International Investment Arbitration and Non-binding Standards Applicable in Conflict: Parallel or Merging Worlds?

This chapter looks at the intersection of investment treaty arbitration and non-binding standards (sometimes called voluntary, informal or corporate social responsibility standards or instruments). The chapter specifically focuses on those standards that might apply in conflict, a time and space when other governance systems are often compromised. There is increasing emphasis on an expectation that corporations act as responsible “global citizens” amongst States, civil society and businesses: a 2014 survey of 853 senior corporate executives found that 83% agreed that human rights are a matter for business as well as governments. And there is an expanding body of standards specifying what that means, including taking measures to avoid exacerbating abuses in conflict scenarios.

The governance concerns underlying these standards are making increasing appearance in investment protection. Voluntary and legal approaches are starting to merge in national legislation, and States are reflecting this change in their investment treaties. The approaches encapsulated in standards have also started to appear in the reasoning and practice of investment treaty tribunals. In light of these developments, this chapter examines the factors and mechanisms that will determine the relevance on non-binding standards to arbitration under investment treaties, particularly in light of the specific jurisdiction in which tribunals operate, carved and limited by party consent.

The interaction is between standards and treaties is not one way; it is not only about how standards are applied by tribunals or incorporated into IIAs, but also how tribunals and IIAs shape the status of standards and their relevance for the risks considered by different Parties. These include both investors and States, as increasing numbers of investors expect the States where they invest to facilitate a culture of and commitment to human rights, environmental and labour norms.