Obligaciones a inversionistas bajo Derecho Internacional: Por qué sí, por qué no, y la importancia del cómo.

Por: Rene Urueña

Miembro Fundador de ACCOLDI

Profesor de Derecho Internacional de la Universidad de Los Andes, Presidente de Academia Colombiana de Derecho Internacional

Hace un par de semanas, hice une presentación sobre arbitraje de inversión y justicia transicional en el marco de una magnífica conferencia organizada por la Universidad del Rosario, la Universidad del Norte y la Universidad de Cornell.

En el segmento de preguntas, expresé dudas sobre la conveniencia de establecer obligaciones autónomas para inversionistas bajo el régimen de inversión. Para continuar la conversación, transcribo a continuación una nota que resume mi racionamiento sobre este punto, publicada como “Nicht küssen, schlucken!: Wie CETA und TTIP durch Investorenpflichten verbessert werden könnten”, en el Internationale Politik und Gesellschaft de Octubre de 2016.

Investor duties? Why, how …. And why not

The international investment regime, composed of a network of international treaties that provides strong protections to foreign investor all around the world, is under heavy fire.  Europeans of different walks of life are resisting the inclusion of an Investor-State Dispute Settlement (ISDS) in the Transatlantic Trade and Investment Partnership (TTIP) or, at the very least, are demanding that its powers be limited.  Americans, in turn, seem to be having the same doubts:  whoever wins the next elections in the US, it seems clear that the TTIP will have a hard time passing through Congress, in no small measure due to ISDS.

By doing so, Europeans and Americans are joining a chorus of voices from Latin America, who for a decade have denouncing the effects of ISDS in their own countries.  After years of signing investment protection treaties without much reflection, the Argentinean experience in 2001 gave a moment of pause to many Latin-Americans.  The Argentinean financial crisis triggered an amazing cascade of investment litigation against that country, shaking many in the region. While, no doubt, much of the pain derived from the crisis was self-induced, it was also clear that ISDS prevented Argentineans to deal appropriately with the fallout of the emergency.  Similarly, in the early 2000’s Bolivians, Ecuadorians and Venezuelans also felt the pressure in their own economies, while Colombian and Peruvians are recently beginning to be the target of litigation.  While Brazil never did jump into the investment regime wagon, the landscape in the region will be familiar for civil society in elsewhere:  Latin-Americans are increasingly weary of ISDS, and they see it as a growing risk for the ability of the state to achieve its goals, particularly with regards to social and environmental rights.

Why start thinking about investor duties?

In this context, one idea that has gained some traction is the inclusion of investment duties in treaties such as the TTIP. The logic is clear.  Investment treaties include only investor rights, and correlative duties on behalf of states hosting the investment.  Nowhere to be found are investor duties, which seems to contradict basic fairness.  Moreover, as it stands, ISDS seems closer to an insurance scheme for the investor, where investment arbitration protects the investor against the risk of host state misconduct — but the investor pays no prime for its insurance.

Investor duties therefore emerge as a way, first, of balancing the overall architecture of the investment regime:  investor have rights and duties; host states have rights and duties.  In this fashion, the powers of ISDS seem less threating to states’ regulatory power. If the ISDS is there to enforce not only investor rights, but also investor duties, then much of the risk associated with a powerful ISDS seems to diminish.

Most importantly, though, by creating duties for the investor, the investment regime creates a threshold for investors to benefit from the generous privileges bestowed upon them by treaties, such as the TTIP.  The enjoyment of rights requires a minimal respect of basic duties.  The imposition of duties forces investors to realize that they, together with host states and civil society, are part of the same legal network to which they all contribute and from which they all benefit, just as we are all part of the same economic network that provides opportunities and imposes burdens on us all.

How to start thinking about investor duties?

Investment duties are currently not included in standard investment treaties, and have not been explicitly recognized by investment arbitrations tribunals.  This framework can be changed, through at least three mechanisms, which are non-exclusive.

Investor duties as part of the definition of “investment”

One particularly efficient way is for investor duties to be factored in the definition of “investment” that is subject to protection by the regime.  By and large, the investment regime and ISDS only operate when an “investment” exists.  The fulfilment of investor duties could be required for an economic undertaking to be considered an actual “investment” under the law, and hence liable to protection.

Consider, for example, that one investor duty should be to refrain from polluting.  In order to achieve the respect of that duty, investment arbitrators could decide that an investment that pollutes is not an actual “investment” under the law, and hence cannot be protected.  Some investment treaties already include clauses that require investments to “respect local law” of the host state (for example, environmental regulation). Such language could provide the legal basis for this strategy; but, even if treaties include no reference to respect of local laws, investment arbitrators could require the fulfilment of certain basic duties of good faith on behalf of the investor before claiming protection from the ISDS.

Unambitious as this may sound, a generalized move in this direction by arbitrators would have an important impact, as it would not require renegotiating treaties, but would send the important signal that, structurally, investment treaties and the ISDS are not solely for the protection of investors, but also allow for the review (however modest) of their behavior.

Investor duties as a defense in case of breach

A second alternative is that investment tribunals accept breaches of basic duties by investors as an acceptable defense for states, when they are accused of breaching their own obligation vis-à-vis the investor. Thus, if a state is accused of breaching an investment treaty, it might decide to accept responsibility, but defend itself by saying that the investor in turn has breached its basic duties of good faith, a fact that should be considered by the investment tribunal.

Consider, for example, if an investor is vastly negligent in planning its investment:  for example, failure to acknowledge (or willingness to ignore) a history of currency instability of the host state.  Clearly, there is no legal duty under the investment regime to be diligent.  In fact, what we see in practice is that investors allow themselves to be particularly risk embracing, under the understanding that ISDS will provide protection if they go bust.

However, if negligent investor files a claim against a state, and that state is allowed to present evidence of the investor’s negligence as a partial justification of the breach (eg: “I did change the pricing system of your investment, but you knew I have always had currency problems”), then the investor will be forced to take a second look at its investment practices.

Again, this may sound unambitious, and may only apply to a limited number of cases.  But if investor behavior is indeed studied in relation to the responsibility of the state, then it becomes possible to think of reducing the investor’s compensation due to its own non-fulfillment of duties of good faith. This simple move, while still finding the state responsible for the breach, would go a long way to reducing the impact of the ISDS on regulatory power, which is based on fear of large compensation to investors.

Creating free-standing investor duties? (and why not)

The final strategy would imply creating free standing duties for the investor, under a new, or renegotiated treaty, thus imposing all the rights that one may want to the investor (diligence, respect of human rights, labor standards or the environment, and so on). This option is not legally complex, and highly politically unlikely.  For example, one could include the duty to respect human rights, or respect the environment. States would be, therefore, able to use the ISDS to directly sue the state for breach of such duties. For some activists, this strategy appears like the ideal course of action. “Even if politically difficult”, some say, “this is what we should fight for:  that the treaty includes direct duties for investors”.

I often find myself doubting of the wisdom of this strategy.  At first sight, it might seem that, indeed, imposing direct obligations is indeed the highly ambitious goal that, if achieved, would really bring investors in line.  However, the reality is that imposing direct duties to investor would, in basic fairness, only call for the recognition of direct rights for investors under international law.  Up to now, what we have is a system in which investor rights are derivative; that is, investor rights are in fact an obligation of the host state towards the state of origin of the investor, that is a party to the treaty.  Technically, investor “rights” can be read as investor “privileges” that can be enforced via arbitration.  This makes investor rights different from human rights, that are bestowed directly to the individual because of the inherent qualities of dignity present in human beings.  By calling for direct duties, we are also implicitly invoking the possibility of direct rights of investors.  Do we really want this human rights vocabulary to start applying to investors? I think not.  We should beware what we wish for.

Investor duties?

Investor duties is a useful strategy to both check the unlimited powers of the ISDS, and have investors share some of the risks (and not only the benefits) of the investment regime. However, despite its apparent benefits, the most extreme solution of direct duties is counterproductive. In contrast, the other two indirect strategies described above may sound less ambitious, but may be ultimately more effective.


Un comentario en “Obligaciones a inversionistas bajo Derecho Internacional: Por qué sí, por qué no, y la importancia del cómo.

  1. Comparto las observaciones del Prof Ureña sobre la necesidad de replantear los procesos asimétricos de inversiones donde las reglas de inversión ha estado focalizadas casi exclusivamente en obligaciones estatales restando posicionamiento sobre las obligaciones de los inversionistas. Parte de esta realidad y en particular que vive actualmente COLOMBIA es el resultado de no ir adecuando los viejos TBI de los años 90 y comienzos de 2000 con estándares propios de obligaciones recíprocas. Recuerdo ya haber plateado este posible panorama que podría suceder en Colombia en una conferencia de gentilmente el Colegio de Abogados Comercialistas me invitara en 2014. Muchos me expresaba allí que esos temores no sucederian COLOMBIA.


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