1 October 2008
Professor John Ruggie was appointed to be Special Representative of the United Nations Secretary-General on business & human rights in 2005. Prof. Ruggie is also the Kirkpatrick Professor of International Affairs and Weil Director of the Sharmin and Bijan Mossavar Rahmani Center for Business and Government, as well as Affiliated Professor in International Legal Studies at Harvard Law School. ITN corresponded with Prof. Ruggie by e-mail.
ITN: Since becoming the UN Special Representative of the Secretary General on Business & Human Rights, you and your team have delved into a number of quite specific areas of international investment law, including bilateral investment treaties, the rules of investor-state arbitration, and stabilization clauses. What has drawn you to this particular area of international economic law?
J.R.: My work on investment is part of examining the role of states in regulating and adjudicating corporate activities vis-à-vis human rights, as requested in my initial mandate. All throughout this examination I have found a lack of policy coherence within and among states in dealing with business and human rights issues. The domain of human rights policy tends to be segregated within its own conceptual and (typically weak) institutional box—kept apart from, or heavily discounted in, other policy domains that shape business practices, including commercial policy, corporate law and securities regulation. Investment policy also fits into that list.
As we’ve seen in a number of recent cases, the investment regime can have a significant impact on human rights issues. Our drawing attention to this nexus has engaged constituencies that have not generally been active in business and human rights before—such as private law firms, international organisations like UN Commission on International Trade Law, the International Finance Corporation, and even civil society organizations like IISD itself.
ITN: You have commented on the imbalance in bilateral investment treaties: i.e., that they provide legal protections to foreign investors, without taking a similar regard for a state’s duty to protect the public interest. Are there remedies that you would suggest?
J.R: In my view, if there are serious negative consequences of BITs for the protection of human rights, those should be corrected. As with stabilization provisions, investor protection should be achieved in a way that at a minimum does not hinder the fulfilment of the state’s human rights obligations.
In terms of remedying any potential negative impact that BITS can have on the state duty to protect, I believe that innovative ideas should come from engagement with stakeholders from all sides, including investors, states, international institutions, and civil society. This is one of the issues I will continue to explore during my current mandate.
ITN: Can you point to any specific areas where, in your view, the international investment law regime works against the promotion of human rights?
J.R.: The three-part framework for business and human rights that I proposed in my most recent report to the Human Rights Council, and which the Council unanimously welcomed last June, comprises the state duty to protect against human rights abuse by all parties, including business; the corporate responsibility to respect human rights; and more effective access to remedies for those who believe their rights have been abused.
We have tried to understand better whether and how the international investment law regime may hinder the state’s ability to protect rights, through legislation and/or regulatory measures. In our joint project with the IFC, we have focused on stabilization clauses as one such mechanism. Our work indicates that these clauses can impede a state’s duty to protect in two ways. Sometimes they are drafted to make investors exempt from new social and environmental laws over the lifetime of an investment project. And sometimes these clauses are drafted to provide the investor with compensation or an opportunity to claim compensation for compliance with new social and environmental laws. Obviously, investors need protection against arbitrary or discriminatory measures by host states. So it is a question of balance and precision, ensuring that provisions in agreements don’t lend themselves to misuse by either side.
Another issue I have looked at briefly is transparency for investor-state arbitration. The UN promotes transparency as a fundamental precept of good governance. I consider that to hold true in the investment realm as well. If the public does not know of disputes between the state and a foreign investor, and therefore cannot inform itself of how the public interest may be impacted by the dispute, it makes it all the more difficult to hold the state to account.
ITN: This brings us to your support for greater transparency in investor-state arbitration governed by the UN Commission on International Trade Law’s rules of arbitration, which has led to significant debate and opposition from some quarters.
J.R.: I don’t believe that my support for greater transparency in investor-state dispute resolution has triggered significant opposition. On the contrary, the UNCITRAL decided by consensus in June of this year that addressing transparency in investor-state dispute resolution will be the next priority of the Working Group on Arbitration.
As I indicated in my statement to UNCITRAL in June of this year, adequate transparency where human rights and other state responsibilities are concerned is essential if the public is to be aware of proceedings that may affect the public interest. It lies at the very foundation of what the United Nations and other authoritative entities have been promulgating as the precepts of good governance.
Again, the issue is one of balance, because some commercial matters do need to remain confidential. But the exceptions should be specifically tailored to address legitimate needs and not blanket the entire process.
I am pleased that UNCITRAL will be considering this important issue. There is now a unique opportunity to focus on how the principle of transparency should be integrated into investor-state dispute resolution. I will follow their proceedings with great interest.