Climate Change: Dutch Court of Appeal upholds the decision of the Hague District Court in Urgenda Foundation v Kingdom of the Netherlands

The Dutch Court of Appeal (the “Court”) has upheld the 2015 decision of the Hague District Court in the case of Urgenda Foundation v Kingdom of the Netherlands, and ruled that the State (ie the Kingdom of the Netherlands) has a duty of care under Articles 2 and 8 ECHR to its citizens to reduce greenhouse gases by at least 25%, relative to the 1990 emission level. All of the defences raised by the State were dismissed.

In its decision the Court stressed that immediate action is required, noting that the later actions are taken to reduce emissions, the more ambitious measures will need to be in the future. In addition, the court held that the State cannot hide behind the EU level reduction target of 20% by 2020, especially as the EU as a whole is expected to achieve a reduction of 26-27% in 2020.

The Court held that by not taking action to reduce emissions by at least 25% by end-2020 the State fails to fulfil its duty of care to its citizens pursuant to Articles 2 and 8 ECHR. A reduction of 25% should be considered a minimum as recent insights about an even more ambitious reduction in connection with the 1.5°C target have not even been taken into consideration.

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Bear Creek Mining Corp. v. Peru: the potential impact on damages of an investor’s contributory action and failure to obtain a social license

In an award dated 30 November 2017 (the “Award“), an ICSID Tribunal ordered Peru to pay around US$30.4million to Canadian company Bear Creek Mining (the “Claimant“) following its finding that a 2011 decree (“Decree 032“) constituted an unlawful indirect expropriation of the Claimant’s right to operate the Santa Ana mine (the “Project“).

This post discusses the disagreement between Karl-Heinz Bockstiegel (the president of the tribunal) and Michael Pryles (appointed by the Claimant) (together, the “Majority“), and Prof. Philippe Sands QC (appointed by Peru), on the assessment of damages. Prof. Sands considered that the damages should be reduced due to contributory fault on the part of the Claimant.

The impact the Claimant’s conduct had on the Tribunal’s calculation of damages was, in any case, significant. Given the extent of, and reasons for, the opposition to the Project by the time of Decree 032, the Tribunal thought a hypothetical purchaser would not have obtained the necessary ‘social license’ to proceed with the Project. Ultimately it awarded the Claimant only a fraction of the US$522 million claimed. The reduced damages award emphasises the importance of respect for human rights and engagement with indigenous communities by investors.

The respective views expressed by the arbitrators concerning the Claimant’s conduct are also interesting in light of the broader debate about the relevance of the human rights of non-parties in investor-state arbitration.

An overview of the overall Award can be found in the post published on 16 December 2017 on the Kluwer Arbitration Blog. Continue reading

3rd EFILA annual conference 2018: parallel states’ obligations in investor-state arbitration – 5 February 2018, London

The European Federation for Investment Law and Arbitration (EFILA) will be holding its third Annual Conference on 5 February 2018 at the Senate House in London. The conference will focus on four topics:

  1. non-disputing third parties and their influence on arbitration;
  2. investment regulation and arbitration;
  3. human rights, environment and arbitration; and
  4. the proposed Investment Court System.

For more information and details on how to reserve a place, please see the conference flyer here. Continue reading

Urbaser v. Argentina and Burlington v. Ecuador: Investment arbitration is not over the counterclaims yet

Two recent decisions by tribunals have advanced the body of tribunal practice considering the issue of counterclaims by respondent states in investment treaty arbitration: Burlington Resources Inc. v. Ecuador, in which the tribunal awarded damages against the investor for breach of Ecuadorian environmental law in the performance of its investment, and Urbaser SA and Consorcio de Aguas Bilbao Bizkaia v. Argentina, in which the tribunal accepted jurisdiction to hear Argentina's counterclaim asserting that the investor had violated international human rights obligations. These decisions arise in the context of conceptual challenges to the pursuit of counterclaims in investment arbitration.

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Herbert Smith Freehills joins UN Global Compact

Herbert Smith Freehills is pleased to announce today that it has officially joined the United Nations Global Compact, the world's largest global corporate sustainability initiative. This commits Herbert Smith Freehills to supporting and implementing the ten principles of the Global Compact on human rights, labour, environment and anti-corruption and requires the firm to publish a Communication on Progress every year, which will describe how the firm has sought to implement these principles. 

As part of its commitment to supporting and implementing the ten principles, Herbert Smith Freehills will:

  1. participate and engage with the Global Compact Local Networks in its main countries of operation;
  2. continue with and build on its work supporting NGO's, charities, and developing country governments through its Pro Bono & Citizenship programme; and
  3. take steps to encourage its clients, suppliers, sub-contractors and other business partners to observe standards similar to those of Herbert Smith Freehills.

Sonya Leydecker, Chief Executive Officer said: " We are delighted to become a signatory to the UN Global Compact.  This is a great initiative which has revolutionised the way in which companies conduct their business to act responsibly and keep their commitments to society. Joining reinforces Herbert Smith Freehills' commitment to the ideals underlying the Compact.  The firm will continue to enhance its business practices in line with the Compact and contribute to the broader dialogue to help achieve the UN's goal of global corporate sustainability" 

Launched in 2000, The Global Compact is the world’s largest global corporate sustainability initiative, with over 8,000 companies and 4,000 non-business participants based in over 160 countries. The initiative is a call to companies everywhere to voluntarily align their operations and strategies with ten universally accepted principles in the areas of human rights, labour, environment and anti-corruption.  To this end, participants across industries are changing the way they operate to implement responsible practices and developing innovative solutions to address poverty and inequality, and support education, health and peace, to name just a few areas.

For more information, please visit https://www.unglobalcompact.org/ or contact Carl Philip Brandgard.

Sonya Leydecker
Sonya Leydecker
Chief Executive Officer
++44 20 7466 2337

Doing business in Africa: human rights and crisis management

Stéphane Brabant, Partner, and Yann Alix, Senior Associate, have published an article on doing business in Africa, focussing on the need for investors taking a long-term view to consider human rights implications and crisis management. To read the full article please click here.

This article was first published in African Banker, Issue 33, 3rd quarter 2015.

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Business, human rights, and extraterritoriality in American law

Beyond Borders: Non-US plaintiffs continue to make inroads towards holding multinational corporations liable under US law for alleged human-rights violations occurring beyond US borders. How can that be?

The Alien Tort Claims Act (ATS) is an eighteenth-century statute that gives federal courts jurisdiction to hear tort claims by non-US plaintiffs for violations of international law committed outside the territorial boundaries of the US. This statute was originally intended to allow a federal cause of action against the predations of US-based privateers on the high seas. Today, it is increasingly being used in an effort to hold corporations doing business on a transnational basis liable for alleged human-rights abuses.

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Indonesia to publish human rights guidelines for businesses

The Jakarta Post has reported that Indonesia’s National Commission for Human Rights (Komnas HAM) is preparing a national action plan containing guidelines aimed at prevent human rights abuses by business actors.  According to the Jakarta Post, Komnas HAM considers that traditional corporate social responsibility activities are “too charity-based” and “the action plan is being prepared to make companies responsible for the negative impacts resulting from their operations”. 

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The human right to water: defences to investment treaty violations

At times, and for a variety of reasons, states will regulate the market in the furtherance of public-policy objectives—including to implement specific human rights obligations. Where investment agreements are in place, these kinds of measures may trigger an investor’s claim for breach by the state of its treaty obligations. Over the course of the last few decades, these hitherto distinct areas of international law protecting international investment on the one hand, and human rights on the other, have intersected with increasing regularity. Investment arbitration tribunals tasked with adjudicating a state’s conduct vis-a`-vis its treaty obligations are now engaging in in-depth analyses of international human rights issues, including questions of applicability and substance. This article charts the development of the ‘right to water’ as a stand-alone human right in international legal jurisprudence and examines the future implications arising from key international policy developments.

A link to the full article is here.

The article is published in Arbitration International, the official journal of the London Court of International Arbitration (pub. OUP).

For further information, please contact Bree Farrugia, Senior Associate or your usual Herbert Smith Freehills contact.

Bree Farrugia
Bree Farrugia
Senior Associate
+81 3 5412 5471