EU Human Rights, International Investment Law and Participation

This chapter explores how different EU law sources of human rights should influence EU investment policy making. This analysis takes the foreign policy objective and principle that demand global human rights protection and promotion, as stipulated in Article 21 and 3(5) TEU, as a starting point, but is not limited to it. International human rights norms and the Charter form important pillars of the EU human rights obligations. This analysis however approaches the examination of the entire EU human rights framework in relation to Article 21 TEU and 3(5) TEU as explicit directives for the former’s application to EU trade and investment policies.

Section 2.1 contrasts the approach adopted in this book to the previous attempts to grasp the specific category of human rights protection as a foreign policy objective, which mainly excluded the imposition of strict human rights obligations on the EU foreign policy maker.

Section 2.2 discusses the applicability of international human rights norms and specifically of the Charter to EU investment policy making and puts them in relation to the foreign policy objective. Based on the recent developments in international human rights, a territorially unconfined application of the Charter and supporting EU case-law, this section rebuts claims for a limited relevance of human rights in international economic regulation.

Section 2.3 discusses the relevance of the EU human rights framework in relation to other substantive and procedural norms that shape EU investment policy. The specific objective of trade liberalization that gained emphasis in the post-Lisbon Treaties raises questions regarding any constitutionally mandated prioritization.

Section 2.4 indicates that policy implications can be derived from the human rights framework. How these policy implications operate precisely and are judicially reviewable, is demonstrated in Part III by means of examining concrete policy tools for their capability to counter severe inequalities of human rights protection which are prevalent in the current international investment regime and which the EU so far has appropriated with only marginal mitigations as Part II reveals. Section 2.4 provides the legal grounds for more adequate responses by explaining that the EU has the necessary competence (the ‘can’) and is to some extent required (the ‘must’) to rethink previous human rights approaches that were conceptually too narrow in that they were limited to view human rights as a development concern and failed to capture human rights threats stemming from or being perpetuated by EU trade policies.

Section 2.5 considers the judicial implications of the EU human rights framework in the context of trade and investment policies. It confronts claims for limited extraterritorial effect of EU acts and consequentially restricted possibilities to judicially challenge those. It further summarizes the relevance of the EU human rights framework for the judicially reviewable legality of EU acts—the latter issue constitutes a common thread throughout this chapter.

The first chapter explained how human rights next to other substantive and organizational principles and objectives should inform the making and implementation of EU foreign policies. This chapter is concerned with the role that the EU can actually play in shaping the international investment regime. It delineates the regulatory reach of the EU with regards to international investment relations in order to subsequently determine which areas should be governed by the EU human rights framework. This chapter first explains the importance of this thorough analysis, that is highlighting the flexibility of current definitions and making the argument that the human rights framework goes beyond the confines of EU exclusive competence (Sect. 3.1). In order to outline the newly gained and existing powers of the EU in view of the powers needed to cover the traditional practice of international investment relations, this chapter elucidates briefly the traditional scope of international investment regulation (Sect. 3.2). As a next step, it analyses to what extent these powers are covered by exclusive competence of CCP, implied external competences and other expressed Treaty competences or remain under the competence of the Member States (Sects. 3.3–3.8). Ever since the inclusion of foreign direct investment (FDI) into CCP, the scope of the EU competence over investment regulation has been highly debated amongst scholars and between the Commission, the EP and the Member States. Each section therefore outlines the answers given by the Court in the landmark decision Opinion 2/15 in comparison to the diverging opinions in the literature. In a last step, it is explored what different policy options remain if one aims for covering the state of the art investment regulation (Sect. 3.8), while discussing what the different policy options mean for the application of the human rights framework (Sect. 3.9).

This chapter aims to demonstrate that IIL privileges certain interests at the expense of others. Human rights interests are for the most part excluded although this regime is often affecting them. This fact might be explained as a natural result of fragmentation of international law, but it is not justifiable from an EU constitutional law perspective. The tensions between human rights and the international investment regime are complex, a product of multiple interactions, systemic and often remain concealed. This chapter therefore approaches the identification of this regime’s stance towards human rights law on several levels. The introduction (Sect. 4.1) explains why this approach is important. The next section gives an overview of the coming into being of today’s investment regime (Sect. 4.2). Subsequently, this chapter analyses the human rights tension arising from the most common formulations of investment protection provisions and their interpretation by arbitral awards (Sect. 4.3). This includes a discussion of the progressive approaches within the investment regime, which can be observed in arbitral practice or have been advocated by the literature. It explores to what extent such approaches are mitigating some human rights concerns. Further, this chapter outlines the threats to human rights protection which cannot be determined by direct clashes of conflicting international obligations but are rather an indirect effect of the ‘multilateralization’ of investment treaties and its linkage to investor-state-dispute-settlement (ISDS) (Sect. 4.4). The chapter concludes (Sect. 4.5) that many frictions with human rights are not even identified in arbitration, human rights law is rarely perceived as applicable or human rights violations remain concealed. The isolated attempts of human rights integration in the arbitral practice and as proposed in the literature are often methodologically inconsistent and instable as they lack clear textual legitimacy. The need for including affected rights-holders to represent their interests becomes clear, while the right legal tools for such inclusion are still missing.

The following section gives an overview of the EU approach to international investment regulation and analyses whether they are adequately responding to the human rights tensions identified in Chap. 4. Many protection standards have evolved over time and have been constructed by arbitration and literature as to some degree independent principles and standards of good governance. In addition, marginal variations within the treaty texts have often been ignored by arbitral practice. Therefore, the treaty makers, if intending to regain legislative control or diverge from previous practices, have to be explicit. The intention to impose a restrictive understanding or a roll-back of a standard has to be expressed clearly, especially in the context of highly debated issues. Bearing this in mind, each section summarizes the tensions between the respective rule and human rights as elaborated in the previous chapter, subsequently analyses the EU approach and concludes whether the EU is solving, mitigating, neutral to or deepening the problem (Sect. 5.2). Further, the EU policy to dispute settlement in investment matters is assessed with a focus on the entry barriers for human rights interests as identified in the previous chapters (Sect. 5.3).

States and international organizations have for some time promulgated Human Rights Impact Assessments (HRIA) as the major instrument for bringing trade agreements in line with human rights obligations. This chapter explores the role that the EU approach to HRIAs is playing and can play in overcoming the inequality of rights protection in the international investment regime. In order to do so, HRIAs must be able to comprehensively assess all interests at stake and empower those that are underrepresented. This chapter tests the EU theory and practice for whether they are fit to do so. First, this chapter outlines briefly the international norms and discourses on HRIAs (Sect. 6.2.1) and relevant constitutional principles of EU law (Sect. 6.2.2)—both with a focus on the inclusivity and empowerment dimensions. This is the legal framework which the EU rules and practice will be measures against. In order to so, the chapter clarifies which rules make up the EU legal and soft law framework for HRIAs, divided into the rules on design, on procedures and on the legal nature or in other words the legal consequences (Sect. 6.3), bringing to light the conceptual shortcomings. The section on the EU practice finds further shortcomings at the implementation stage in terms of the substantive scope that is applied, in terms of participation and representation, in terms of transparency and independence and those shortcoming that flow directly from the conceptual limitations (Sect. 6.4). However, by exposing the linkages between HRIAs and the inequality problem of EU investment policy also the potentials become visible. This chapter therefore also aims to highlight the possibilities for reforms—from marginal to more imaginary.

Since the EU-Korea FTA, the EU includes an elaborated mechanism for civil society participation as a monitoring and advisory body for the trade and sustainable development chapters. This chapter proposes that these mechanisms bear the potential to enable human rights-holders to participate in the implementation, evaluation and contestation of the international investment regime while circumventing existing power imbalances at domestic level as well as at the level of investment arbitration. Therefore, these mechanisms could be a means to counter the inequality of rights protection within the international investment regime by building sustainable institutions that enable those previously disregarded to inject their interests into international investment regulation. However, for the EU to seize the full potential of the EU human rights framework, substantial reforms and a shift of perception are necessary as this chapter demonstrates. In order to show the potential and the shortcomings, the first section (Sect. 7.2) outlines the relevant requirements of the EU external human rights framework. Any consultation and participation mechanism in an investment agreement will have to meet such legal requirements in order to discharge the duty to respect and in order to realize the duty to promote that flow from EU constitutional law as demonstrated in Chap. 2. Other applicable obligations stemming from EU law as well as international human rights law provide the substantive content for the abstract human rights commitment of Art. 21 TEU. Second, the institutional design, the practice as well as the discernible concept behind the current civil society involvement mechanisms in EU trade agreements are evaluated against these legal requirements (Sect. 7.3). Subsequently, the necessary reforms are being proposed (Sect. 7.4).

The conclusion reminds of the motivation for this research and summarizes the findings of each chapter and of the book. It also clarifies the meaning of the finding in context of past and future EU policies as well as in context of the broader theoretical literature. The conclusion therefore suggests tangible policies, hopes to be a motivation for further research and demands fundamental rethinking and imaginative exploration for both policy makers and academia to overcome the power imbalances in the international investment regime.