Human Rights and Environmental Counterclaims in Investment Treaty Arbitration

Nedumpara, James J.; Laddha, Aditya

doi:10.1007/978-981-13-5744-2_82-1

James J. Nedumpara⁴ &
Aditya Laddha⁵

253 Accesses

Abstract

Generally, Investment Treaty Arbitration (ITA) is unidirectional in nature. It only permits the investor to file a claim against the host State. Bilateral Investment Treaties (BITs) or International Investment Agreements (IIAs) typically do not impose substantive obligations on the investors which can allow host States to institute a claim against the investor before an arbitral tribunal. This is rooted in the idea that BITs are aimed at protecting the rights of investors in the territory of the host States. The host States, in return, benefit from the investments made by the foreign investors. Therefore, in an ITA the investor holds the sword and the respondents hold the shield. Such an asymmetric structure of ITA, however, as it stands today, does not adequately reflect all the dimensions and dynamics of an investor-State dispute. In a dispute involving issues of human rights and environmental protection, the affected State or other non-State actors such as local communities do not have an effective and equal remedy against the investor. An investor, on the other hand, could enjoy the right to initiate an international arbitration against the host State. To bridge this gap, counterclaims serve as an important legal tool. Counterclaims allow the host State to institute a claim against the investor in the dispute initiated by the latter. From a policy perspective, counterclaims could not only resolve the asymmetrical structure of the ITA but could also ensure that the whole dispute between the State and other actors, on the one hand, and the investor, on the other hand, is resolved before a single dispute settlement forum. While there has been an increasing rise in the attempt to institute counterclaims by States, the legal contours regarding its admissibility and scope are yet to be defined. This chapter discusses the role and legal framework of counterclaims with a specific emphasis on the legal regime of human rights and environmental counterclaims in the ITA.

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Notes

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68.
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77.
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78.
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79.
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80.
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85.
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93.
Relevant excerpts of Article 10.16 of the DR–CAFTA are as follows:
“Article 10.16: Submission of a Claim to Arbitration
In the event that a disputing party considers that an investment dispute cannot be settled by consultation and negotiation:
1. (a)
  the claimant, on its own behalf, may submit to arbitration under this Section a claim
  1. (i)
    that the respondent has breached
    1. (A)
      an obligation under Section A,
    2. (B)
      an investment authorization, or
    3. (C)
      an investment agreement;
    and
  2. (ii)
    that the claimant has incurred loss or damage by reason of, or arising out of, that breach; and
2. (b)
  the claimant, on behalf of an enterprise of the respondent that is a juridical person that the claimant owns or controls directly or indirectly, may submit to arbitration under this Section a claim
  1. (i)
    that the respondent has breached
    1. (A)
      an obligation under Section A,
    2. (B)
      an investment authorization, or
    3. (C)
      an investment agreement.
    and
  2. (ii)
    that the enterprise has incurred loss or damage by reason of, or arising out of, that breach.” (emphasis added)
94.
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102.
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104.
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Centre for Trade and Investment Law, Indian Institute of Foreign Trade, New Delhi, India
James J. Nedumpara
LLM Candidate at Masters in International Dispute Settlement (MIDS), Geneva, Switzerland
Aditya Laddha

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School of Law, City University of Hong Kong, Kowloon, Hong Kong
Julien Chaisse
School of Business and Law, University of Portsmouth, Portsmouth, UK
Leïla Choukroune
Institute of Malaysia and International Studies, National University of Malaysia, Bangi, Selangor, Malaysia
Sufian Jusoh

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Nedumpara, J.J., Laddha, A. (2020). Human Rights and Environmental Counterclaims in Investment Treaty Arbitration. In: Chaisse, J., Choukroune, L., Jusoh, S. (eds) Handbook of International Investment Law and Policy. Springer, Singapore. https://doi.org/10.1007/978-981-13-5744-2_82-1

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DOI: https://doi.org/10.1007/978-981-13-5744-2_82-1
Received: 01 July 2020
Accepted: 03 July 2020
Published: 09 October 2020
Publisher Name: Springer, Singapore
Print ISBN: 978-981-13-5744-2
Online ISBN: 978-981-13-5744-2
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