The Judicialisation of the Social License to Operate: Criteria for International Investment Law

The Social License to Operate (SLO) is a non-legal term which has been widely conceptualised as meaning a particular set of interactions between investors and affected communities. Within the international investment law field, even though tribunals previously analysed situations of social conflict, the wording SLO had never been considered by an investment tribunal until Bear Creek Mining Corporation v Republic of Peru. This article argues that if the SLO of the investment is involved in a dispute, tribunals should thoroughly analyse the relationship between the investor and the affected community and establish (judicialise) a standard of review for the investor’s conduct which should only include those aspects of the relationship that might be considered as affecting or forming part of the national public interest. In addition, this article puts forth the criteria for the judicialisation of the SLO in investment disputes, drawing upon the Bear Creek scenario as relevant background.

Bear Creek V. Peru and the Legality of the Investment as a (Implied) Requirement for the Investment Arbitration Tribunal’s Exercise of Jurisdiction

Concerns about inconsistency in the application of standards in arbitral awards are strongly present in investment treaty arbitration. In particular, tribunals can regularly exercise a varying scope of jurisdiction when they determine the legality requirement that demands foreign investments to be made in accordance with the law of the host state.In this paper, the author seeks to analyze the decision rendered by the tribunal in Bear Creek v. Peru, in which the Canadian mining company alleged that the Peruvian State breach, inter alia, expropriation protections under the Canada-Peru Free Trade Agreement in relation to its investment in the silver mining project of Santa Ana. In order to achieve this aim, in the first chapter, he addresses three key issues regarding the tribunal’s jurisdiction, the rights on which the company based its claim and the arguably prerequisite of legality or good faith for the tribunal’s exercise of jurisdiction. In the second chapter, he analyzes the validity of the tribunal’s interpretation on the legality requirement for investment as an implicit element in the relevant treaty to determine the tribunal’s jurisdiction.

Wild, Native, or Pure: Trout as Genetic Bodies

Advances in genetics and genomics have raised new questions in trout restoration and management, specifically about species identity and purity, which fish to value, and where these fish belong. This paper examines how this molecular turn in fisheries management is influencing wild and native trout policy in Colorado. Examples from two small Colorado watersheds, Bear Creek and Sand Creek, illustrate how framing trout as genetic bodies can guide managers to care for or kill trout populations in the interest of rectifying decades of genetic disruption caused by human activity. While trout management has typically relied on human intervention, the turn to genetic science is prompting new classifications of lineage and taxa, altering long-standing conservation priorities, and reorienting the manipulation of biological processes such as reproduction and dispersal. As a result, other social and ecological factors may be pushed to the margins of management decisions. These changes warrant greater conversation about the consequences of molecular analyses and the values embedded in trout science and conservation more broadly.

Estado-empresas transnacionales: cambios en el régimen de solución de controversias inversor-Estado y redefinición de la soberanía a la luz de la protección de los derechos humanos

Este trabajo aborda como tema central la relación entre los principales actores vinculados a la inversión extrajera, Estados y empresas transnacionales, en el marco del régimen de solución de controversias inversor-Estado. En un menor nivel de abstracción, dicha relación se manifiesta, en primer lugar, en el planteo de alternativas al régimen de solución de controversias inversor-Estado tradicional. Se constatan dos alternativas, a saber: el abandono del régimen y los tratados que buscan un equilibrio. El abandono del régimen por parte de Bolivia, que en 2007 se convierte en el primer Estado en el mundo en retirarse del Centro de Arreglo de Diferencias relativas a Inversiones, seguido por Ecuador (2009, con cambios en su postura en 2018) y Venezuela (2012). El hito inicial se complementa con la terminación de tratados bilaterales de inversión por parte de Bolivia, Ecuador, y Sudáfrica como un disidente africano. Por otra parte, las alternativas se presentan en forma de tratados que buscan un nuevo equilibrio o excluir total o parcialmente el régimen actual. En este punto se analizan los acuerdos de cooperación y facilitación de inversiones de Brasil, las exclusiones sectoriales del Acuerdo Integral y Progresivo de Asociación Transpacífico, y el nuevo modelo de tratado bilateral de inversiones de India (2016). En segundo lugar, este trabajo examina la relación Estado-empresas transnacionales mediante la determinación del impacto de la extensión de la regulación estatal en materia de derechos humanos en casos concretos de arbitrajes de inversiones contra Estados de Sudamérica y la Unión Europea. Ejemplo de lo anterior son los casos Pac Rim contra El Salvador (medioambiente), Masdar contra España (transición energética), Philip Morris contra Uruguay (medidas de control del tabaco), Bear Creek contra Perú (derechos de las comunidades locales), entre otros analizados. Se constata que tanto en situaciones de avance o retroceso de la regulación en materia de derechos humanos, los inversores extranjeros han iniciado arbitrajes contra los Estados huéspedes. En tercer y último lugar, el binomio Estado-empresas transnacionales se analiza desde la transición hacia un nuevo concepto de soberanía, no abordado por Krasner en su cuádruple proyección (soberanía de interdependencia, westfaliana, legal internacional e interna). El concepto de soberanía regulatoria se basa en la defensa del espacio de política pública, cuyo corazón es el derecho de regular. En este sentido, se analiza la evolución del régimen internacional para contextualizar el reconocimiento, por la UNCTAD en 2003, de la erosión del espacio de política pública por los mecanismos de solución de disputas inversor-Estado. Se presentan los caminos de defensa que los Estados y la doctrina han propuesto y particularmente se interpela la situación de la Unión Europea: a su interior (arbitrajes intra-Unión Europea) y a su exterior (el sistema de tribunales de inversiones del Acuerdo Económico y Comercial Global con Canadá). El círculo cierra con el examen de la soberanía regulatoria, como concepto en transición, sus manifestaciones empíricas y los motivos de su surgimiento en el marco de la slowbalisation y la crisis del multilateralismo. Dentro de las principales conclusiones a las que arriba este trabajo se destaca que las alternativas estatales (a nivel de tratados) tienen raíces jurídicas, políticas y coyunturales, esto es, en la experiencia de los Estados ante el régimen. En segundo lugar, la transición hacia el nuevo concepto de soberanía regulatoria se conecta directamente con la defensa del espacio de política pública, habiendo los Estados comprobado su erosión en las mencionadas disputas. Finalmente, la soberanía regulatoria no abarca exclusivamente la dimensión doméstica del Estado sino que se extiende hacia el exterior, dando pasos tendientes a moldear las instituciones internacionales.

Contributory Fault under International Law: A Gateway for Human Rights in ISDS?

The intersection between foreign investment and human rights is gaining attention, as is evident from an increasing number of investment treaty awards analysing legal issues relating to human rights. In the recent International Centre for the Settlement of Investment Disputes (ICSID) arbitration of Bear Creek v Peru, Philippe Sands QC posited, in a dissenting opinion, that the investor’s contribution to events—ie protests against its allegedly adverse environmental impact and disregard of indigenous rights, namely resulting from its ‘inability to obtain a “social licence”’—which led to the unlawful expropriation of its investment, was ‘significant and material’. He further noted that the investor’s ‘responsibilities are no less than those of the government’ and found that damages should thus be reduced. Last year, the Netherlands adopted a new model bilateral investment treaty (BIT), which allows tribunals to ‘take into account non-compliance by the investor with the UN Guiding Principles on Business and Human Rights and the OECD Guidelines for Multinational Enterprises’ when assessing damages. These recent developments shed light on how states and tribunals, as part of their decision-making process, can take into account human rights in practice, and crucially in respect of damages analyses. By first dissecting the concept of contributory fault, then shedding light on the intersection of investment treaty law and human rights, as elucidated in recent jurisprudence, this article questions whether there now exists a gateway for human rights obligations (soft or hard) in the investment treaty arbitration realm through the concept of contributory fault.

Analyzing the Social License to Operate in International Investment Law

A small segment of Investor-State Arbitration flows from the consequences of resistance by the local population (particularly, indigenous people) against the particular investment, and the concerned State cancelling permits granted earlier, precluding all future activities of the investor. This paper seeks to argue that when faced with an investment treaty dispute of this nature, arbitrators should (and indeed may be required to) reflect on the Social License to Operate (SLO) as a part of the applicable law. It aims at creating a framework within which the Social License to Operate should be conceptualized by investment tribunals in the future. The article first examines the nature of the social license to operate and then goes on to highlight its existence in relevant bodies of international law. Thereafter, the article seeks to analyze its use in past investment tribunals, such as the award laid down in Bear Creek Mining v. Peru, and uses this analysis as a springboard to construct a way forward for future applications of the concept.