*Karl P. Sauvant, PhD*
*Resident Senior Fellow*
*Columbia Center on Sustainable Investment*
Columbia Law School - The Earth Institute, Columbia University
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*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?*
* <#m_-2162004342729134014__edn1>
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]

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]

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

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
** <#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
[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
[3] <#m_-2162004342729134014__ednref5> See,
[4] <#m_-2162004342729134014__ednref6> A. Ross, “Second dispute under
Bangladesh accord settles,” *Global Arbitration Review*, January 23, 2018,
[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
[7] <#m_-2162004342729134014__ednref9> The revised 2010 UNCITRAL
Arbitration Rules could serve as suitable institutional rules, available at
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 (**
<>**).” 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*

   - 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
<>**. *

*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
   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
   - *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
   - *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

Karl P. Sauvant, Ph.D.
Resident Senior Fellow
Columbia Center on Sustainable Investment
Columbia Law School - Earth Institute
Ph: (212) 854-0689
Fax: (212) 854-7946
*Copyright © 2018 Columbia Center on Sustainable Investment (CCSI), All
rights reserved.*
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