BUSINESS AND HUMAN RIGHTS / Šturma, Mozetic (eds)

BUSINESS AND HUMAN RIGHTS

Pavel Šturma Vinícius Almada Mozetic (eds.) et al.

2018

Scientific reviewers: Prof. JUDr. Mahulena Hofmann, CSc. (University of Luxemburg)

Papers presented by Czech scholars were supported by Charles University in Prague research projects No. UNCE/HUM/011, UNCE “Research Centre for Human Rights”.

Bibliografische Information der Deutschen Nationalbibliothek Die Deutsche Nationalbibliothek verzeichnet diese Publikation in der Deutschen Nationalbibliografie; detaillierte bibliografische Daten sind im Internet über http://dnb.dnb.de abrufbar. Bibliographic information published by the Deutsche Nationalbibliothek The Deutsche Nationalbibliothek lists this publication in the Deutsche National- bibliografie; detailed bibliographic data are available on the Internet at http://dnb.dnb.de.

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ISBN 978-3-946915-21-8

TABLE OF CONTENTS

INTRODUCTION

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PART I. INTERNATIONAL LAW FRAMEWORK

1. Human rights and international investment law Pavel Šturma

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2. The intrinsic connection between human rights and the 2030 Agenda in the context of transnational areas towards international business Rafael Burlani, Marcos Leite Garcia 26 3. Indirect obligations of business entities under Article 8 of the European Convention on Human Rights Alla Tymofeyeva 37 4. The OECD Guidelines for Multinational Enterprises and the increasing relevance of the system of National Contact Points Ondřej Svoboda 52 5. United Nations Human Rights Treaty Bodies’ Approach to States’ Obligations in the Context of Business Activities Ivana Machoňová Schellongová 64 PART II. HUMAN RIGHTS CHALLENGES 6. Democracy and the rule of law: judicial activism in Brazil as a challenge for fundamental social rights Lenio Streck 79 8. Entrepreneurial adverse impacts on human right to social security: a discussion upon concerns set forth in sensitive international standards Carlos Luiz Strapazzon 103 9. Governance, business, and human rights: reflections about the prohibition of social retrogression in social service deliverance in case of economic crisis Rogério Luiz Nery da Silva, Cristiane Brum dos Santos 115 7. Land grabbing as a human rights challenge Martin Faix 92

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PART III. CONSTITUTIONAL FRAMEWORK FOR NATIONAL IMPLEMENTATION OF HUMAN RIGHTS 10. Business Corporations and the Constitutionalization of Private Law Pavel Ondřejek 129 11. Business and the building of women’s labour market in Brazil through affirmative action measures Narciso Leandro Xavier Baez, Thaís Janaina Wenczenovicz 138 12. The European Union and its Member States and the implementation of the UN Guiding Principles on Business and Human Rights Jitka Brodská , Harald Ch. Scheu 152 13. Czech National Action Plan for Business and Human Rights Martin Archalous 166 PART IV. CORPORATE SOCIAL RESPONSIBILITY AND LABOUR LAW 14. Legal aspects of Corporate Social Responsibility – selected examples from the Czech Republic Jana Ondřejková 173 15. Right to Privacy vs. Employer’s Big Brother Practises Martin Štefko 178 16. Fundamental right to privacy and nominal publication of public servants’ remuneration: analysis of understanding STF NO Re N. 652.777/SP Jeferson Osvaldo Vieira , Vinícius Almada Mozetic 187 PART V. BUSINESS AND HUMAN DIGNITY 17. Selling and owning human body parts in the light of human rights: the ideal and the current practice Petr Šustek, Martin Šolc 201 18. The obstetric violence to protect women’s rights and the healthcare business issues Janaína Reckziegel , Cassiane Wendramin 209

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PART VI. BUSINESS AND HUMAN RIGHTS IN THE INFORMATION SOCIETY 19. The protection of personal and sensitive data of the employee in the Brazilian legal system Rodrigo Goldschmidt , Beatriz de Felippe Reis 20. Predatory effects of corruption on the market and civil society: some indicators Rogério Gesta Leal

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LIST OF SOURCES

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ABOUT THE CONTRIBUTORS Pavel Šturma , Professor, JUDr., DrSc., is Professor and head of the Department of International Law, Charles University (Prague), Faculty of Law, Senior Research Fellow at the Institute of Law, Czech Academy of Sciences, and member of the UN International Law Commission (Geneva). He also coordinates the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University (research project No. UNCE/HUM/011). Vinícius Almada Mozetic , PhD., is Post-doctoral researcher in law, University of Vale do Rio dos Sinos – UNISINOS; Professor and member of the research group of Master of Laws, University of West Santa Catarina – UNOESC at Chapecó (Material and Effectiveness Dimensions of Fundamental Rights). Martin Archalous , Mgr., is Lawyer and Master in Law from Charles University in Prague. He worked as the secretary of Business and Human Rights Working Group at the Office of the Government of the Czech Republic. Narciso Leandro Xavier Baez, PhD., LL.M., is Chief Academic Officer at the “Excellence Centre in Law” and the LL.M Degree in Law at “Universidade do Oeste de Santa Catarina” and a Federal Judge (4th Region) since 1996. Jitka Brodská , Mgr., is Deputy Director at the Ministry of Foreign Affairs of the Czech Republic (Department of Human Rights), and PhD. candidate at Charles University in Prague. Cristiane Brum dos Santos is Master’s student at the University of Western Santa Catarina – UNOESC (Brazil) and servant of the Federal Regional Court of the 4th Region. Rafael Burlani is Lawyer, Master and PhD. from UFSC. Permanent Professor of the Professional Master in Management of Public Policies of the University of Vale do Itajaí (UNIVALI), Collaborating Professor of the Professional Master in Administration – Management, Internationalization and Logistics of UNIVALI, Professor of CEJURPS at UNIVALI and member of the UNIVALI ODS Nucleus. Martin Faix , JUDr., PhD., MJI, is Senior Lecturer of International Law and a member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University in Prague and Senior Lecturer of International Law at the Palacký University in Olomouc, Czech Republic. He serves also as alternate member for the Czech Republic in the Management Board of the EU’s Fundamental Rights Agency. Beatriz de Felippe Reis is Master’s student in law of PPGD/UNESC and specialist in Labor Law by UNISINOS. He graduated in Juridical and Social Sciences by UFRGS. He is also Judiciary Analyst of TRT4. Rogério Gesta Leal is PhD. in Law from UFSC and UBA, Professor of UNISC and FMP and Judge of the Court of Justice of the State of Rio Grande do Sul, holder of the Fourth Criminal Chamber, which judges crimes committed by Mayors and Councilors and Crimes against Public Administration.

Rodrigo Goldschmidt is Post-Doctor in Law by PUC/RS. Doctor of Law fromUFSC. Teacher and Researcher of PPGD – Master in Law – UNESC. Labor Judge of TRT12. Marcos Leite Garcia is PhD. in Law from the Complutense University of Madrid, Spain. Professor of the Stricto Sensu Postgraduate Program in Legal Science, Master’s and Doctorate courses and the law degree from the University of Vale do Itajaí (UNIVALI). Rogério Luiz Nery da Silva , PhD., is Post-doctorate in Law, Université de Paris X (France) and Fordham University School of Law (New York, USA). Full Professor at the University of Western Santa Catarina (UNOESC-BRAZIL) and postdoctoral candidate student at the Federal University of Santa Catarina (UFSC). Doctor in Law (UNESA) and Master in Law (UNIG). He is also Professor at the School of Magistrates of the State of Rio de Janeiro (EMERJ) and Professor at the Public Ministry School Foundation of Rio de Janeiro (FEMPERJ). Pavel Ondřejek, JUDr., PhD., is Senior Lecturer at the Department of Legal Theory, Charles University (Prague), Faculty of Law, and member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Jana Ondřejková , JUDr., PhD., is Senior Lecturer at the Departemnt of Political Sciences and Sociology of Law, Charles University (Prague), Faculty of Law, and a member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Janaína Reckziegel is PhD. in Fundamental Rights and New Rights from University Estácio de Sá – RJ. Master in Public Law and University Professor and Researcher of the Post-Graduate Program in Law at the University of Western Santa Catarina – UNOESC. Ivana Machoňová Schellongová, JUDr., D.E.A., is Human Rights Officer in the Human Rights Treaties Branch of the Office of the High Commissioner for Human Rights (OHCHR). She is also a lecturer of the international human rights law in the Webster University in Geneva and PhD. candidate at Charles University in Prague. Harald Christian Scheu, Dr.iur., Mag., PhD., is Associate Professor at the Department of European Law of the Faculty of Law, Charles University (Prague) and member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. He serves also as member for the Czech Republic in the Management Board of the EU’s Fundamental Rights Agency. Carlos Luiz Strapazzon is Professor of Constitutional Law. Professor of the Fundamental Rights Program at the Western University of Santa Catarina State School of Law, UNOESC, in Chapecó-SC State, Brazil and Professor of Constitutional Law at University Positivo School of Law in Curitiba, Paraná State, Brazil. He was also Editor- in-Chief of the EJJL (2011-2016). Lenio Luiz Streck is Post-doctorate in Law from the University of Lisbon, Master and PhD in Law from the Federal University of Santa Catarina. Full Professor of the Graduate Program in Law (Master and Doctorate) of the University of Vale dos Rio dos Sinos, Collaborating professor of Estácio de Sá University, Università degli Studi

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Roma Tre and Faculty of Law of the University of Coimbra. Former Attorney General of Rio Grande do Sul. Ondřej Svoboda , Mgr. , is Master in Law and PhD. candidate at the Department of International Law, Charles University in Prague, and member the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. He works at the Ministry of Industry and Trade of the Czech Republic. Martin Šolc , JUDr., Mgr., is PhD. student at the Department of Civil Law and the Centre for Medical Law of the Faculty of Law, Charles University, and member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Martin Štefko , JUDr., PhD., is Associate Professor at the Department of Labour Law of the Faculty of Law, Charles University (Prague) and a former member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Petr Šustek , JUDr., PhD., is Senior Lecturer at the Department of Civil Law and coordinator of the Centre for Medical Law of the Faculty of Law, Charles University (Prague) and member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Alla Tymofeyeva , JUDr., Mgr., PhD., is Senior Lecturer at the Department of International Law of the Faculty of Law, Charles University (Prague) and member of the Centre of Excellence – Research Centre for Human Rights (UNCE) at Charles University. Jeferson Osvaldo Vieira is Master and member of the research group on Civil Rights of the Postgraduate Program in Law of the University of Western Santa Catarina. Lecturer in the law degree course at the University of Western Santa Catarina. Magistrate of the Court of Santa Catarina. Thaís Janaina Wenczenovicz is Assistant lecturer and Senior Researcher at the State University of Rio Grande do Sul / UERGS, Professor in the Postgraduate Program in Education / UERGS, Assistant Professor in the Stricto Sensu Post-graduation Program in Education of the State University of Paraná – UNIOESTE, Collaborating professor in the Stricto Sensu Post-Graduation Program in Fundamental Rights / UNOESC, Evaluator of INEP – BNI ENADE / MEC, Member of the Global International Committee on Media and Gender (GAMAG) – UNESCO and Leader of the Research Group CNPq / UERGS Human Rights and Justice: decolonial perspectives. Cassiane Wendramin is Master in Law at the University of Western Santa Catarina (UNOESC).

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INTRODUCTION This book is the new outcome of the continuing project of cooperation between Charles University in Prague, Faculty of Law (in particular its Research Centre for Human Rights, UNCE) and the University of West of Santa Catarina (Universidade do Oeste de Santa Catarina, Unoesc) in Joaçaba, SC, Brazil. The project is in line with the new research strategy of Charles University in Prague, which seeks to promote internationalization of research, including the cooperation with universities in Latin America and the Far East. The cooperation between the CU Faculty of Law and the Unoesc was established in the beginning of 2014, on the occasion of the research stay and lecture of Professor Vinicius Mozetic in Prague. The next step was the agreement to co-organize two conferences and publications on the subject of International and Internal Mechanisms of Fundamental Rights. The first took place in October 2014 in Joaçaba, SC. The second took place in October 2015 at the CU Faculty of Law, in Prague. The next conference on the topic of “Business and Human Rights” was organized by the Research Centre (UNCE) at the CU Faculty of Law in Prague in November 2017. Some chapters develop, in a largely amended and expanded manner, the ideas presented at the 2017 Prague conference. However, the publication is not just a collection of the papers presented at the conference. Instead, it is a self-contained book which includes chapters written by professors and researchers from the CU Faculty of Law and the Unoesc and/or other universities in Brazil. The edited book contains 11 Czech and 9 Brazilian contributions. The chapters by Czech authors were written in English; those by Brazilian authors were translated from Portuguese. The book appears in 2018 when we commemorate the 70 th anniversary of the Universal Declaration of Human Rights (1948). It is a foundational document, marking the modern turn to individual human rights. In spite of its non-binding form (United Nations General Assembly resolution), it sets the basic catalogue of human rights which would be later developed in treaty instruments, both general and specialized. In addition and with reference to the subject of this book, the Universal Declaration also distinguishes itself from later instruments in two important aspects. First, it does not separate yet civil and political rights from economic, social and cultural rights. Second, it also reminds the social context and human obligations as a corollary to human rights. In particular, Article 28 provides that “Everyone is entitled to a social and international order in which the rights and freedoms set forth in this Declaration can be fully realized.” This may be also interpreted in terms of positive obligations of States and even in terms of sustainable development. Next, Article 29 (para. 1) sets forth that “everyone has duties to the community in which alone the free and full development of his personality is possible.” This seems to be of special importance for the research in the topic of business and human rights, where the applicability of major human rights treaties is open to questions. The book takes inspiration from the Universal Declaration and tries to articulate questions and to give answers to many complex problems of human rights in the contemporary society.

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This book differs from many other publications on business and human rights at least in two important points. First, it addresses the topic not only from the point of view of international law but also from constitutional, European and comparative perspectives. Indeed, the topic of business and human rights is a multi-facet problem. It includes various aspects of public and private law. Second, this book aims at discussing the relevant issues of business and human rights on the basis of the existing law (lex lata), both international and internal, and its interpretation by international and national judicial bodies. It does not intend to develop abstract ideas on the possible international legal personality of transnational corporations and other business entities. Those ideas are very challenging in theory and very difficult for implementation in practice. Neither the book wants to comment on preliminary drafts of a UN treaty on transnational corporations and other business enterprises with respect to human rights, which seems to be the project with an uncertain end that has already caused a sharp division between developing countries and developed countries. The chapters are divided into six parts: starting from the international law framework (I.), going to human rights challenges (II.), constitutional framework of national implementation of principles on business and human rights (III.), the concept of Corporate Social Responsibility and implications in labour law (IV.), to the issues of business and human dignity (V.), and business and human rights in information society (VI.). On the Czech side, the authors are mostly professors and junior collaborators (researchers and PhD. candidates) of the Research Centre for Human Rights (UNCE), being specialists in international law, European law, constitutional law, but also other fields of public and private law, including civil law, and labour law. While they work in different departments of the Faculty of Law, they share the interest in human rights protection. On the Brazilian side, most of the authors, in particular Professor Mozetic, Professor Baez, Professor Nery da Silva and Professor Strapazzon, come from the University of West Santa Catarina, some others are fellows of other academic institutions in Brazil. They also cover a wide range of fields in public and private law, including constitutional law, civil law, social law, and the legal aspects of Internet and information society. In spite of different perspectives of the Brazilian and Czech authors, the book aims at presenting their views on various aspects of human rights in business activities. Both Brazil and the Czech Republic are more than just emerging markets that feature a very dynamic economic growth. For over 25 years, they have been new democratic states, attached to the rule of law and human rights. Taking human rights seriously means to streamline them into all legal branches in our countries, as well as in both vertical and horizontal relations. The book has benefited from the reviews by Prof. Dr. Mahulena Hofmannová, as well as from the very careful technical proofreading by Mr. Charles Bird, J.D., LL.M. We would like to sincerely thank them on behalf of all of the co-authors. Prague – Joaçaba, November 2018

Professor JUDr. Pavel Šturma, DrSc. Professor Dr. Vinícius Almada Mozetic

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Part I.

INTERNATIONAL LAW FRAMEWORK

1 Human Rights and International Investment Law

Pavel Šturma*

1. Introduction Business and investment are usually treated separately from human rights. There is no love at first sight between bilateral investment treaties (BITs) and other international investment agreements (IIAs) and human rights. In fact, such agreements do not mention human rights at all, or do so in a cursory way only, which also has an influence on the decisions of investment arbitration tribunals. First, individuals or groups of individuals whose human rights are at stake usually do not have standing in arbitrations between an investor and a host State. Second, defendant States rarely invoke human rights considerations, even if they have obligations arising from universal or regional conventions on human rights. In the absence of human rights provisions in IIAs, States can usually invoke other defences, if possible. This is due to various reasons, which can be partly explained by a growing specialization, compartmentalization, or fragmentation of contemporary international law. Indeed, international investment law is a branch of international law, which differs in many aspects from human rights law. These branches, namely the respective multilateral or bilateral treaties and agreements, include different sets of rights and obligations. They address two, at least partly, different holders of rights and obligations. This is in spite of the fact that both IIAs and human rights treaties impose obligations on States and provide for rights of individuals, natural, or legal persons. It is even possible to argue that both of them aim at protecting similar, if not the same individual rights, namely the right to property, the right to a fair and non-discriminatory treatment, and certain procedural rights, like the access to courts, etc. However, IIAs and human rights treaties operate in quite a different way. States owe human rights to all individuals, human beings in their territory or under their jurisdiction or control. There is no requirement of nationality and no reciprocity. The correlative obligations of States operate erga omnes , or more precisely erga omnes partes . In addition, the control and enforcement of human rights, by way of international courts or quasi-judicial bodies, are based on both inter-state and individual complaints. Depending on the specific treaty regimes, not only States but also individuals, groups of individuals, and NGOs have standing. The international instruments include a large catalogue of rights and freedoms, including possible general or right-specific exceptions and limitations. This makes it possible to apply human rights not in an absolute manner but rather balance them against the other rights of other persons. * Professor, JUDr., DrSc., head of Department of International Law, Charles University (Prague), Faculty of Law, member, UN International Law Commission, and coordinator of the Research Centre for Human Rights (UNCE). The chapter bears partly on his article Public Goods and International Investments Law: Does the New Generation of IIAs Better Protect Human Rights?, Brill Open Law, 1 (2008), pp. 5-15.

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On the other hand, protection and promotion of investments, under BITs or some other IIAs, are based on the principle of reciprocity. Those agreements only protect investors and investments of one State party in the territory of the other State party. The respective treaty instruments usually provide for the rights of investors and the obligations of States. They also allow, in a more or less express way, for asserting certain rights of the host State, representing public interests, but they generally disregard other persons and their rights. Nevertheless, human rights can be viewed as a kind of global public good. As such, they can be used, directly or indirectly, as defences where appropriate. To be able to do so, States should take care in drafting BITs and other IIAs. It seems that a certain disbalance in favour of private interests (investors and their investments) and against general interests has been widely recognized. The situation has started to change, in particular over the past ten years. It is certainly a response to a growing backlash against international law and arbitration. In addition to some arbitral decisions, some new model BITs and new IIAs are drafted in a more balanced way. These agreements also include sometimes questioned mega-regionals, such as the Comprehensive Economic and Trade Agreement (EU-Canada, CETA), 1 or the project of the Transatlantic Trade and Investment Partnership (EU-US, TTIP), etc. In particular, the public consultation on the Investment chapter of theTTIP, organized by the European Commission in 2014, revealed the above-mentioned backlash. 2 Based on the results of this consultation, the EC presented its concept paper “Investment in TTIP and beyond – the path for reform. Enhancing the right to regulate and moving from current ad hoc arbitration towards an Investment Court”. 3 As it appears from the title, the EC revisited its existing investment policy. It focused not only on the replacement of the traditional model of the investor-State dispute settlement (ISDS) by an Investment Court but also on further enhancing the right to regulate. 2. Indirect protection of human rights through the incorporation of public goods and interests in IIAs The key question is whether new developments in the field of international investment law are capable of contributing to a better protection of human rights. This question is not an easy one, in particular because of the diversity of the IIAs and a scarcity of the express provisions on human rights or similar concepts. Such an outcome can be reached by more ways, including more detailed and specific drafting of certain absolute standards of treatment (such as the fair and equitable 1 EU-Canada Comprehensive Economic and Trade Agreement (CETA), consolidated version of all chapters (http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf). 2 European Commission, Report: Online public consultation on investment protection and investor-to- state dispute settlement (ISDS) in the Transatlantic Trade and Investment Partnership Agreement (TTIP), SWD (2015) 3 final, Brussels, 13 January 2015, available at http://trade.ec.europa.eu/doclib/2015/ january/ tradoc_153044.pdf . 3 European Commissioner for Trade, Concept Paper, Investment inTTIP and beyond – the path for reform. Enhancing the right to regulate and moving from current ad hoc arbitration towards an Investment Court, 5 May 2015, available at http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.pdf .

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treatment clause, FET), delimiting measures which constitute or do not constitute an indirect expropriation and other means. Particular attention is to be paid to articles by which States parties reaffirm their right to regulate with a view of legitimate policy objectives, such as the protection of public health, security, environment, public morals, social or consumer protection, or the promotion and protection of cultural diversity. As a matter of example, it is possible to mention certain provisions of CETA and some bilateral treaties. They do not usually include specific chapters or provisions on human rights. In spite of that, human rights are in fact covered, indirectly, by several chapters and articles aiming at the protection of various public goods and interests. First, they are included in provisions on General Exceptions, which are often modelled after the example of Article XX of the GATT. E.g., IIAs such as Article 18 of the Canadian Model BIT, 4 Article 24 of the Norway draft BIT 5 or Article 28.3 of the CETA, 6 nothing in this Agreement shall be construed to prevent a Party from adopting or enforcing measures necessary “to protect human, animal or plant life or health”. Although human rights are not expressly spelled out, there is little doubt that such protection relates to the right to life and the right to health. Second, many recent BITs and other IIAs include more explicit provisions on the right of a host State to regulate matters of general interest or to pursue legitimate policy objectives. E.g., Article 8.9 of the CETA or Article 2 of the Investment chapter of the draft TTIP say that the Parties reaffirm their right to regulate within their territories legitimate policy objectives, such as the protection of public health, safety, the environment or public morals, social or consumer protection, or the promotion and protection of cultural diversity. Such a right also appears in some new BITs, including the new 2016 Czech Model BIT, Article 12 (Investment and regulatory measures/objectives). 7 In para. 1, this article enumerates the same legitimate policy objectives which appear in the CETA and other IIAs. Moreover, Article 12(2) puts that, for greater certainty, “the provisions of this Agreement shall not be interpreted as a commitment from a Contracting Party that it will not change the legal and regulatory framework”. On balance, it is fair to admit that most Czech BITs are from 1990s or the early years of the new century and do not include such provisions. This is typical for most of older BITs, including those of Argentina and other frequently suited countries, which are still in force and are used as a basis for investment arbitrations. Third, additional and more specific human rights, in particular social rights, can be identified in other chapters or articles of some IIAs dealing with trade and/or investment 4 Art. 18 (General Exceptions), Canadian Model BIT (2012): “1. For the purpose of this Agreement: (a) a party may adopt or enforce a measure necessary: (i) to protect human, animal or plant life or health, …” 5 Art. 24 (General Exceptions), Norway’s Draft Model Treaty. Cf. TITI, A., The Right to Regulate in International Investment Law (Baden-Baden: Nomos, 2014), s. 174. 6 EU-Canada Comprehensive Economic and Trade Agreement (CETA), consolidated version of all chapters (http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf). 7 See the text available at: http://www.mfcr.cz/assets/cs/media/Vzor_Vzorova-dohoda-o-ochrane-zahranicnich- investic.docx.

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and labour. For example, let us mention the CETA Chapter 23. In addition to the right to regulate and to provide for and encourage high levels of labour protection (recognized in Article 23.2), the Parties affirm, in Article 23.3, 8 their commitment to respect, promote, and realize the fundamental principles and rights at work in accordance with the obligations of the members of the ILO and the commitments under the ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up of 1998. 9 Furthermore, each Party shall ensure that its labour law and practices promote the objectives included in the ILO Decent Work Agenda, and in accordance with the ILO Declaration on Social Justice for a Fair Globalization of 2008 adopted by the International Labour Conference at its 97th Session. 10 Fourth and more specifically related to the obligations of non-state actors to respect human rights, a few IIAs also introduce the concept of Social Corporate Responsibility. As it is well known, traditional BITs include only rights of investors and obligations of host States. Such agreements have been criticized and rightly so. 11 The first new proposals and model agreements on investment and sustainable development have been advanced by certain NGOs, such as the International Institute for Sustainable Development (IISD). 12 Later, such initiatives were taken over by international governmental organizations, such as the UN Conference on Trade and Development (UNCTAD). The UNCTAD Investment Policy Framework for Sustainable Development is a document dealing with model provisions for future IIAs. 13 The Section 7 of the UNCTAD Framework also includes a clause on duties of an investor. It may contain an obligation to respect the laws of the host State and a clause on the denial of rights under the given treaty if the investment is in conflict with the law of the host State. From the perspective of human 8 EU-Canada Comprehensive Economic and Trade Agreement (CETA), op. cit., pp. 184-185. 9 ILO Declaration on Fundamental Principles and Rights at Work and its Follow-up of 1998 adopted by the International Labour Conference at its 86th Session. Those rights include: (a) freedom of association and the effective recognition of the right to collective bargaining; (b) the elimination of all forms of forced or compulsory labour; (c) the effective abolition of child labour; and (d) the elimination of discrimination in respect of employment and occupation. 10 Art. 23.3, para. 2, EU-Canada Comprehensive Economic and Trade Agreement (CETA), op. cit., p. 185. Those rights include: (a) health and safety at work, including the prevention of occupational injury or illness and compensation in cases of such injury or illness; (b) establishment of acceptable minimum employment standards for wage earners, including those not covered by a collective agreement; and (c) non-discrimination in respect of working conditions, including those for migrant workers. 11 Cf. MUCHLINSKI, P., Negotiating New Generation International Investment Agreements. New Sustainable Development Oriented Initiatives. In: HINDELANG, S., KRAJEWSKI, M. (eds.), Shifting Paradigms in International Investment Law , More Balanced, Less Isolated, Increasingly Diversified (Oxford: OUP, 2016), p. 41 ff. 12 International Institute for Sustainable Development, Model International Agreement on Investment for Sustainable Development. Negotiators Handbook , 2 nd ed., IISD 2005 (revised 2006), see at : www.iisd.org/ pdf/2005/investment_model_int_agreement.pdf 13 UNCTAD Investment Policy Framework for Sustainable Development (2012), UN Pub. UNCTAD/ DIAE/ PCB/2012/5 (http://unctad.org/en/PublicationsLibrary/diaepcb2012d5_en.pdf ); and its new version, UN Pub. UNCTAD/WEB/DIAE/PCB/2015/3.

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rights bodies, the most relevant document is the Guiding Principles on Business and Human Rights, adopted by the UN Human Rights Council in 2011. 14 Even more importantly, however, the above-mentioned UNCTAD model agreement provides that a treaty may include a provision encouraging or requiring an investor to carry out a due diligence of human rights in the enterprise in accordance with the UN Guiding Principles. Moreover, investors may also be required to respect the standards of Corporate Social Responsibility (CSR). 15 It is interesting that clauses on CSR have been progressively incorporated into some recent bilateral treaties. For example, Norway’s draft model BIT of 2007 states in Article 32 that parties shall “encourage investors to conduct their investment activities in compliance with the OECD Guidelines for Multinational Enterprises and to participate in the United Nations Global Compact”. Similar concerns are reflected in the Preamble to the AustrianModel BIT (2011). The CanadianModel BIT also includes a provision (Article 16) on CSR providing that “each Party should encourage enterprises operating within its territory or subject to its jurisdiction to voluntarily incorporate internationally recognized standards of corporate social responsibility in their practices and internal policies, such as statements of principle that have been endorsed or are supported by the Parties. These principles address issues such as labour, the environment, human rights, community relations and anti-corruption.” Most recently, the CETA also incorporates a preambular paragraph in which Parties “encourage enterprises operating within their territory or subject to their jurisdiction to respect internationally recognised guidelines and principles of corporate social responsibility, including the OECD Guidelines for Multinational Enterprises, and to pursue best practices of responsible business conduct”. Having said that, the present contribution does not claim that the direct incorporation of reference to public goods in general (and human rights in particular) in the Preambles or operative provisions of new IIAs is the only way how to introduce them into international investment law. The argument is more nuanced. On one hand, this way seems to be preferable, as such black and white letters in the treaty can hardly be ignored by international arbitral tribunals. First, usual interpretative methods, namely the general rule of treaty interpretation (Article 31, para. 1, of the Vienna Convention of the Law of Treaties, 1969) 16 warrant giving effect to all rules and principles expressly written or referred to in a treaty. Second, the reference to specific rights and documents may limit uncertainty about which human rights are to be applied in the context of international investments. On the other hand, most IIAs in force are old BITs that do not usually contain any such preambular or operative clauses. It is also more likely to adopt labour and other 14 Guiding Principles on Business and Human Rights Implementing the United Nations ‘Protect, Respect and Remedy’ Framework; see www.ohchr.org/documents/issues/business/A.HRC.17.31.pdf . 15 See UNCTAD Investment Policy Framework 2012, p. 58; UNCTAD 2015, p. 107. 16 See Vienna Convention on the Law of Treaties (1969), 1155 UNTS, 331. Article 31 – General rule of interpretation: “1. A treaty shall be interpreted in good faith in accordance with the ordinary meaning to be given to the terms of the treaty in their context and in the light of its object and purpose.”

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rights in preferential trade and investment agreements than in the classical BITs. 17 And, even the more recent agreements, which already included some provisions of this kind, often use just exhortatory and non-binding language. It means that human rights and other public goods can make it into international investment law only slowly, by way of new treaty provisions. At best, such new agreements may reflect a new trend in IIAs but cannot, in and by themselves, change the prevailing content of international investment law. 3. Alternative (mostly interpretative) means However, there are also alternative ways of how to include human rights and other public goods or fundamental values into international investment law. They are different in nature and not equally reliable as to the outcome. Two of them have essentially interpretative character, while the third one relies on the procedural rules. First, human rights or public goods may be incorporated into the IIAs through subsequent agreements or subsequent practice, which establishes the agreement of the Parties regarding the interpretation of the treaty. 18 Such subsequent agreements or practice establishing the agreement on interpretation, if adopted by all Parties, reflect the “common understanding of the parties” and thus provide for the authentic means of interpretation of that treaty, even if these means do not necessarily imply a conclusive effect. 19 Although such subsequent agreements do not appear often in international investment law, they are not excluded. A notorious example is the interpretative declaration adopted by the NAFTA Free Trade Commission in 2001, on the meaning of the standard of fair and equitable treatment under Article 1105(1) of NAFTA. 20 However, this interpretation was generally accepted by investment tribunals, being rejected in the case Pope &Talbot , 21 but confirmed in the cases ADF Group 22 or Mondev . 23 Second, potentially the most powerful means of systemic integration of human rights, environmental agreements and other instruments aiming at protection of public goods, seems to reside in Article 31, para. 3(c), of the Vienna Convention, which requires 17 Cf. VAN DUZER, A., Sustainable Development Provisions in International Trade Treaties. What Lessons for International Investment Agreements? In: HINDELANG, S., KRAJEWSKI, M. (eds.), Shifting Paradigms in International Investment Law. More Balanced, Less Isolated, Increasingly Diversified (Oxford: OUP, 2016), p. 175. 18 See Article 31, para. 3: “There shall be taken into account, together with the context: (a) any subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions; (b) any subsequent practice in the application of the treaty which establishes the agreement of the parties regarding its interpretation; (c) any relevant rules of international law applicable in the relations between the parties.” 19 Cf. commentary to draft Conclusion 3 (Subsequent agreements and subsequent practice as authentic means of interpretation), in Report of the ILC, 2016 (A/71/10), pp. 118 ff., at 132-134. 20 NAFTA Free Trade Commission, 31 July 2001. Cf. YANNACA-SMALL, K., Fair and Equitable Treatment Standard: Recent Developments. In: REINISCH, A. (ed.), Standards of Investment Protection . Oxford: Oxford University Press, 2008, p. 114. 21 Pope &Talbot Inc. v. the Government of Canada, UNCITRAL, Award in Respect of Damages, 31 May 2002. 22 ADF Group Inc. v. USA, ICSID case No. ARB(AF)/00/1, Final Award, 9 January 2003, par. 179. 23 Mondev v. USA, ICSID case No. ARB(AF)/99/2, Award, 11 October 2002, par. 125.

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taking into account any relevant rules of international law applicable between the parties. However, although investment tribunals should generally apply the Vienna rules of treaty interpretation, including that of Article 31(3)(c), where appropriate, they often refuse to do so. The tribunal in Methanex , while rejected the investor’s claim, arrived at the conclusion without applying the Vienna rules on the interpretation of NAFTA provisions. Similarly, though with a pro-investor outcome, the tribunals in the cases Santa Elena 24 and Unglaube 25 did not even mention the obligations of Costa Rica to protect the natural environment under multilateral environmental treaties. In fact, most investment arbitration awards refer to decisions of other tribunals, but only few of them take into account subsequent agreements and subsequent practice or even any applicable rules of international law according to Article 31(3) of the Vienna Convention. 26 It means that, although not entirely absent in some arbitral awards, the Vienna rules on treaty interpretation do not play such a role as they could and should play. While the IIAs, unlike the WTO Agreement, do not expressly provide for such approach, they are international treaties governed by general international law, which also includes the rules on treaty interpretation. The tribunals should not just pay a lip service to the Vienna rules but approach interpretation as a single combined operation. Then all legally relevant aspects, including arguments based on a broader context of the IIAs, need to be considered. 4. Potential use of counterclaims in investment arbitration However, there are also other means beyond the means of interpretation of how to include non-economic considerations. As a matter of jurisdiction, an ICSID tribunal can accept the respondent’s counterclaim based on the alleged violation of human rights. Such a possibility arises from Article 46 of the ICSID Convention which provides: “Except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine any incidental or additional claims or counterclaims arising directly out of the subject-matter of the dispute provided that they are within the scope of the consent of the parties and are otherwise within the jurisdiction of the Centre.” 27 Until recently, however, ICSID or other tribunals did not accept jurisdiction over human rights counterclaims for a lack of sufficient legal or factual links between the main claim and the counterclaim. 28 For the first time, in the ICSID award in Urbaser 24 Companía del Desarollo de Santa Elena, S.A. v. Costa Rica, ICSID case No. ARB/96/1, Final Award, 17 February 2000. 25 Unglaube and Unglaube v. Costa Rica, ICSID case No. ARB/08/1 and ARB/09/20, Award, 16 May 2012. 26 Cf. BERNER, K., Reconciling Investment Protection and Sustainable Development. A Plea for an Interpretative U-Turn. In: HINDELANG, S., KRAJEWSKI, M. (eds.), Shifting Paradigms in International Investment Law , op. cit., pp. 188-203; ŠTURMA, P., BALAŠ, V., Ochrana mezinárodních investic v kontextu obecného mezinárodního práva [Protection of International Investment in the Context of General International Law], Praha: PF UK, 2012, pp. 46-47. 27 See the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965), at: https://icsid.worldbank.org/en/Documents/icsiddocs/ICSID%20Convention%20 English.pdf 28 See, e.g., Saluka v. Czech Republic, UNCITRAL case, Decision on Jurisdiction over the Czech Republic’s Counterclaim, 7 May 2004.

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v. Argentina (2016) 29 , the tribunal accepted jurisdiction over such counterclaim and integrated a human rights perspective into international investment law. The claimant, a shareholder in a concessionaire that supplied water and sewerage services in Buenos Aires, commenced arbitral proceedings for violations of the BIT between Spain and Argentina. The counterclaim filed by Argentina alleged that the concessionaire’s failure to provide the necessary level of investment in the business led to violations of the human right to water. The tribunal held that a sufficient connection between the main claim and the counterclaim was established by the manifest factual links between the claims and because the claims were “based on the same investment, or the alleged lack of sufficient investment, in relation to the same Concession”. 30 Arriving on the merits, the tribunal found, on the basis of examination of the arbitral clause, the applicable law clause and other provisions, that the BIT was not a closed system but it enabled the respondent to make a reference to certain legal sources external to the BIT. 31 The precedential decision of the tribunal has certain strong points. First, it found that although the claimant was a non-state actor, it could also bear human rights obligations in international law. Second, the tribunal referred to several human rights instruments, namely to the Universal Declaration of Human Rights (UDHR) and the International Covenant on Economic, Social and Cultural Rights (ICESCR), to establish human rights obligations associated with the right to water. 32 Furthermore, the tribunal also relied on the ILO Tripartite Declaration of Principles concerning Multinational Enterprises and Social Policy. Quite interestingly, the tribunal also used Article 30 of the UDHR and Article 5, para. 1, of the ICESCR 33 to conclude that in addition to human rights related to the right to water, there was also “an obligation on all parts, public and private parties, not to engage in activity aimed at destroying such rights”. 34 In the end, however, the counterclaim was not successful on the basis of the above interpretation of human rights obligations by the tribunal. It found the origin of the obligation related to the right to water in the concession contract. Next, as the human right to water provided a duty to perform, the only obligation was placed on the State. Consequently, the claimant’s obligation would be based in the concession contract or domestic law. 35 However, the tribunal did not have jurisdiction over matters related to Argentina’s domestic law.

29 Urbaser S.A., Consorcio de Aguas Bilbao Bizkaia, Bilbao Biskaia Ur Partzuergoa v. Argentina, ICSID case No. ARB/07/26., Award, 8 December 2016. Cf. also GUNTRIP, E., Urbaser v. Argentina: The Origins of a Host State Human Rights Counterclaim in ICSID Arbitration? EJIL: Talk! (10 February 2017).

30 Ibid., par. 1151. 31 Ibid., par. 1191. 32 Ibid., par. 1196-1107.

33 Art. 5(1): “Nothing in the present Covenant may be interpreted as implying… any right to engage in any activity or to perform any act aimed at the destruction of any of the rights or freedoms recognized herein.” 34 Urbaser v. Argentina, op. cit., par. 1199. 35 Ibid., par. 1208-1210.

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Nevertheless, the tribunal pointed out that “the situation would be different in case an obligation to abstain, like a prohibition to commit acts violating human rights, would be at stake. Such an obligation can be of immediate application, not only upon States, but equally to individuals and other private parties.” 36 However important a breakthrough the Urbaser decision was, we should not overestimate the role of counterclaims in investment arbitration. This possibility is based on Article 46 of the ICSID Convention and Rule 40 of the ICSID Arbitration Rules. 37 This seems to question the possibility for the host State to advance a counterclaim against the investor before ad hoc arbitration tribunals. However, even in the ICSID arbitration, as shown by the Gavazzi case, 38 the Tribunal may prefer the textual interpretation of the respective BIT. The Tribunal, by a majority decision, did not accept “that the right of the Host State to file a free-standing counterclaim in an investment treaty arbitration should be presumed unless expressly excluded by the BIT… Where there is no jurisdiction provided by the wording of the BIT in relation to a counterclaim, no jurisdiction can be inferred merely from the ‘spirit’ of the BIT.” 39 In addition, and by contrast to Urbaser , the counterclaim in Gavazzi was an independent claim based upon Romanian law, not a claim based on the alleged violation of international human rights law. According to the view of the Tribunal, the BIT does not indicate that Romanian law would apply to the substance of the dispute either, 40 or to the procedural law applicable to this arbitration. 41 This case thus shows that the accepted counterclaims by the host State remain exceptional in investment arbitration. 5. Another alternative path: a new UN treaty on business and human rights? This book aims at discussing the relevant issues of business and human rights on the basis of the existing law ( lex lata ), both international and internal, and its interpretation by international and national judicial bodies. This is the reason why it can pay just a cursory attention to the recent proposals of a binding instrument to regulate business activities with respect to human rights. Although this project is conceived rather as a general, along-standing initiative within the UN Human Rights Council, without a direct link to international trade and investment law, it may have certain, albeit indirect, impact on negotiation and interpretation of international investment agreements (IIAs). 36 Ibid., par. 1210. 37 Cf. Art. 46 of the ICSID Convention (1965): “Except as the parties otherwise agree, the Tribunal shall, if requested by a party, determine any incidental or additional claims or counterclaims arising directly out of the subject-matter of the dispute provided that they are within the scope of the consent of the parties and are otherwise within the jurisdiction of the Centre.“ (for the text see https://icsid.worldbank.org/en/ documents/icsiddocs/icsid%20convention%20english.pdf ) 38 Marco Gavazzi and Stefano Gavazzi v. Romania, ICSID Case No. ARB/12/25, Decision on Jurisdiction, Admissibility and Liability, 21 April 2015.

39 Ibid., par. 154. 40 Ibid., par. 156. 41 Ibid., par. 158.

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