International investment agreements, multilateral free trade agreements, WTO law and practice: report

Published:
12 July 2016
Issued by:
The Independent Expert on the promotion of a democratic and equitable international order
Presented:
To the Human Rights Council at its 33rd session

Background

In its resolution 30/29, the Human Rights Council invited the Independent Expert on the promotion of a democratic and equitable international order to continue to develop studies on the adverse human rights impact of international investment agreements, bilateral investment treaties and multilateral free trade agreements on the international order.

On 13 October 2015, the Independent Expert convened an Expert meeting to discuss a strategy to follow-up on the recommendations contained in his 2015 thematic reports on the adverse impact of free trade and investment agreements on a democratic and equitable international order.

Summary

This report complements the analysis contained in the Independent Expert's 2015 report to the Council (A/HRC/30/44  and Corr.1) and his 2015 report to the General Assembly (A/70/285 and Corr.1), addresses the aggravation of the "regulatory chill" generated by investor-State dispute settlements, and demonstrates that the newly proposed investment court system suffers from the same fundamental flaws as investor-State dispute settlement.

Essentially, the investment court system lacks the fundamental safeguards to ensure an independent legal system in line with the requirements of due process. Under the investment court system, States would remain vulnerable to the same kind of frivolous and vexatious claims that have characterized the hugely expensive, slow and unpredictable investor-State dispute settlement litigation. Important issues of constitutionality and the rule of law arise when non-State actors exercise "prerogative powers" beyond public control and judicial scrutiny.

The issues are so complex and the consequences so serious that the present report can be read only as a work in progress, since it will be necessary to continue monitoring the adverse impacts of old bilateral investment treaties and free trade agreements and to see whether initiatives to reform the system and eliminate contra bonos mores provisions in those treaties result in a more democratic and equitable economic regime, or whether egregious abuses continue with impunity. The role of parliaments is crucial in ensuring human rights protection while promoting trade. The Parliamentary Conference of WTO in June 2016 demonstrated awareness of the problems. The world expects more than rhetoric.