International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration

The document examines the tension between the protections granted to foreign investors under Bilateral Investment Treaties (BITs) and the human rights obligations of host states. It highlights a surge in investor-state disputes, particularly in the water and sewage sectors in Latin America, where the 'right to water' may serve as a legal defense for state regulation. The paper argues that current BITs are largely silent on human rights and lack transparency, which may lead to 'regulatory chill' or the prioritization of investor rights over public interest. It suggests reforms, including the inclusion of minimum human rights responsibilities for investors and the potential use of human rights courts to resolve investment disputes.

• Bilateral Investment Treaties (BITs) typically lack references to international human rights commitments and do not condition investor rights on the responsibility to respect human rights standards.
• There has been a significant increase in the use of investor-state dispute settlement mechanisms, with over half of the 120 disputes registered at ICSID occurring in the five years prior to 2003.
• Host states may be able to defend their treatment of foreign investors by invoking international human rights obligations, such as the right to water, as part of the applicable international law in an arbitration.
• Investment treaty arbitration is characterized by a lack of transparency, as many rules (such as those of the ICC or UNCITRAL) do not require disputes to be a matter of public record, unlike the NAFTA process.
• While investment tribunals generally lack jurisdiction to hear direct human rights claims from citizens, they may be required to consider 'peremptory norms' (jus cogens) of international law, such as prohibitions against genocide, slavery, and torture.
• The threat of investment treaty arbitration can lead to 'regulatory chill,' where governments abandon public health or environmental regulations to avoid costly disputes, as seen in Canada's abandonment of plain tobacco packaging plans.
• In cases of expropriation, human rights obligations could potentially be used to mitigate the level of damages owed to an investor, particularly when the state's action was taken to protect a public interest.
• The author recommends that future investment treaties should include minimum human rights responsibilities for investors and that the dispute settlement process be reformed to ensure full transparency.

APA

Peterson, L. E., & Gray, K. R. (2003). International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration. International Institute for Sustainable Development. https://www.iisd.org/system/files/publications/investment_int_human_rights_bits.pdf

Chicago

Peterson, Luke Eric, and Kevin R. Gray. International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration. International Institute for Sustainable Development, 2003. https://www.iisd.org/system/files/publications/investment_int_human_rights_bits.pdf.

Wikipedia

{{cite report |last1=Peterson |first1=Luke Eric |last2=Gray |first2=Kevin R. |title=International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration |publisher=International Institute for Sustainable Development |date=April 2003 |url=https://www.iisd.org/system/files/publications/investment_int_human_rights_bits.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{peterson2003international, author = {Peterson, Luke Eric and Gray, Kevin R.}, title = {{International Human Rights in Bilateral Investment Treaties and in Investment Treaty Arbitration}}, institution = {International Institute for Sustainable Development}, year = {2003}, month = apr, url = {https://www.iisd.org/system/files/publications/investment_int_human_rights_bits.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }