The Human Right to Property in International Investment Law

• Author: Frederic Bertrand
• Position: completed his B.C.L./LL.B. degree with a Major Concentration in International Human Rights & Development at McGill University in 2018
• Pages: 42-75

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ARTICLE

THE HUMAN RIGHT TO PROPERTY IN

INTERNATIONAL INVESTMENT LAW

Frédéric Bertrand *

CITED: (2019) 24 Appeal 45

ABSTRACT

is article seeks to address part of t he “legitimacy cri sis” currently underway in t he

international investment regi me. It identies shortcomings in the jurisprudent ial coherence

of investor-state arbitral awards i n expropriation cases where the state defends its act ions

by invoking human rig hts considerations. is ar ticle suggests the interpretation of the

scope and charac teristics of investors’ property rights under inves tment law—as well as the

property rights of non-part ies to investor-state disputes, such as the ances tral land rights of

Indigenous peoples—s hould be in line with the meaning of propert y rights under human

rights law. is approach has the met hodological benet of incorporating to investment

law human rights law t heory’s, methods of interpretation and jurispr udence— which

favours a balancing a ct and proportionality analy sis, and provides a margin of appreciation

to state authorities when addressi ng multiple human rights considerations. It provides

consistent analy tical tools to overcome the diculties of broad ly stating that human right s

should apply to investment law, which can be insu cient as a guide to interpretation in

the context of specic disputes .

* Frédéric Bertrand comp leted his B.C.L./LL .B. degree with a Major Concentrat ion in International

Human Rights & Developme nt at McGill University in 2018. He sincerely thank s Professor

Frédéric Mégret, Profess or Ana Maria Daza Vargas, Didier Paquin an d the editors of Appeal for

their thoughtful comm ents on earlier drafts of this pa per. He is currently clerking at the Cour t

of Appeal of Quebec, th ough the opinions he expresses in this a rticle are his, and they do not

represent the opinions of th e Court—or reect his work at the Co urt.

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TABLE OF CONTENTS

ABSTRACT ........................................................45

INTRODUCTION..................................................46

I. INVESTMENT ARBITRATION AND HUMAN RIGHTS: IMBALANCE

AND INCONSISTENCIES ...........................................51

A. Rejection of Human Rights Arguments ..............................51

i. e Pezold and Border Timbers Cases .............................52

ii. e Glamis Case.............................................53

B. Human Rights-Friendly Approach..................................55

C. Inconsistencies in Expropriation Cases...............................57

i. Police Power, Margin of Appreciation, and Proportionality ............57

ii. Standard of Compensation.....................................61

D. e Way Forward...............................................62

II. THE HUMAN RIGHT TO PROPERTY IN INTERNATIONAL LAW .....63

A. Global International Human Rights Law.............................63

i. e Universal Declaration of Human Rights .......................64

ii. e Two Covenants ..........................................66

iii. Other Global Human Rights Instruments in Relation to Property.......67

B. e Right to Property in Regional Human Rights Mechanisms ............68

i. e European Context........................................68

ii. American Regional Human Rights Mechanisms.....................72

C. Other Sources of International Law on the Human Right to Property . . . . . . . 73

III. POTENTIAL CONTRIBUTIONS OF THE HUMAN RIGHT TO

PROPERTY TO INTERNATIONAL INVESTMENT LAW .................74

A. A Balanced Approach to Expropriation ..............................74

B. Case Study: e Constitutional Protection of Indigenous Rights in Canada...76

CONCLUSION ....................................................77

INTRODUCTION

With the recent wave of protectionist sentiments emerging in the politica l sphere—

including the new ga ins of Eurosceptic part ies, Brexit, and tensions bet ween the United

States and its tradi ng partners since the 2016 election—the legitimacy of t he institutions

at the foundation of the trade liber alization system are increasingly under pressure. e

international investment reg ime has attracte d much academic commentar y, especially

with regard to mecha nisms for investor-state dispute settlement (“ISDS”). ough these

mechanisms have be en established through over 3,200 i nternational investment agreements

(“IIAs”), including bilater al investment treaties (“BITs”) and free trade ag reements (“FTAs”),

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observers have signa lled many shortcomings in the f unctioning of the regime.

1

Some clai m

the system of internationa l investment arbitration is undergoing a “legitimac y crisis.”2

Critics of ISDS point to considerations of independence, impartiality, and competence

of private arbitrators hired from a pool of corporate l awyers to decide on public interests

matters. Commercial a rbitration, where the protection of condential business in formation

is a major concern, serves as t he original basis of ISDS’ institutional setti ng. However,

problems of transparency a nd public accountability emerg e where important issues of

public interest are being decided in a si milar setti ng.3 Beyond institutional concer ns, an

apparent and often irreconcil able contradiction can be identied from the va rious awards.

is has been att ributed in part to the fact that arbitration cla ims are awarded by ad hoc

panels without a right to appea l. Some try to explain these contra dictions by the personal

biases of private arbitrators and /or the wide discretion they e njoy when making decisions

based on vague tre aty standards without adequate g uidelines and consistent methodolog y

in legal reason ing.4

e above shortcomings arg uably translate in a struct ural bias in favour of the investors.5

is issue is par ticularly apparent in ca ses involving claim s of indirect expropriation

for regulatory measures adopted by states in fur therance of public objectives such as

the protection and ful lment of human rights—where the investment regime is fac ed

with a “exibility-stabi lity dilemma” between investment protection and the state’s

right (or perhaps duty) to regulate.

6

Various proposals seek to address t his perceived

structura l imbalance between i nvestors’ interests and human rights consider ations,7 where

1 Alfred-Maurice de Zayas, Repor t of the Independent Exper t on the promotion of a democratic and

equitable international order, UNHRCOR, 33d Sess, Agenda item 3, UN Do c A/HRC/33/40, (12 July

2016) at 3 [de Zayas, 2016 Rep ort ].

2 See e.g. Silvia Steininger, “What’s Human Rights G ot to do With it? An Empirical Analysis of

Human Rights References i n Investment Arbitration” (2018) 31:1 Leiden J Intl L 33 at 33-34

[Steininger]; Susan Franck, “T he Legitimacy Crisis in Investment Treaty Arb itration: Privatizing

Public International Law throu gh Inconsistent Decisions” (2005) 73:4 Fordham L Rev 1521.

3 See e.g. Jasper Krommendijk and John Mor ijn, “‘Proportional’ by Wha t Measure(s)? Balancing

Investor Interests and Human R ights by Way of Applying the Proportio nality Principle in

Investor-State Arbitration” in Pierre -Marie Dupuy, Francesco Francioni, and Ernst- Ulrich

Petersmann, eds, Human rights in International Investment Law and Arbitration (New York, NY:

Oxford Universit y Press, 2009) 422 at 449 [Krommendijk and Mor ijn]; Alfred-Maurice de Zayas,

Report of the Independ ent Expert on the promotion of a de mocratic and equitable international

order, Alfred-Maurice de Zayas, UNHRCOR, 30th Sess, Agenda item 3, UN Doc A/HRC /30/44, (14

July 2015) at paras 15-16 [de Zayas, 2015 Rep ort ]; de Zayas, 2016 Repo rt supra n ote 1 at para 23;

A. Newcombe and L. Parad ell, Law and Practice of Investment Treaties - Standards of Treatment

(Alphen aan den Rijn: Wolters Kl uwer, 2009), Ch 1, section 1.49 [Newcombe and Paradell];

Lone Wandahl Mouyal, International Investment Law and the Right to Regulate: A Human Rights

Perspective (London, New York: Routledge, 2016) at 228 [Mouyal].

4 See e.g. Steininger supra note 2 at 5; Je Waicymer, “Balanc ing Property Rights and Hum an

Rights in Expropriati on” in Pierre-Marie Dupuy, Francesco Franci oni, and Ernst-Ulrich

Petersmann, eds, Human Rights in International Investment Law and Arbitration (New York, New

York: Oxford Universit y Press, 2009) 275 at 298, 304 [Waicymer]; Kromm endijk and Morijn, supra

note 3 at 303-04.

5 See e.g. Julien Cantegreil, “Implementin g Human Rights in the NAFTA Regime—The Potential of

a Pending Case: Glamis Corp v USA” in Pierre- Marie Dupuy, Francesco Francioni, and Ernst-Ul rich

Petersmann, eds, Human Rights in International Investment Law and Arbitration (New York: Oxford

University Press, 2009) 367 at 369 [Cantegre il]; de Zayas, 2015 R ep ort , supra note 3 at paras 15-16);

Steininger, supra note 2 at 51.

6 See e.g. Mouyal, supra note 3, especiall y ch 4.

7 See e.g. Victoria Tauli-Corpuz, Report of the Special Rapporteur of the Human Rights Council on

the rights of Indigenous people s on the impact of international investment an d free trade on the

human rights of Indigenous peoples, UNGAOR, 70th Sess, UN Doc A/70/301, (2015) (discussing

how Indigenous peopl es bear a disproportionate burd en of the systemic imbalances bet ween

investors’ rights and human rig hts).