[Ghazal is a student at Kirit P Mehta School of Law, SVKM's NMIMS (Deemed-to-be-University).]
Associating human rights with business is not a novel idea. The need for Investor State Dispute Settlement (ISDS) reforms in the business and human rights sphere has been inducing changes in the workings of many tribunals. Issues such as a foreign investor's business being involved in human rights violations against local populations are often a source of criticism of ISDS as it does not allow third parties like indigenous communities to participate even when their human rights are in question.
However, amicus curiae submissions are seen as a method to overcome such criticism. While much has been said on the topic of amicus curiae submissions in investment arbitration, this article, through the lens of recent cases and the ICSID Arbitration Rules 2022, attempts to answer an unconventional question. Are amicus curiae enough to protect human rights of local communities in investment arbitration?
Amicus Curiae in Investment Arbitration
Arbitrators over the past two decades have shown a greater willingness to include third parties in investment arbitration. 97 claims of amicus curiae have been filed since 2003 before different arbitral tribunals (some being based on the North American Free Trade Agreement (NAFTA), and some being non-NAFTA). The arbitral tribunals decided to accept 59 of them in whole, approve 4 in part, and deny 34 of them.
Earlier, Rule 37(2) of the ICSID Arbitration Rules 2006 used to govern submissions from non-disputing parties. The Tribunal, according to the rule, has to consider whether the non-party’s submission “(i) would assist the Tribunal in the determination of a factual or legal issue related to the proceeding by bringing a perspective, particular knowledge or insight that is different from that of the disputing parties; (ii) the non-disputing party submission would address a matter within the scope of the dispute; or (iii) the non-disputing party has a significant interest in the proceeding.” The Tribunal also had to make sure that “the non-disputing party submission does not disrupt the proceeding or unduly burden or unfairly prejudice either party, and that both parties are given an opportunity to present their observations on the non-disputing party submission.”
The ICSID Arbitration Rules 2006 were updated in 2022, and now Rule 67 governs submissions by non-disputing parties. It has added 2 more conditions in addition to the previous three that the tribunal has to give heed to. These are – “(i) the identity, activities, organization and ownership of the non-disputing party, including any direct or indirect affiliation between the non-disputing party, a party or a non-disputing Treaty Party; and (ii) whether any person or entity will provide the non-disputing party with financial or other assistance to file the submission”.
Border Timbers v. Zimbabwe
In the past, only 2 cases have involved an application by local communities themselves to be included as non-parties, out of which is Glamis Gold v. USA, where the application was approved, and the other is Border Timbers Limited and Others v. Zimbabwe (Border Timbers), where the same was rejected. The arbitrators in the Border Timbers case pointed out the thin line that exists in the framework of Rule 37(2) where a non-disputing party must be independent but also possess significant interest in the proceedings.
The indigenous communities had alleged that the company violated their human rights and had historical access to the land, hence they had significant interest. However, their application was rejected on ground of non-independence. This was because the chief of these communities was selected by the President of Zimbabwe. However, the Tribunal also agreed that the proceedings would impact interests of these communities but due to the framework of Rule 37(2) they could not be allowed to make submissions.
It is pertinent to also note that the European Center for Constitutional and Human Rights had also applied together with the communities to be amicus curiae. They argued that “[t]hese issues are also of significant public interest beyond the present dispute, to other indigenous communities and individuals living in areas potentially affected by foreign investments, to investors and governments, in Zimbabwe and elsewhere.” They also pointed out that amicus curiae submissions were the sole possibility for affected communities to be heard in arbitration. However, the tribunal put human rights completely out of the scope of the arbitration, and hence rejected the application.
Gran Columbia Gold v. Colombia
In the more recent case of Gran Colombia Gold Corp. v. Republic of Columbia, “El Cogote”, an association of miners applied to be amicus curiae. The company alleged illegal mining activity which prejudiced their exclusive mining licenses issued by the state. The association wished to shed light on the manifestations of the local miners, precautionary measure resolution by the Inter-American Commission on Human Rights, corruption in acquisition of the license, violation of their collective rights and the difference between illegal and traditional mining among other things. The Tribunal did not allow submissions on violation of collective rights as that was out of their scope.
Interestingly, the Tribunal addresses the same dilemma that the arbitrators had in Border Timbers. Here it notes that for a party to be independent, does not have to mean that they had no role in the events making up the factual matrix, as that would hold the condition of having significant interest and particular knowledge ‘nugatory’. Therefore, the tribunal accepted the submissions but limited to the topics of the corruption in acquiring license, manifestations of the miners and the resolution of the Inter-American Commission on human rights. Again, the collective rights for the local communities were out of the scope of the arbitration.
The Way Forward
Increasingly, it is evident that stakeholders to investment arbitrations find it costly to disregard human rights. Human rights standards are now being explicitly integrated into the latest generation of bilateral agreements, human rights jurisprudence continues to be utilised to support understanding of investment law, as well as in a growing proportion of cases, human rights can serve as the basis for a claim or counterclaim.
However, tribunals are still putting human rights and collective rights of local population out of the scope of the arbitration, as seen in the above cases. The bigger issue also lies in the framework of submissions by an amicus curiae. The dichotomy between the need for significant interest and the independence of the non-disputing party is significantly worsening the situation for communities affected by investors. Unless the parties themselves put in the issue of human rights abuses during the proceedings, the submission of amicus curiae is unacceptable, therefore limiting their scope and application. Even if allowed, their submissions are limited, and they are not provided any access to documents of the hearing. There is a dire need to distinguish between the involvement of “affected persons” (local communities) and “concerned persons” (amicus curiae).
It is undeniable that these changes are part of a larger progression in the vulnerability of companies to human rights-based contentions, that can be seen also in the December 2019 launch of the Hague Rules on Business and Human Rights Arbitration.
Previously, Odumosu, Laryea, and Perrone have advocated for the involvement of local communities in Investor state arbitration hearings. Perrone and Laryea argue for an explicit involvement in the proceedings, whereas Odumosu contends that participating does not inherently imply a formal (direct) status of participation in the hearings. The Hague Rules suggest that a new business and human rights arbitration framework could be set up. However, as Ogunranti argues, reforming the ICSID rules could be just as effective and would avoid the backlash and legitimacy concerns of an untested arbitration process.
While it was expected that the ICSID Arbitration Rules 2022 would be beneficial to the cause of local populations, it has not been up to the mark. It only includes two other categories for the consideration of the tribunal when accessing an application. As a local community participant noted in a United Nations’ round table discussion, “if you believe amicus works, that is false.”
In 2007, United Nations adopted the landmark United Nations Declaration on Rights of Indigenous Peoples. It recognises their right to self-determination, which however still is contentious in practice. An important right that is also provided for in Article 10 is the right to free, prior, and informed consent when taking over land and property of the local communities. It is widely unrecognised in international investment agreements. The World Bank has also tried to draft guidelines with respect to the framework for inclusion in projects they fund. At present, however, human rights for local communities are largely ignored in investment treaties and arbitration. Anaya and Puig are of the opinion that IIAs “provide extensive protections to foreign investors without the adequate policy and regulatory space to ensure the protection of human rights”. Therefore, a wider accessibility to local communities and parties affected by the investor’s decisions guaranteed using the FPIC framework and clauses on community rights in IIAs and ICSID rules could be a step in the direction of solving the legitimacy crisis of investor state arbitration.