Environmental Protection and Investment: Mobilizing Investment as “Human Rights Law Approach”

ISHIBASHI Kanami

This paper analyzes the two possibilities to mobilize foreign investment in order to realize human rights obligations, and eventually environmental protection.

One possibility is to regulate activities of TNCs and to let them function as the driving force to realize environmental protection. Nowadays it is well recognized that the influence of TNCs in the international society has been growing in various fields. Since TNCs are not entities of international law, their activities have remained out of control for a long time, so that they had and have might cause serious problems in host countries, including human rights infringements and environmental degradation. Therefore, the UN took initiatives and, in 1999, adopted the so-called Global Compact, which is targeted for enforcing TNCs to comply the ten basic principles in the areas of human rights, labour, environmental protection and anti-corruption in voluntary bases.

While the Global Compact has limitations in that it is not binding on TNCs in any sense and waiting for their voluntary commitments, the new guideline, named as “Guiding Principles on Business and Human Rights: Implementing the United Nations ‘Protect, Respect and  Remedy’ Framework,” which was proposed by the UN Special Representative on business and human rights, John Ruggie, and endorsed by the UN Human Rights Council in June 2011, is more elaborated and enhancing all enterprises including TNCs to fulfill human rights obligations provided in major human rights treaties, even though it is still not binding for them. It based on three pillars as follows; (a) states’ existing obligations to respect, protect and fulfil human rights and fundamental freedoms; (b)business enterprises required to comply with all applicable laws and to respect human rights;(c) the need for rights and obligations to be matched to appropriate and effective remedies when breached. In this point, such the UN and UNHCHR’s initiatives to induce activities of TNCs in ways to meet international human rights standard are to be qualified as “Human Rights Law Approach” in order to realize environmental protection.

The other possibility to mobilize investment to promote environmental protection is to incorporate elements of human rights and environmental concerns in investment dispute settlements, either directly (consideration in awards) or indirectly (allowing amicus curiae to participate in dispute settlement process).

Recently, disputes between investors and States tend to be resolved in arbitrations under the PCA, ICSID or UNCITRAL, by considering standards of international human rights and environmental protection. There are several leading precedents which have those implications; S.D. Myers v. Canada Case, Azurix Corp v Argentine Republic Case, Methanex Corporation v. United States of America Case and Chemtura Corp. v. Government of Canada Case, although the awards of the former two cases resulted in favour of the investors even after such considerations. And also, as the ICSID and the UNCITRAL arbitration rules shows, dispute settlement between investors and States needs transparency in order to meet “public interest,” which is converge with human rights and environmental protection and as one of the ways to reflect such interest, amicus curiae is getting allowed to participate in dispute settlement process formally.

Thus, investment should be expected to be mobilized as “human rights approach” to enhance environmental protection and, in the event, to tackle with the fragmentation problem of international environmental law.