International investment rulemaking takes place at bilateral, regional, interregional and multilateral levels, with over 2500 treaties in force as of April 2024, including treaties with investment provisions. Investment treaties can take a variety of forms and include, for example, bilateral investment treaties (BIT), which are agreements made betw
een two States establishing the terms and conditions for private investment by nationals and companies of one State in another State. This type of investment is usually called “foreign direct investment” (FDI).
Investor-State dispute settlements (ISDS) are measures which can be contained within certain investment agreements or FTAs and give investors the right to call for arbitration in the event they believe that a government has violated such an agreement. Controversy arises when, for example, the investment treaty provides that a State will not amend its regulatory framework for a period of time (e.g. no environmental law amendments for ten years), but the State later wishes to amend the regulatory framework to fulfil human rights obligations, but the ISDS gives investors grounds to take action against the State if it makes such amendments.
The UN Business and Human Rights Guiding Principles (UNGPs), Guiding Principle 9, states:
“States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance, through investment treaties or contracts.”
“Economic agreements concluded by States, either with other States or with business enterprises – such as bilateral investment treaties, free trade agreements or contracts for investment projects – create economic opportunities for States. But they can also affect the domestic policy space of Governments. For example, the terms of international investment agreements may constrain States from fully implementing new human rights legislation, or put them at risk of binding international arbitration if they do so. Therefore, States should ensure that they retain adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection.”
In 2021, the UN Working Group on Business and Human Rights (Working Group) published a report on “Human rights-compatible International Investment Agreements (IIAs)”, noting that “international investment agreements – if not designed properly – can significantly limit the ability of States to regulate investors and their investment. They can also exacerbate the existing imbalance between rights and obligations of investors and undermine affected communities’ quest to hold investors accountable for human rights abuses and environmental pollution.” A similar analysis can be found in the 2023 report of the UN Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment, which highlights that the ISDS system “has become a major obstacle to urgent actions needed to address the planetary environmental and human rights crises, and the system has particularly harmful impacts on the global South.”
Another way to enter an FDI is by making a foreign investment contract with the State (State contracts). These contracts form agreements between States and foreign investor companies. They often, but not necessarily, are supported by BITs. These contracts might take, for example, a form of concession or Build-Operate-and-Transfer Agreements. For instance, FDIs in the extractive sector are often governed by concession contracts between States and investors. These contracts typically feature stabilisation clauses that limit the host State’s power to modify the regulatory framework overseeing the investment project.
Commentators state that the stabilisation clauses, especially in State-investor contracts, can undermine the State’s policy sphere to develop gender equity and equality laws, as the State may be rendered liable if compliance with these new obligations adds to the operating costs of the foreign investors. For example, in the 1990s, the Zambian government privatised mines to attract foreign investment, employing development agreements with stabilisation clauses. As commentators analyse, these clauses later posed challenges to implementing the 2015 Zambian Gender Equity and Equality Act, which mandated investors to implement equality plans and other gender equality measures in their operations, increasing their operational costs. The conflict between these stabilisation clauses and the government’s gender equity ambitions led to legal uncertainty and compromised policy coherence in Zambia.
International trade frameworks and free-trade agreements (FTAs) also often contain substantive provisions on investment. In this context, the investment chapters of many FTAs include a broad definition of ‘investment’ and offer certain protection and guarantees for foreign investors from one contracting State to protect their investment in another contracting State. However, they might fall short of including enforceable human rights conditions and obligations for businesses and investors. For example, the Business & Human Rights Resource Centre (BHRRC) reported in 2023 that the FTAs negotiated since the UK left the EU have “fallen worryingly short on human rights, wasting their potential to drive prosperity and rights-based sustainable development.” (See the Issue page on Trade for more information).
The growing awareness of the impacts of investment treaties has resulted in various organisations, such as the United Nations Conference on Trade and Development (UNCTAD) and the South Centre, as well as non-governmental organisations, developing recommendations and concrete proposals on how to ensure that investment treaties are aligned and support human rights protection, or at the least do not limit it. UNCTAD actively assists policymakers, government officials and other IIA stakeholders in negotiating new IIAs with a view to making them more conducive to sustainable development and inclusive growth, and “modernizing the existing stock of old-generation treaties”. UNCTAD’s World Investment Report 2017 presents and analyses the costs and benefits of 10 policy options that States can take to reform their old-generation treaties. The UNCTAD World Investment Report 2023 underscores the risks that old-generation IIAs pose to climate action and the energy transition, emphasising the urgency of IIA reform.
Some States, such as South Africa, India, Indonesia and Ecuador, are leading the way in terminating their bilateral investment treaties.
In February 2024, the UK government announced its withdrawal from the Energy Charter Treaty (ECT) due to its failure to support the net-zero transition. Initially signed in 1994 to encourage energy sector investment, the ECT predominantly protected fossil fuel investments. Civil society actors have long campaigned for States to exit the ECT, as the ECT allows energy companies to sue governments that take regulatory steps against climate change. For example, German companies RWE and Uniper commenced arbitration proceedings against the Dutch government (see below for arbitration proceedings) following the Dutch government’s move to phase out coal and shut down coal-fired power plants by 2030.
Such efforts are important examples of States achieving Guiding Principle 9 by maintaining “adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties.” The UN Sustainable Development Goals also call for “respect [of] each country’s policy space and leadership to establish and implement policies for poverty eradication and sustainable development.”
One of the most controversial and disputed elements of the IIAs are provisions concerning the treaty-based Investor-State Dispute Settlement (ISDS). European Center for International Political Economy (ECIPE) has noted that “ISDS is a legal instrument in BITs, or other BIT-like bilateral and international investment agreements, that grants investors the right to call for arbitration in the event they believe that a government has violated such an agreement”. Investor-State arbitration has greatly expanded over the past decade. UNCTAD has launched the ISDS Navigator, which contains information about known international arbitration cases initiated by investors against States under IIAs. Accordingly, the total number of recorded cases has risen from 57 in 2000 to 1332 known arbitrations in 2023.
Alongside the increase in arbitrated cases, there has been growing concern by some States about the nature of arbitration claims by foreign investors against host States, which have included challenges to legitimate environmental and other public welfare and financial policy measures. The high costs of arbitration and lack of transparency, independence and predictability have also led several States to rethink the scope of their investment treaty obligations as well as the arbitration mechanisms incorporated in their investment treaties. Some States such as Bolivia, Ecuador, Venezuela and Honduras denounced or are considering denouncing the International Centre for Settlement of Investment Disputes Convention, establishing an international arbitration institution known as ICSID- The International Centre for Settlement of Investment Disputes. ISDS has also been criticised for contributing to the underrepresentation of women in the arbitration process itself.
There is no legal aid equivalent for States defending themselves from these suits, and States are often required to pay lawyers, experts and arbitrators substantial amounts using public funds. On the other hand, resourceful multinational corporations have access to a growing group of third-party financiers who are willing to fund their cases against States, usually in exchange for a cut of any eventual award. In 2019, academics found that a total combined legal expense for both parties was around US$ 9-10 million; the awarded amounts were, on average, US$ 45 million, while the average damages claimed was around US$ 171 million.
Another significant limitation of the ISDS system is the lack of public participation in the decision process of arbitration tribunals, as these bodies have the sole discretion on whether to accept amicus briefs from stakeholders. For example, in the case of Eco Oro v Colombia (initiated in 2016), the arbitration tribunal in 2019 rejected submissions by the communities and civil society organisations opposing a mining project (which the Colombian government refused to grant a permit due to its expected significant environmental damage).
In 2023, the UN Special Rapporteur on the issue of human rights obligations relating to the enjoyment of a safe, clean, healthy and sustainable environment has criticised the arbitration process for its lack of transparency. This criticism points out that proceedings are frequently conducted in private, with essential elements like documents, negotiations, and awards remaining confidential. There have been a number of important transparency-related innovations in international arbitration, for example, the United Nations Commission on International Trade Law Rules on Transparency in Treaty-based Investor-State Arbitration. Also, the EU Multilateral Investment Court project, which had an overall objective of setting up a permanent body to decide investment disputes, that would replace the system of ISDS based on ad hoc commercial arbitration and, like the approach in the FTAs, would bring the key features of domestic and international courts to investment adjudication.
The EU-Canada Comprehensive Economic Trade Agreement (CETA), for example, foresees setting up a permanent multilateral mechanism. However, the EU’s approach has been criticised as “putting a sheep’s disguise on the ISDS wolf that still lurks beneath.” As another example, the Regional Comprehensive Economic Partnership (RCEP), which has 16 member States but nonetheless plays a major role in maintaining and promoting world trade, does not include the ISDS mechanism. In 2023, members of the US Congress called on the US Trade Representative to remove the ISDS provisions from existing US trade agreements.
As reported by UNCTAD in 2023, recently signed IIAs, also called ‘new-generation IIAs’, contain some reform provisions to secure the State’s right to regulate. As UNCTAD highlights, it remains to be seen whether these reform provisions are sufficient to ensure the implementation of legitimate measures towards achieving the SDGs.
Some recent examples of ISDS in practice include:
Some recent examples of ISDS in practice include:
After a decade-long fight, the citizens of the Italian region of Abruzzo won an important battle against the oil industry: they stopped the OmbrinaMare oil project, which would have had a large impact on the environment and climate. In 2015, the Italian government agreed to pass a new law banning oil drilling near the Italian coast. However, the Italian government was then sued under the ECT. Following a closed-door tribunal operating under the ECT, in 2022, the tribunal ordered the Italian government to pay more than £210m to the UK oil company Rockhopper as compensation for an offshore oil drilling ban.
Since 2010, the citizens of Dubrovnik have opposed the construction of a luxury resort on the hill overlooking their city. Ultimately, the project was stopped by Croatian courts in 2016. But the company behind sued Croatia following ISDS procedures, seeking US$ 500 million in compensation – and trying to silence the community in local courts. The arbitration tribunal issued its decision in May 2023 in favour of Croatia, finding that Croatia was not liable in any way and that the claim for damages should be rejected.
For 20 years, residents of Romanian town Roşia Montană have fought plans to build a gold mine which would impact their homes and the environment. The project was stopped through a court case, where the mine was declared illegal. Canadian company Gabriel Resources sued Romania in 2015 in an international tribunal, seeking US$ 5.7 billion in compensation – nearly 3% of Romania’s GDP. After 9 years of proceedings, in March 2024, the arbitration tribunal issued a decision that rejected Gabriel’s claim and awarded Romania US$ 10 million in legal fees and expenses.
The 2030 Agenda for Sustainable Development clearly recognises the role of investment, including in the form of Foreign Direct Investment (FDI), in achieving its objectives, especially through Sustainable Development Goals (SDGs) target 17.3 on mobilising additional financial resources for developing countries from multiple sources; and SDG target 17.5 on adopting and implementing investment promotion regimes for least developed countries.
The need for a better investment climate for sustainable development is also detailed in the Addis Ababa Action Agenda (AAAA). The UNGPs firmly establish the relevance of international human rights law and due diligence to investment law and policy by emphasising the need for policy coherence. Moreover, they require ‘heightened’ due diligence where investment is supported directly by the State. This approach is reaffirmed in the 2030 Agenda, which emphasises that investment must be targeted where the need is greatest and meet certain prerequisites to ensure that it effectively contributes to sustainable development (See the Issue page on the 2030 Agenda for Sustainable Development for more information).
Commentators highlight that since most IIAs were concluded before the SDGs, they require amendments and updates to align with these goals. In 2018, UNCTAD upgraded its reform package to realign international investment governance with global sustainability targets.
Belgium (2017 - open)
Advocate for strengthening the integration of sustainable development (including human rights) in free trade agreements
The federal government states that during negotiations at the European level, Belgium will advocate for the respect and inclusion of fundamental labour rights and international environmental standards – including in cases of development cooperation – in investment agreements and free trade agreements. “Any new trade or investment agreement must not have negative impact on sustainable development.”
Chile’s NAP makes no reference to investment treaties and investor-state dispute settlements.
`The Colombia NAP does not explicitly address this issue’
“Under the common commercial policy, the negotiation of commercial agreements is in the sole competence of the EU. Agreements are negotiated on behalf of the Union by the European Commission, which acts in the name of Member States (they must always mandate it to do so). The European Commission pursues the common commercial policy in furtherance of the principles and objectives of the European Union, i.e. inter alia by promoting democracy, the rule of law and human rights. Subject to the European Commission’s approval, the Czech Republic may negotiate bilateral investment agreements.
Current state of play: …
2.3 Actions taken
Protection of human rights through state regulation and policy [page 12]
“Together with more than 40 countries Denmark adheres to the OECD Declaration on International Investment and Multinational Enterprises.”
Status in Denmark (initiatives implemented before the UN ratification of the Guiding Principles) [page 28]
“In 2008 the state financing fund, Vækstfonden, has committed to adhere to the UN Principles for Responsible Investment (PRI). The Export Credit Agency (EKF), the Investment Fund for Developing Countries (IFU) and Investment Fund for Central and Eastern Europe) (IØ) has committed to join the UN Global Compact.”
State Duty to Protect [page 31]
“States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts.”
Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 31]
“When Danida signs contracts with companies, it is a requirement that companies live up to Danida’s anti-corruption policy and to the UN Global Compact. A description of the applicant’s approach to quality assurance and how it will comply with Danida’s anti-corruption code of conduct and the principles of the UN Global Compact during implementation are requested from pre-qualified tenderers and form part of the tender evaluation.
The EU adheres to principles and standards on responsible business conduct such a s the OECD Guidelines for Multinational Enterprises, which is also reflected in negotiations for free trade agreements that includes the a rea of investment. The guidelines are considered the reference document on Corporate Social Responsibility, including human rights, intended to balance the rights and obligations between investors and host states. Furthermore, it is common practice to reference in the mandate the right of the parties to adopt and enforce measures necessary to pursue legitimate public policy objectives such a s social, environmental, human rights, security, public health and stability of the financial systems in a non-discriminatory manner.”
Initiatives taken or planned as a dedicated measure to implement the UNGPs (after the UN ratification of the Guiding Principles) [page 31]
“The Government actively supports substantial Trade and Development chapters in the EU’s bilateral free trade agreements as well as human rights suspension clauses in the same agreements. The new free trade agreement between the EU and Peru /Colombia is an important case in point, being substantially more ambitious in this a rea than earlier agreements.”
1.2 Activities in international organizations [page 14]
“As a follow-up measure, the working group proposes that …
Finland participates and actively influences the work related to human rights and CSR questions that is carried out in the OECD, for instance, by being involved in drafting and updating guidelines, templates and recommendations related to the subject. Finland shall support and participate in the update of the OECD Policy Framework for Investment.”
1.3 Activities in the EU [page 18-19]
“As a follow-up measure, the working group suggests that in order to reinforce the human rights aspect in the EU trade policy:
3.5 Support for Finnish and international organisations promoting the subject [page 29]
“The OECD Policy Framework for Investment is being modernised to face the challenges of sustainable development, such as equality, CSR and human rights”
7. The European Union (EU) [page 17]
… It also promoted the inclusion of social, environmental and governance standards in trade and investment agreements …
8. Trade and Investment Agreements [page 19]
In its 2013 opinion, the CNCDH underlined that “the need for coherence should guide France’s foreign policy” and recommended that, in accordance with Guiding Principle no.10, “the Government support and promote the aforementioned instruments within multilateral institutions dealing with economic, commercial and financial issues, including those that are binding, that are designed to ensure that businesses respect human rights.”
As for the National CSR Platform, it issued the following recommendations:
France discussed CSR issues in a report on its international trade strategy and European trade policy (December 2015), clearly indicating that CSR is a concern addressed in its trade policies.
State measures to control access to domestic markets are powerful tools when it comes to protecting and supporting businesses that respect human rights. However, in a document dated 24 June 2016, the Committee on Economic, Social and Cultural Rights expressed its concern at “the failure to devote sufficient attention to the impact that bilateral or multilateral trade or investment agreements concluded or being negotiated by the State party or the European Union have or will have on the enjoyment of Covenant rights in the other countries that are party to those agreements. The Committee is particularly concerned by the fact that the mechanisms for settling disputes between States and investors provided for in several agreements could reduce the State’s ability to protect and achieve some of the Covenant rights (art. 2 (1)).”
Indeed, most bilateral investment agreements and a growing number of bilateral and regional trade agreements implement mechanisms for investor-State dispute settlement (ISDS). ISDS enables foreign investors to bring arbitration proceedings when they consider that host States have not complied with the terms of the original agreement. ISDS makes it possible to obtain rulings against States that do not respect their commitments (for example, due to discrimination on the basis of gender, religion, nationality, etc.). In 2014, more than 600 cases were registered around the world, not including private disputes between parties whose details were kept confidential.
In 2013, the EU and the United States began negotiating a Transatlantic Free Trade Agreement (TAFTA,) also known as the Transatlantic Trade and Investment Partnership (TTIP), which originally featured an ISDS clause. The EU has suggested replacing the ISDS clause with a bilateral investment dispute court or Investment Court System until a permanent multilateral court can been established. This reform is being defended in all European trade negotiations, and has already been accepted by Canada and Vietnam.
European trade agreements incorporate CSR and adherence to international conventions on labour and the environment. EU free trade agreements all include sustainable development chapters, which contain provisions on labour law and environmental protection. These chapters also refer to CSR. Provisions mainly reiterate key existing multilateral agreements (for example, ILO’s fundamental conventions in the labour field and multilateral environmental agreements in the environmental field). They also set out cooperation mechanisms for the parties in order to support progress in these fields. Sustainable development chapters in EU free trade agreements and investment agreements contain two further important provisions: one prevents parties to the agreement from lowering social and environmental standards to promote trade and attract investments; the other confirms States’ right to regulate in the social and environmental fields.
These provisions have been included in European trade agreements since 2008. They are now systematically incorporated into agreements being negotiated, including the TTIP. The European Commission can adapt commitments to social and environmental standards based on a country’s level of development.
Otherwise, France is currently revising its model agreement for the protection of investments. In particular, it is planning to significantly reinforce provisions on CSR and the State’s capacity to regulate in the social, environmental, health and cultural fields, as per the European draft model.
From the French perspective, addressing these issues in free trade agreements results in a number of weaknesses:
In 2013, France issued a number of proposals to improve the way in which social and environmental standards were addressed in European trade agreements. These proposals are still relevant.
These proposals focus on five main areas:
Actions Underway [page 21]
Actions to be Implemented [page 22]
France’s General Secretariat for European Affairs will support this work and distribute relevant documentation to lead ministries, in order to guarantee inter-ministerial coordination on European issues and their assessment by European institutions.
10. The Reinforcement of Legislation [page 23]
Recent public policies have led France to adopt new legislative measures supporting CSR.
15. Economic Sectors and Human Rights
The Agriculture and Food Sector [page 32]
The strategic importance of national food security and economic opportunities in the agricultural sector have led a number of countries and businesses to invest (and support investment) in agrifood production. Given this large-scale investment, which often involves large-scale land purchases, the international community has sought to implement guidelines and directives to regulate these projects. Two major initiatives have been launched:
… Working with actors involved in French cooperation efforts, it developed the Guide to Ex-Ante Analysis of Agricultural Investment Projects that Affect Land and Property Rights to facilitate the enforcement of these principles …
Actions to be Implemented
The Financial Sector [page 34]
… There have been a number of voluntary international initiatives by the financial sector to promote human rights (…, the development of Socially Responsible Investment, …).
Footnote: Socially Responsible Investment (SRI) is an investment that reconciles economic performance and social and environmental impact by financing enterprises and public bodies that support sustainable development, regardless of their sector of activity. By influencing governance and behaviour, SRI encourages the development of a responsible economy. In France, SRI represented €170 billion in 2013.
Objective indicator: Number of meetings; Elaborated legislative amendments package.
Activity: Arranging consulting appointments with large companies’ representatives and sharing finest experience.
Responsible agency: Ministry of Economy and sustainable development of Georgia.
Partnership agency: Georgian Employers Association.
“Under Article 207 of the Treaty on the Functioning of the European Union (TFEU), commercial policy lies within the sphere of competence of the EU. Within the Federal Government, the Federal Ministry for Economic Affairs and Energy is responsible for formulating German positions in the realm of commercial policy and advancing them in European and global forums. For the export-driven German economy, particular importance attaches to the elimination of trade barriers and reinforcement of the multilateral trade system. Trade, moreover, can make a major contribution to sustainable development. In this context, it is important that trade should be shaped in a development-friendly way. This means, for example, that environmental, social and human rights standards should firmly underpin free-trade agreements, which should be accompanied by impact-assessment and monitoring mechanisms.”
The current situation
“The institutions and Member States of the EU are also bound by their human rights obligations when implementing Union legislation. Germany supports the EU practice of agreeing on provisions designed to safeguard human rights in framework agreements with trading partners and using sustainability chapters in all new free-trade agreements to enshrine high labour, social and environmental standards. Germany is committed to the negotiation of comprehensive binding standards for inclusion in these sustainability chapters. The EU ‘Trade for All’ strategy which was presented in the autumn of 2015 also emphasises that commercial policy should advance sustainable development and human rights throughout the world. At the same time, freetrade agreements also guarantee the right to regulate, which preserves the necessary leeway for states to protect human rights.
The Federal Government supports further development of the range of instruments for human rights impact assessment of trade and investment agreements.”
Measures
Measures [page 30]
“The Federal Government will support the systematic inclusion of sustainability chapters in free-trade agreements, which will prescribe, among other things, compliance with the ILO Core Labour Standards.”
“I believe that the protection of human rights and the promotion of economic growth, trade and investment should be complementary and mutually reinforcing”
I. Key commitments to ensure policy coherence across government [page 17]
“Ensure coherence between Ireland’s new Trading Strategy: ‘Ireland Connected: Trading and Investing in a Dynamic World’ , and the National Plan on Business and Human Rights”
II. Initial priorities for the Business and Human Rights Implementation Group [page 18]
“vii. Promote awareness of relevant multi-stakeholder and multilateral initiatives such as the UN Global Compact, the Principles for Responsible Investment and the Children’s Rights and Business Principles among state owned or controlled companies.”
EU and Multilateral Efforts [page 20]
“7. Continue to take account of the human rights elements of European Commission impact assessments when providing input in the course of Free Trade Agreement (FTA) negotiations and support the appropriate implementation of human rights clauses in FTAs as they arise in EU agreements.”
Trade and Investment [page 21]
“11. Provide information to participants in overseas trade missions led by Government representatives on human rights issues in the destination countries.
12. Ensure that State agencies and staff involved in promoting two-way trade and investment have received briefing and guidance on the purpose and implementation of the UN Guiding Principles.
13. Encourage Irish companies operating abroad to adopt good practice with regards to consultation with human rights defenders and civil society in local communities, particularly on environmental and labour conditions.
15. Provide up to date guidance on the protection of human rights defenders working in the area of business and human rights through the circulation of Human Rights Defenders Guidelines to all Embassies.
16. Provide information from Embassies, working in cooperation with state agencies as appropriate, to Irish companies on business and human rights issues in their host countries.
18. Provide advice to business enterprises of the possible risks of human rights situations when operating in conflict affected areas.
19. Ensure awareness of the International Finance Corporation (IFC) performance standards among state owned companies that invest in or manage projects, outside of OECD high income countries, which exceed the euro equivalent of US$10 million.”
Development Cooperation [page 21]
“21. Support developing countries to improve their business and investment environment and continue to promote transparent, accountable and effective governance systems, rule of law, and equitable and inclusive economic growth, including transforming economic opportunities and outcomes for women and girls.”
“46. Strengthen support, at international and European level, for the promotion and inclusion of social and environmental sustainability clauses in international and trade and investment treaties.” (p. 68)
Chapter 2. Action Plan
2. Areas of the NAP
(2) Measures of the Government as an Actor regarding State Duty to Protect Human Rights
E. Promotion and Expansion of the Business and Human Rights Agenda in the International Community
(Existing framework/Measures taken）
In the areas directly related to business activities, the Government has incorporated clauses concerning social issues, including labour and the environment in some of the EPAs and investment treaties that Japan has signed or ratified in a manner consistent with trade rules such as those of the World Trade Organization (WTO), and promoted shared understanding between signatories on values to be respected, such as securing appropriate labour standards and conditions and protection of the environment. For example, the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (TPP11 Agreement) includes an independent Labour Chapter and Environment Chapter as well as provisions on women’s participation, and the Japan-EU Economic Partnership Agreement (EPA) includes a Trade and Sustainable Development Chapter. On top of this, the Japan-EU EPA also stipulates that the parties shall convene joint dialogue with civil society, establishing that civil society shall play a certain role through exchange of opinions on themes such as trade and sustainable development, the environment, and labour.
(Future measures planned)
(d）Continue to make efforts towards concluding EPAs and investment agreements that benefit not only industry but also a wide range of people, including workers [Ministry of Foreign Affairs, Ministry of Finance, Ministry of Agriculture, Forestry and Fisheries, Ministry of Economy, Trade and Industry]
CHAPTER THREE: POLICY ACTIONS
3.1. Pillar 1: The State Duty to Protect [Page 16]
[…] States are expected to guarantee policy coherence across different government agencies, thereby ensuring that different state institutions are aware of and observe the State’s human rights obligations. The State’s duty in this regard includes providing these institutions with the requisite information through training and support (horizontal coherence) while ensuring that the policies and regulatory frameworks are consistent with the state’s international human rights obligations (vertical coherence). This coherence should extend to the State’s investment treaties with other States or with business enterprises. […]
Policy Actions [Page 18]
The Government will:
xii. Review current trade and investment promotion agreements and bring them into compliance with the Constitution and international human rights standards to ensure that they are not used to facilitate illicit financial flows and tax evasion by businesses.
CHAPTER FOUR: IMPLEMENTATION AND MONITORING
ANNEX 1: SUMMARY OF POLICY ACTIONS
| Strategic Objective | Policy Actions | Key Actors |
| Strategic Objective 1: |
The Lithuanian NAP makes no reference to investment treaties and investor-state dispute settlement (ISDS).
‘Luxembourg’s NAP does not explicitly address this issue’
The 2020-22 NAP states the second edition of the National Action Plan complements the first NAP. Additional information about the first NAP can be found here.
Pillar I
Sustainable trade with and investment in developing countries
“Development cooperation policy on business and human rights focuses on improving the sustainability of production and international value chains in and with developing countries in a way that helps reduce poverty and inequality. To this end it is important that a) the interests and specific situation of the developing countries in question are taken into account when designing measures aimed at making trade and investments more sustainable, and b) developing countries are supported in the transition required to meet these commitments to inclusive, green economic development.
The interests and specific circumstances of developing countries must be taken into account when drafting national, European and international agreements aimed at improving the sustainability of trade and investments. Examples include developing standards on deforestation and the climate, the circular economy, land use rights, labour, foreign trade and investments and RBC. The cornerstone of this is to determine the development impact of efforts to make trade and investment more sustainable, especially the impact on vulnerable groups such as indigenous peoples, small-scale producers, workers and agricultural labourers, with a particular focus on women and young people. This should reinforce the efforts’ positive effects and, as far as possible, prevent and mitigate any negative side effects. …” p. 46.
| ACTION POINTS PILLAR I | Aim | Responsible party | Timeline |
| Sustainable trade with and investment in developing countries | |||
| Strengthen collaboration between ministries by establishing an interministerial working group to conduct a permanent dialogue on sustainable trade and investments, focusing on specific high-risk value chains with a strong Dutch footprint. | Enhance learning capacity regarding policy coherence on sustainable trade and investments and on business and human rights. | All ministries involved, with BZ taking the initiative. | From 2022 |
| Research, monitor and evaluate the impact on developing/producing countries of national, European and international sets of rules and standards aimed at improving the sustainability of trade and investments, where possible under the auspices of the EU and supported by local stakeholder consultations | Enhance learning capacity regarding policy coherence on sustainable trade and investments and on business and human rights. | BZ | On introduction of new proposals and during implementation. |
The Nigeria NAP provides a list of existing constitutional obligations, domestic legislation, internation obligations, and police and administrative steps. This breakdown only looks at the list of challenges and the implementation of the 3 pillars of the UNGPs.
The Nigerian NAP on Business and Human Rights does not address Investment treaties and investor-state dispute settlement (ISDS).
2. The State duty to protect human rights
2.8 Free-trade Agreements and Investment Contracts [page 26]:
States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts.
Responsible management [page 22]:
Through the Government Pension Fund Global (GPFG) and the Government Pension Fund Norway (GPFN), Norway has financial investments both in Norway and the world at large. The role of the Fund is that of a financial investor, and the overriding objective is to achieve the highest possible return at moderate risk…The GPFG is not a foreign policy instrument, and only in special cases of comprehensive international sanctions or measures that Norway has endorsed, has such restrictions been imposed on investing in government bonds.
Pakistan’s NAP does not explicitly address this issue.
The Peruvian NAP does not make an explicit reference to Investment treaties and investor-state dispute settlement (ISDS).
Poland’s second NAP makes no explicit reference to Investment treaties and investor-state dispute settlement (ISDS).
The Slovenian NAP makes no reference to investment treaties and investor-state dispute settlements.
South Korea (2018-2022)
South Korea’s NAP makes no reference to investment treaties and investor-state dispute settlement (ISDS).
Measure 1
“The Government will promote the inclusion of references to the respect of human rights in agreements on trade, investment or other related business activities signed by Spain that affect the scope of the Guiding Principles. Likewise, the Government will promote the inclusion of such references in the agreements entered into by the European Union with third-party States.”
Measure 2
“The Government will promote awareness-raising and the implementation of the United Nations Principles for Responsible Contracts recommendations, developed in 2011 by the then Special Representative of the Secretary-General John Ruggie (A/HRC/17/31/Add.3, 2011)”
The State as actor
Trade promotion
2 National Action Plan on Business and Human Rights 2020-23
2.1 Pillar 1: state duty to protect
2.1.5 Policy coherence
Guiding Principle 9
The federal government enters into economic agreements with other States or with business enterprises. They include bilateral investment promotion and protection agreements, free trade agreements and agreements governing investment projects. The federal government should ensure that these agreements provide sufficient domestic policy scope to fulfil the human rights obligations of both Switzerland and the contracting partner.
Guiding Principle 10
Measure 19: Promotion of respect for human rights and labour standards within financial institutions
Investments by the Swiss Investment Fund for Emerging Markets (SIFEM) are subject to full due diligence with regard to its environmental, social (including working conditions) and governance (ESG) responsibilities. The relevant human rights standards are applied in all ESG risk assessments. This means that the risks of human rights abuses are always taken into account in the investment decision-making process. SIFEM partners (fund managers) are required to submit an annual or half-yearly report detailing their ESG activities and any major ESG accidents and incidents. This information makes it possible to improve the monitoring of human rights issues from the initial situation assessment and right through the investment cycle.
As part of its involvement in international financial institutions, Switzerland actively promotes the systematic reinforcement of ESG standards. It supports the strictest transparency standards and helps to mitigate the potential adverse human rights impacts of projects by strengthening the independent inspection committees that handle project-related complaints lodged by the communities concerned. By creating frameworks and exemplary programmes, financial institutions can advance the promotion of ESG standards, respect for human rights at international level and a shared understanding of problems.
| Objective | Indicator | Responsibility |
|---|---|---|
| Ensuring that investments and projects supported by Switzerland in relation to its economic development cooperation and international financial institutions do not have an adverse impact on human rights and serve as an example of international best practices. | Human rights due diligence as part of SIFEM investments (source: summary report of the Federal Council on the achievement of its strategic goals). |
Taiwan (2020-2024)
III. The State duty to protect human rights
C. Actions planned
‘[…] during the process of discussing and signing bilateral or multilateral economic and trade agreements, Taiwan’s government agencies in charge of economic and trade negotiations will also continue seeking to include human rights clauses to be observed by all signatories.’
3. The core content of the National Action Plan on Business and Human Rights
3.4 Action Plan on Cross Border Investment and Multinational Enterprises
3.4.2 Challenges
Government should consider human rights impacts before signing international trade or investment agreements and treaties. Review provisions for a stabilization clause in the investment agreement that will not affect government policies to promote the UNGPs. Measures for business organizations located in the territory or jurisdiction of the sovereignty of Thailand must comply with The UNGPs. The determination of measures to initiate or develop any project must consider the public interest, rights of public participation, and the impact on the people in the project area before deciding to implement the project. Establish foreign country investment supervision measures of Thai investors to respect human rights principles. Establish measures for businesses that receive investment support and ensure business investment respects human rights. Conduct a study of risks of human rights impacts in providing public services by independent academics to be accepted by people in the area and society. Determine measures and mechanisms to supervise the resolution of the impact. Propose the use of human rights risk assessment principles and human rights surveillance in the preparation of public service and joint venture agreement (in the case of the government authorizing the private sector to act). Consider cancelling assignments of the private sector to proceed with the construction of projects related to the infrastructure and public services through joint venture agreements (public-private partnerships).
3.4.1 Overview of the situation
… in the past, the Thailand Board of Investment (BOI) has implemented various measures to stimulate and encourage foreign investors to invest in Thailand, such as providing tax privileges to foreign businesses that invest in 10 categories of S-Curve Industries and opportunities to participate in Public Private Partnerships (PPPs) in communications infrastructure, including the government policy to push for the Eastern Economic Corridor (EEC) project.
The National Human Rights Commission of Thailand has received complaints regarding the impact of cross-border business operations of Thai entrepreneurs, such as a Thai private company that was granted a land concession for sugarcane cultivation and established a sugar factory in Cambodia and violated the human rights of the Cambodian people. The National Human Rights Commission of Thailand has investigated and has ruled that though the company is not the action maker, the impact is considered a part of their direct responsibility in the case of affecting human rights. In the case that a private company has entered into a Memorandum of Agreement with the Port Authority of the Union of Myanmar to operate a deep-sea port project in the Dawei Special Economic Zone Project in Myanmar, the National Human Rights Commission has investigated and found that the construction of infrastructure of the project caused human rights violation to the Myanmar people. The National Human Rights Commission of Thailand has recommendations for relevant government agencies to consider establishing mechanisms or defining the Investment Supervision to respect the basic principles of human rights by using The UNGPs as a framework.
3.4.3 Action Plan (2019–2022)
Pillar 1: State duties in protecting (Protect)
– National Strategy for Public Sector Rebalancing and Development
