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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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

The importance of human rights due diligence for businesses: International Criminal Court asked to investigate allegations of land grabbing in Cambodia

On 7 October 2014 a communication was filed with the International Criminal Court (“ICC”) asking the Prosecutor to investigate the alleged commission of crimes against humanity pursuant to a State policy of systematic and widespread ‘land grabbing’ in Cambodia (the “Communication”). The Communication argues that the alleged policy of land grabbing involved crimes of forcible transfer, murder, illegal imprisonment, other inhumane acts and persecution.

The Communication follows recent complaints brought against companies for alleged involvement in illegal land grabs in Cambodia, including via litigation in the English courts and the National Contact Point mechanism established in connection with the OECD Guidelines for Multinational Enterprises. This trend highlights the importance for businesses to conduct thorough due diligence to identify the risk of being involved in or linked to human rights abuses or national or international crimes when investing in or working with suppliers in emerging markets and high risk countries.

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Recent developments in US legislation on modern slavery

The recent introduction of the Federal Business Supply Chain Transparency on Trafficking and Slavery Bill (H.R. 4842) on 11 June 2014 (the “Bill”) is the U.S. government’s latest initiative in developing its approach towards human rights protections in business. The Bill builds on the California Business Supply Chain Transparency on Trafficking and Slavery Act, which came into force in January 2012 and only applies to retailers and manufacturers doing business in California. Under the Bill, all companies with worldwide annual gross receipts exceeding $100 million, and which are currently required to file annual reports with the Securities and Exchange Commission, are to disclose what measures, if any, they have taken to identify and address conditions of forced labour, slavery, human trafficking and the worst forms of child labour[1] within their supply chains,[2] whether within the US or abroad. These reporting obligations are designed to encourage the adoption of internal policies and processes by exposing businesses to scrutiny. They also incentivise businesses by empowering consumer groups with greater information on companies’ human rights behaviour. In addition to complementing existing US legislation prohibiting human trafficking and forced labour in relation to federal procurement contracts, the Bill is consistent with other initiatives around the world to curb forced labour.

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Towards a Treaty on Business and Human Rights?

The Human Rights Council has adopted a resolution establishing a new working group with a mandate to elaborate “an international legally binding instrument on transnational corporations and other business enterprises with respect to human rights”. In this note, we briefly summarise the background to the resolution and its implications for the future of the business and human rights agenda at the UN.

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European Commission publishes employment and recruitment sector guide: Corporate responsibility to respect human rights

The European Commission has published guidance for the employment and recruitment sector on meeting the corporate responsibility to respect human rights under the UN Guiding Principles on Business and Human Rights (UNGPs). The guidance sets out the steps required under the UNGPs to “know and show” a respect for human rights and has translated this into the particular context of employment and recruitment agencies.

The guidance is of relevance not only to employment and recruitment agencies, but to all companies globally, who rely on agencies for the recruitment of direct hire employees or the supply of workers. The sector guide will be particularly relevant for personnel engaged in corporate governance, ethics and compliance or human resources functions, and those whose role includes managing business relationships with employment and recruitment agencies. It is also intended to be helpful to groups who are interested in promoting respect for human rights in this business sector, including trade unions.

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European Commission publishes oil and gas sector guide: corporate responsibility to respect human rights

The European Commission has published guidance for companies in the oil and gas sector on meeting the corporate responsibility to respect human rights under the UN Guiding Principles on Business and Human Rights (UNGPs). The guidance sets out the steps required under the UNGPs to “know and show” a respect for human rights and translates this into the particular context of the oil and gas sector.

The guidance is of relevance to all companies globally in the oil and gas sector. The sector guide will be particularly relevant for personnel engaged in corporate governance and ethics and compliance functions, and whose role includes managing business relationships with contractors, suppliers and joint venture partners. It is also intended to be helpful to groups who are interested in promoting respect for human rights in this business sector, including governments, industry associations, NGOs and trade unions. The guidance builds on a draft published for public consultation in December 2012 (see our e-bulletin on the draft guidance here) and focuses on upstream activities, albeit not exclusively.

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Equator Principles III released

The Equator Principles Association (EPA) has released the third version of the Equator Principles (EPs) for managing environmental and social risks in financing projects. They are largely the same as the draft EPs released for public consultation in August 2012 (see our e-bulletin here which discusses the draft in detail), but there have been some changes of which lenders and borrowers should be aware, particularly in relation to express exclusions of certain financial instruments from scope, relaxed public disclosure requirements, and human rights due diligence. The new EPs will come into effect on 4 June 2013, but the EPA will allow the previous version of the EPs to be used where the arrangement mandate is signed before the end of 2013.

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