e=763bcf158c> - No. 228, Felipe Hees and Pedro Barreto da Rocha Paranhos, “Investment facilitation: moving beyond investment promotion,” June 18, 2018 - No. 227, Rob van Tulder and Jan Anton van Zanten, “MNEs and the Sustainable Development Goals: what do first steps reveal?” June 4, 2018. - No. 226, Khalil Hamdani, “Investment facilitation at the WTO is not investment *redux*,” May 21, 2018. *All previous FDI Perspectives are available at **http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/ <http://ccsi.columbia.edu/publications/columbia-fdi-perspectives/>**. * *Other relevant CCSI news and announcements* - *On September 26, 2018*, CCSI and the UN Sustainable Development Solutions Network (SDSN), under the guidance of Prof. Jeffrey Sachs, Special Advisor to the UN Secretary-General on the SDGs, and Laurent Fabius, President of the Constitutional Council of the French Republic, will host a conference to discuss the Global Pact for the Environment <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ff036dac85&e=763bcf158c>. The Global Pact for the Environment aims to unify international environmental governance and codify a human right to the environment in international law. *For more information, and to register, please see our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=9ae37e3b7c&e=763bcf158c>.* - *On September 26, 2018*, CCSI and the Sabin Center for Climate Change Law will host a conference on "Climate Change, the Courts, and the Paris Agreement." In recent years citizens, sub-national governments and NGOs have turned to litigation to hold governments and corporations accountable for their contributions to climate change. *For more information about this event, including registration, please see our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=5d421fa285&e=763bcf158c>.* - *On September 27-28, 2018*, CCSI will hold its Annual Columbia International Investment Conference (CIIC) on “Multinationals in the Age of Sustainable Development: New Thinking on the Role of International Investment Agreements.” The Conference, taking place alongside the 73rd Session of the UN General Assembly in New York, will build on a multi-year effort to identify guiding principles and practical approaches for aligning international investment treaties with the Sustainable Development Goals (SDGs).* Additional information will be posted shortly on our website here <https://columbia.us6.list-manage.com/track/click?u=ab15cc1d53&id=ff7e394807&e=763bcf158c>.* Karl P. 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