Morocco-Nigeria: Advancing Human Rights Protection in International Investment Treaties
The abusive conduct of private foreign investors is of growing concern for our globalized economy. A look at the applicability of the 1969 Vienna Convention on the Law of Treaties (VCLT)—the legal framework that regulates interstate treaties—reveals it to enable the creation of “imbalanced” investment agreements which neglect to regulate private conduct. The global interplay of corporations and states has the potential to result in corporate encroachment on concerns related to intrastate human rights—and fixing this discrepancy is critical to ensuring equity under international law.
This article draws upon the International Centre for Settlement of Investment Disputes case Bear Creek Mining Corporation v. Republic of Peru (2017) to demonstrate that collective action against human rights abuses should hold at least as much legal sway as corporate interests. In response to the threat of the empowerment of oppressive corporate behavior, the Reciprocal Investment Promotion and Protection Agreement (henceforth “Morocco-Nigeria”), a 2016 bilateral investment treaty between Morocco and Nigeria, offers an innovative model of a two-state agreement that empowers civic and state actors to oppose harmful investors. Furthermore, it outlines investor compliance standards that allow the state’s actions to align with principles of international law, a remedy for the imbalanced nature of investment agreements made between a state and foreign corporations. Morocco-Nigeria addresses the legal ambiguity of the VCLT, offering a path within existing legal structures to protect the individual over corporate interests when appropriate.
The VCLT, adopted in 1969 by the United Nations Convention on the Law of Treaties and ratified by 116 of the world’s nations, notes in its preamble that member states drafted and signed the convention “[h]aving in mind the principles of international law embodied in the Charter of the United Nations, such as…the prohibition of the threat or use of force and of universal respect for, and observance of, human rights.” [1] However, “having in mind” is not a binding term. The statements of the preamble are not operational provisions. Though this convention is applicable to treaties between states governed by international law, the subsequent treaties that are produced in the frame of the VCLT should be framed with these principles “in mind” as well, since adherence to human rights principles is the implicit expectation of treaties. This is a notion that Morocco-Nigeria employs and expands upon.
It is also important to note that this language is rather broad—states can still perform questionable actions while keeping such principles “in mind.” This broad language presents an issue: the lack of legal obligation of the ratifying states to the Charter's principles. But while this language may be vague, adherence to the VCLT—whether preamble or operational provision—and the UN Charter are not mutually exclusive, particularly as the Charter was made binding in the International Covenant on Civil and Political Rights (1966). The states which ratified the former and already agreed to the latter should be working towards upholding human rights as explicitly outlined by the Charter. How they go about doing this—or justifying abusive actions, in some interpretative cases—is of course highly nuanced, and difficult for the international community to regulate.
The VCLT’s vagueness continues in Section III: Interpretation of Treaties, Article 31, which states that “[t]here shall be taken into account, together with the context: any relevant rules of international law applicable in the relations between the parties.” [2] Beyond the moral obligations to protect cultural heritage, human well-being, security, and health, states are legally incentivized to uphold the VCLT’s principles so as to be empowered to bring harmful states to court—in the case of interstate investment situations—and to protect their own reputational risk before the community of potentially interested international investors. Alongside protecting the interests of state parties, the "rules" which uphold a—third-party—individual’s right to culture, self-determination, and fundamental freedom should be included within the “relevant rules of international law” that are considered in the context of inter-party relations. Such a standard is outlined in interstate treaties such as Morocco-Nigeria.
As such, the primary concern of the VCLT is that while it leaves treaty parties with flexibility to modify the rights of states, it does not address modifications of the rights of private third parties. Specifically, the “Convention does not apply to international agreements concluded between states and other subjects of international law.” [3] Assuming that a private entity is a non-specified “other subject,” if it engages in activity that encroaches on human rights within another state, host states may not regulate it through the modification of their agreement post-signage. This presents a problem when comparing state-to-state and state-to-corporation agreements: there is a discrepancy between the power that a state holds in balance with another state, and the power that a state holds with respect to an investor in that state. In essence, the host state is at a legal disadvantage in holding a harmful investor accountable, even though it faces no such disadvantage with a fellow state. And while a non-state entity is not subject to the VCLT, it is nonetheless a subject of international law. Thus, it should be held accountable in the event it encroaches on principles of human rights. Furthermore, the reputational and material costs of investor-state arbitration can dissuade states from adoption or enforcement of measures designed to regulate investors and their activities. [4] For a harmful investing agent, there is no threat of potential revocation or modification of rights as coming from any overarching bilateral agreement. Host states may be hesitant to take political or legal action against harmful investors—potentially holding reservations about investor deterrence or withdrawal of resources.
This concern, which highlights the potential for an investor-state power imbalance, is legitimized by the outcome of Bear Creek Mining Corporation v. Republic of Peru. Bear Creek is a precious metals exploration and mining company, incorporated in British Columbia and primarily operating in Latin America. [5] In its acquisition of land for the Santa Ana silver mining project in Huacullani District of southern Peru, Bear Creek had infringed on the integrity of the territorial and cultural heritage of the indigenous population. Lack of transparency, lack of consultation, and the risk of contaminating the indigenous population’s water supply compelled the constituency to pressure the Peruvian government, which eventually issued a decree revoking the initial declaration of public necessity that had authorized Bear Creek to hold the land. [6] This spurred Bear Creek to contend that the state had failed to protect their investments under the protections set out in the 2008 Free Trade Agreement between Canada and Peru. In response, Peru claimed that “the State has the discretionary right to reconsider and repeal earlier declarations of public necessity,” particularly as the premise that the Santa Ana Project would improve the public welfare of local communities was “gravely mistaken.” [7]
The case eventually reached the International Centre for Settlement of Investment Disputes for arbitration. Ultimately, Bear Creek was successful in retaining its request for only 3% of its total damages claim, and the Tribunal thus determined that respondent Peru had to bear its own costs of arbitration, as well as reimburse 75% of the arbitration costs requested by Bear Creek. [8] Peru is an example of a state that was spurred to react in protection of the well-being of its constituents, and this case is an example of the repercussions that states may encounter in doing so. Threatened by the costs of arbitration such as those incurred by Peru, governments can be incentivized to prioritize the interests of investors over the interests of domestic human rights, particularly if that state’s economy relies heavily on foreign investors.
Under the original finding of public necessity, Bear Creek did indeed have the authority to acquire mining rights in the Santa Ana region, and did hold the rights on which it based its claim. [9] Nonetheless, the threats its project posed to the cultural heritage and water supply constitute encroachment on the human rights of the indigenous population—and thus, an encroachment on the principles outlined by the UN Charter. Rather than turning to the UN Charter as a basis for reform, reaffirming human rights through a bilateral treaty offers a more substantial means for their defense against a harmful investor. Per Professor Barnalu Choudhury of Rutgers University,
“multinational corporations are often reliant on international investment agreements to gain access to new markets, international investment agreements can be used as a tool to impose human rights obligations onto corporations from the outset, before abuses occur.” [10]
Had the right of the state to repeal allowances to the investor—particularly when exercised in response to concern for human rights—been legitimized through an overarching bilateral treaty, it would have been more difficult for representatives of Bear Creek to dispute the Peruvian government. Furthermore, if Bear Creek had been obligated to transparently consult the indigenous community, the encroachment may have been prevented entirely, in addition to the subsequent financial and reputational repercussions faced by both state and corporate parties.
The VCLT is again relevant to this discussion in that it offers a provision regarding what states should “keep in mind” when creating treaties with other states—the principles of international law. In crafting such treaties, regulatory consideration of corporations which encroach on human rights is thus a provisional obligation to which these states have committed through their obligation to uphold international law. Morocco-Nigeria offers a framework for investment agreements which both upholds the VCLT and uses explicit provisions to address its shortcomings in relation to private investor regulation. As a “Post-Establishment Obligation,” Article 18 of Morocco-Nigeria states that “Investors and investments shall uphold human rights in the host state.” [11] While Morocco-Nigeria is not a treaty between a private company and a state, it is an agreement whose terms must apply to all investors, and investments made by investors, of either Nigeria or Morocco. [12] While the VCLT fails to cover “the accountability of corporations that operate in states without adequate human rights regulation or remedies to address human rights abuses, or that are unwilling to enforce these regulations or provide access to remedies,” Morocco-Nigeria offers features that affirm the rights of state parties to regulate investors within their territories. [13]
Under the case of Bear Creek v. Republic of Peru, Bear Creek argued that Peru’s “determination of illegality [of the concession of land in question] by a national court is not binding on an investment tribunal.” [14] Contrasting this discrepancy is Morocco-Nigeria's assurance of investor liability, which can be applicable in the case of violation of domestic human rights. Article 20 of the treaty, for example, states that “investors shall be subject to civil actions for liability in the judicial process of their home state for the acts or decisions made in relation to the investment where such acts or decisions lead to significant damage, personal injuries or loss of life in the host state.” [15] When included in a bilateral treaty, such a provision holds an investor accountable on an international level, addressing the discrepancy highlighted by Bear Creek’s argument.
Of note in Morocco-Nigeria is the binding resolution that lays the framework for disputes between investors and host states: it creates a bilateral Joint Committee, which has the potential to relieve pressure from states who wish to hold harmful investors accountable. Article 26 states that “[b]efore initiating an eventual arbitration procedure, any dispute between the Parties shall be assessed through consultations and negotiations by the Joint Committee.” [16] The Joint Committee, notably, is composed of representatives of the investor, of parties, and of any non-party entities who are involved. Offering a preliminary dispute mitigation system impacts the factors which could dissuade a state from bringing an investor to arbitration; it has the potential to bring issues to light before committing to legal action, or committing to the risk of reputational and material deterrence. It also increases the accessibility of smaller-scale, civic groups—including those directly harmed by the projects—to consultation participation. If members of Peruvian indigenous groups had had access to such a committee in the Bear Creek case, preliminary discussions may have lessened the likelihood of human rights encroachments. This Joint Committee offers a leveling of investor-state arbitration power, in which the foreign private investor may have previously held the upper hand.
Transparency in corporate investment practices, as well as collaborative approaches towards relationships between state, corporate, and affected communities, are key to promoting accountability of private investors. It is these aspects, as well as explicit language binding parties to uphold human rights, which position Morocco-Nigeria as a model for states looking to rectify the legal ambiguity left unaddressed by the VCLT. In accordance with the principles of international human rights law, private parties should be held to the same standards of consideration for human rights as the states under which they operate. As the international development community turns increasingly towards the private sphere for development, infrastructure, and technology investments, ensuring a balanced legal playing field between private investors and host state entities must be a key objective of bilateral relationships.
Edited by Devon Hunter
Sources:
[1] "Vienna Convention on the Law of Treaties," opened for signature May 23, 1969, United Nations Treaty Series, vol. 1155: 2, https://legal.un.org/ilc/texts/instruments/english/conventions/1_1_1969.pdf.
[2] Vienna Convention, 2.
[3] Vienna Convention, 3.
[4] Jesse Coleman, Kaitlin Y. Cordes & Lise Johnson, "Human Rights Law and the Investment Treaty Regime," Columbia Center on Sustainable Investment Staff Publications (New York, New York: Columbia Center on Sustainable Investment 2019), 9.
[5] "Corporate and Share Information," 2023, Bear Creek Mining Corporation, https://bearcreekmining.com/corporate/corporate-and-share-information/.
[6] Coleman, Cordes & Johnson, "Human Rights," 2.
[7] Bear Creek Mining Corporation v. Republic of Peru, ICSID Case No. ARB/14/21, 83 (2015), https://www.italaw.com/sites/default/files/case-documents/italaw9381.pdf.
[8] Bear Creek, 275
[9] Bear Creek, 88
[10] Barnali Choudhury, "Spinning Straw into Gold: Incorporating the Business and Human Rights Agenda into International Investment Agreements," University of Pennsylvania Journal of International Law vol. 38 (Philadelphia, Pennsylvania: University of Pennsylvania Legal Scholarship Repository, 2017), 426.
[11] "Reciprocal Investment Promotion and Protection Agreement Between the Government of the Kingdom of Morocco and the Government of the Federal Republic of Nigeria," conclusion date December 3, 2016, 3, https://investmentpolicy.unctad.org/international-investment-agreements/treaty-files/5409/download
[12] "Reciprocal Investment," 3.
[13] Choudhury, "Spinning Straw," 446.
[14] Bear Creek, 85.
[15] "Reciprocal Investment," 16.
[16] "Reciprocal Investment," 19.