Human Rights and Investment in Economic Emergencies: Conflict of Treaties, Interpretation, Valuation Decisions

Abstract

This article examines a host State’s obligation to comply with the “minimum core obligation” owed to its constituents under the International Covenant on Economic, Social, and Cultural Rights (ICESCR), simultaneously with the obligation to compensate investors for breaches of investment treaty obligations arising from governmental measures taken during economic emergencies. Host States undertaking social protection measures purely to maintain good faith observance of ICESCR minimum core obligations during economic emergencies, and not as a pretext against expropriation or non-expropriation compensation, can argue various legal bases to diminish the quantum of damages owed to investors collaterally injured by such governmental measures.

Part I (ICESCR Applicability in Economic Emergencies) discusses the ICESCR minimum core obligation during economic emergencies, and the determinability of its content on a case-to-case basis. Part II (Conflict of Treaties and VCLT Article 30: the ICESCR and the Investment Treaty) then proceeds to depict the conflict of treaties situation faced by the host State under Article 30 of the Vienna Convention on the Law of Treaties (VCLT), and why this rule could also privilege the ICESCR as the prevailing applicable treaty in certain instances. Part III (VCLT Article 31 and ICESCR-Sensitive Investment Treaty Interpretation) shows the possibilities of accepting the ICESCR minimum core obligation as part of the host State’s laws. Where the investment treaty requires that an investment be established “in accordance with host State law” and be continuously subjected to such host State law throughout the life of the investment, the host State could potentially invoke the ICESCR minimum core obligation as a subsisting condition for the maintenance of investment treaty protection. Finally, Part IV (The Principle of Political Decision: Recasting the Valuation Decision) considers how arbitral tribunals could still mitigate the level of compensation ultimately owed by the host State, by reconceptualizing the “fair market value” standard when applied to an economic emergency. The Conclusion affirms the joint and complementary importance of human rights and investment protection to the defense of the public interest.

Keywords: Human Rights, Investment, Economic Emergencies, Conflict of Treaties, Valuation, Minimum Core Obligation, ICESCR, Investment Treaty, Fair Market Value

JEL Classification: F02, F10, F20, F30, F40