TWN
Info Service on Health Issues (Oct14/02)
13
October 2014
Third
World Network
Investment:
UN Rapporteur on right to health call for review of investment treaties
New Delhi, 13 October (K M Gopakumar) – Investment treaties should
be reviewed to ensure that States have the right to make changes in
their laws and policies to further human rights regardless of the
impact of such changes on investors’ rights.
This recommendation came from the Special Rapporteur on Right to Health,
Mr. Anand Grover, who just completed his term, in his last report
to the UN General Assembly (UNGA). The UNGA is expected to consider
this report in the third week of October.
The report notes that nearly 40 countries have already began renegotiation
of international investment treaties.
Bilateral investment agreements are under intense scrutiny of various
governments and civil society organizations due to the onerous obligations
they create on governments, and the upscaling of the rights of TNCs.
[The call for reform of international investment treaties and agreements
will also be made this week during the UNCTAD Investment Forum, which
is taking place on 13-16 October in Geneva.]
The Grover report also calls for an international treaty to hold transnational
corporations (TNCs) accountable for their violations on human rights.
[The Human Rights Council at its 26th session passed a
resolution to start a process for an internationally legally binding
instrument on TNCs. The resolution is titled “Elaboration of an international
legally binding instrument on Transnational Corporations and other
Business Enterprises with respect to Human Rights” available on: http://www.twn.my/title2/unsd/2014/unsd140605.htm]
The fifth part of the report deals with the accountability deficit
of TNCs on human rights violations including the right to health.
This part presents the current state of play with regard to the accountability
of TNCs with regard to human rights violations. Two other sub-sections
discuss the shortcomings of international investment treaties and
the investor -state dispute settlement mechanism.
The report also discusses the justifiability of right to health, progressive
realization of the right to health and enforcement of right to health
(undocs.org/A/69/150).
TNCs and Human Rights
The report notes that TNCs’ “increasing presence in the world economy
has enabled them to influence international and domestic law-making
and infringe upon States’ policy space”.
On human rights violation, the report states that TNCs “have also
affected the rights of large communities with impunity, causing displacement,
contamination of groundwater and loss of livelihood. They have directly
perpetrated serious human rights violations, in particular in developing
and least developed countries.
They have thus seriously affected the laws, policies and social and
economic environments of States and have violated the economic, social
and cultural rights of individuals and communities, including the
right to health.”
The report further says that it is “difficult for States or affected
individuals to hold foreign transnational corporations accountable
for harmful actions that were orchestrated through their domestic
subsidiary”.
According to the report, “The magnitude of violations by transnational
corporations and the ease with which they can evade responsibility
for such violations call for an international mechanism to hold them
liable for human rights abuses”.
The report also points out the shortcomings of a 2011 document prepared
by the Special Representative of the UN Secretary-General on human
rights and transnational corporations and other business enterprises:
“Guiding Principles on Business and Human Rights - Implementing the
United Nations ‘Protect, Respect and Remedy’ Framework”.
The first pillar of the Principles requires States to take measures
including institution of laws to ensure accountability of TNC for
their human rights violations. According to the Grover report “it
could be argued, however, that the State obligation to protect, which
is already an important obligation of States under international human
rights law, has been ineffective against transnational corporations”.
Further, the report also critiques the idea of extending incentives
for TNCs to comply with human rights standards and states that providing
incentives for compliance makes respect for rights a means to attain
an end (the promised incentive), but does not foster respect for rights
in and of themselves”.
The report further points out that access to remedy against human
rights violations mentioned in the Guiding Principles becomes ineffective
due to the inability or unwillingness of States to hold TNCs accountable
for their human rights violations.
The report adds that, “The Guiding Principles also fail to take into
consideration the existing political context, whereby developing countries
may be vulnerable to undue influence from transnational corporations.
Business interests may be protected at the cost of the human rights
of those affected communities that remain dependent on States to hold
corporations accountable for violations. Non-binding responsibilities
have therefore not prevented transnational corporations from violating
human rights”.
According to the report “there is an urgent need for an international
instrument that can address the increasing complexities presented
by transnational corporations’ multi-jurisdictional organization and
global influence. Moreover, because not all States have a robust regulatory
mechanism, owing either to their poor negotiating power or because
they are unwilling to hold domestic corporations accountable for harms
caused, obligations should also be conferred on domestic corporations”.
Apart from the accountability and monitoring mechanism, the report
calls for an effective enforcement mechanism to remedy and discourage
violations. Towards this the report proposes an adjudicatory mechanism
to examine individual or State complaints against transnational or
domestic corporations.
International Investment Agreements
The report states that international investment agreements allow TNCs
to reduce States’ policy space and States’ power to introduce health
laws in the public interest.
It states that, “Given that the agreements are concluded between States,
they do confer no obligations on transnational corporations to respect,
protect and fulfil the right to health, allowing corporations to continue
profit-making activities even if they are violating individuals’ right
to health”.
The report questions the secrecy and lack of consultation at national
level while negotiating investment agreements. It points out that
“The rights to information and to participate in the decision-making
process are essential for the enjoyment of the right to health. Those
elements of the right to health framework are undermined when international
investment agreements are negotiated and concluded in secrecy”.
According to the report “the practice of withholding information from
stakeholders such as civil society groups has been held to be non-discriminatory,
even where the same information was provided to corporations with
the justification that corporations have expertise in matters relating
to free trade agreements. Such inequity in access to information can
enable corporations to influence the content of an international investment
agreement in their favour”.
The report warns of the threat of investment and trade agreements
on the enjoyment of right to health. “Pharmaceutical companies may
be able to challenge the patent laws of host States if such laws do
not comply with investors’ rights under the free trade agreement,
even though such patent laws may be compliant with the Agreement on
Trade-Related Aspects of Intellectual Property Rights. States may
thus be unable to check the increasing cost of medicines, which undermines
their core obligation to ensure access to health facilities, goods
and services, including essential medicines, especially for vulnerable
groups”.
The report notes that “International investment agreements are treated
as a stand-alone legal code and often do not contain references to
the right to health. They should, however, be interpreted in a manner
that does not conflict with human rights law …”
The report calls on States to review these investment agreements to
ensure that States have the right to change laws and policies in furtherance
of human rights irrespective of the impact of such changes on the
investor’s right.
In the absence of an international legal framework to hold TNCs accountable
for their human rights violations, the report calls upon States to
incorporate provisions in investment agreements to enable them to
hold TNCs liable for human rights violations in both the home country
and the host country. Furthermore, the report also urges States “to
ensure their ability to implement human rights-friendly laws is not
in any way hindered by the (investment) agreement”.
Investor-State Dispute Settlement
Grover’s report stress various shortcoming of the investor-state arbitration
process provided in investment agreements.
According to the report, “the high cost of arbitration and the threat
of an adverse judgment can create a chilling effect on States, dissuading
them from fulfilling their right to health obligations.” In
addition, “These disputes may also deplete States’ resources, which
can affect their ability to progressively realize the resource-dependent
aspects of the right to health”.
It notes that out of 568 known investor-State arbitrations most of
them were brought against developing countries and nearly 85% of the
cases were brought by investors from developed countries.
The report states that, “the current system of investor-State dispute
settlement also suffers from bias and conflicts of interest. The dispute
settlement is controlled by a small clique of arbitrators and lawyers,
and the same person may be counsel, arbitrator and adviser to an investor
or State at different times”.
According to the report the “ the enormous size of such awards can
have a negative effect on the State’s ability to implement health
policies. For example, in CME v. Czech Republic, the compensation
awarded to the investor was equal to the entire health budget
of the States.
The key recommendations of the report are as follows:
- States review, renegotiate or enter into international investment
agreements in an open and transparent manner, with the participation
of affected communities and other stakeholders;
- International investment agreements should include provisions that:
(a) Confer human rights obligations on host and home States and investors;
(b) Allow host States to modify existing laws, or adopt new laws,
to comply with their obligations under the right to health or in times
of crisis affecting the entire State;
(c) Enable States to initiate disputes when investors do not comply
with or violate the right to health.
- Investor-State dispute settlement systems should be made transparent
and be modified to:
(a) Ensure that arbitrators are unbiased;
(b) Establish a regionally representative, permanent panel of
arbitrators;
(c) Require the details of a dispute to be published and continuously
updated as soon as an investor issues the notice of intent;
(d) Ensure that non-parties to disputes have the right to attend
arbitration proceedings;
(e) Ensure that those who are not party to the dispute, especially
affected communities, have a right to make written and oral submissions;
(f) Allow arbitration to be conducted in host States to facilitate
access to the arbitration by interested parties;
(g) Institute a system of review of arbitration awards to reduce
arbitrariness.
- The adoption of an international treaty that will:
(a) Confer specific, binding human rights obligations, including
the right to health, on transnational corporations;
(b) Prevent investors from encroaching on States’ policymaking
space;
(c) Provide for an accessible and effective adjudicatory forum
where States and individuals can hold transnational corporations accountable
for violations of the right to health.
- Until an international treaty is formulated, States adopt a declaration
on human rights obligations of transnational corporations.+
