TagTime with Prof. Diane Desierto – Invoking Climate Change, Environmental Law and Human Rights Law in International Arbitration: Utopia or Opportunity?*

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Author: Olivia Lu**

Environmental Law
Climate Change Law
Human Rights Law

This is a summary of a June 17, 2020 TagTime series webinar lecture by Professor Diane Desierto,† titled “’Invoking Climate Change, Environmental Law and Human Rights Law in International Arbitration: Utopia or Opportunity?”[1]

International arbitration is a growing avenue for the advancement of human rights and environmental protections. Environmental, human rights, and climate change law are not entirely new to the arbitration field as they already interact in treaties, state contracts, and private-party agreements. However, environmental, human rights, and climate change law are independently complex and robust bodies of law whose incorporation in arbitration inevitably necessitate changes to predominant arbitration practices.

The first source of interaction between environmental law, human rights law, climate change law and arbitration practice lies in applicable substantive law. The U.S. investment treaty model, SITA,[2] agreements under the Canadian and ASEAN investment treaty regimes, as well as an increasing number of international investment treaties, contain explicit references to maintaining or respecting existing environmental or labor obligations. The drafting of later investment treaties has expanded to include climate change and human rights commitments. Whether climate change commitments will be written into investment commitments in the current draft of the Regional Comprehensive Economic Partnership Agreement or, alternatively, will become external agreements respected by the parties is still under consideration.

The next kind of applicable substantive law is state-based contracts. For instance, a public-private partnership where the state may require that an infrastructure, cross-border, or energy products project comply with the state’s climate change, human rights, or environmental obligations.

Agreements between private parties with express stipulations applying human rights, environmental, or climate change law are another source of applicable substantive law that also enable multi-stakeholder referral of business and human rights disputes. Bangladeshi court arbitrations regarding the 2013 Dhaka garment factory collapse, which involved local labor unions, the International Labour Organization, the Bangladeshi government, and the private sector serve as prime examples of arbitration beyond the binary model of investor-state or interstate arbitration.

The second source of interaction lies in mandatory law according to the forum state’s arbitration law that may include some measure of human rights, environmental, or climate change law. However, there are few jurisdictions that have incorporated human rights law as part of their mandatory law for forum states.

The third source of interaction lies in the influence that human rights, environmental, or climate change law can have on the assessment, valuation, and design on reparative relief proposed to arbitral tribunals.

The complex body of climate change law consists of: (1) treaty-based law with differentiated obligations as exemplified in the U.N. Framework Convention on Climate Change and the 2015 Paris Agreement; (2) customary norms such as prohibitions against causing transboundary harm, the “polluter pays” principle, the common and differentiated responsibility principle, and the principle of intergenerational equity that have recently been recognized in the Inter-American Court of Human Rights’ advisory opinion regarding marine access and the protection of the Caribbean Oceans; (3) national laws and softer instruments like the commitments reached in the Conference of Parties but were not codified into treaties. Although there has not yet been a test case, international arbitration councils could potentially point to energy charter or investment treaties that can sufficiently accommodate climate change law.

Human rights law is also complex due to the vast range of issues it addresses in the nine core human rights treaties (ICCPR, ICESCR, ICERD, CAT, CRPD, CEDAW, CPC, ICMW, CPED). In addition to regional human rights treaties and instruments, the Universal Declaration of Human Rights has been recognized as binding law, such as in the Philippines. Human rights norms have also been recognized as having customary or even jus cogens status.

Human rights law’s complexity gives rise to a gap in meaning between violations versus justified limitations of human rights obligations, therefore necessitating a non-monolithic understanding of human rights law.

International environmental law is equally complicated. It entails hundreds of multilateral environmental agreements and multilateral treaties containing environmental provisions. Moreover, customary norms and soft instruments arguably have the quality of international law.

The multi-disciplinary nature of environmental, human rights, and climate change law necessitates a kind of fact-finding distinct from that used in predominantly commercial arbitration. Expertise is required to substantiate allegations of violations. Arbitral institutions’ interpretation of expected state conduct must also be qualified by the counterpart defenses, derogations, and limitations inherent in these bodies of law. States’ receptiveness to the binding scope, implementation, and enforcement of these bodies of law are not uniform across jurisdictions. States may resist the extraterritoriality of human rights treaties.

Arbitrations invoking environmental, human rights, and climate change law consist of business and human rights arbitration, investor-state arbitration, and interstate arbitration. In the realm of business and human rights arbitration, the Hague Rules on Business and Human Rights Arbitration modified the 2013 UNCITRAL Arbitration Rules to take into account costs of arbitration for human rights victims and adapted fact-finding rules to broaden the base of expertise. Many investor-state arbitrations are beginning to incorporate human rights law. For example, Urbaser v. Argentina recognized that the law from the International Covenant on Economic, Social and Cultural Rights as well as the Universal Declaration of Human Rights, but limited the expectation of applicable law. Tribunals could review domestic constitutional law to determine whether environmental, human rights, and climate change law can be read into mandatory law even if not expressly provided for under contract. Inter-state arbitration has been more successful in invoking environmental law. In the Indus Waters Kisheganga arbitration, the arbitral tribunal accounted for prohibitions against transboundary harm and ensured sustainable management of natural resources.

When applying environmental, human rights, and climate change law in arbitration, councils, arbitrators, and tribunals must engage with states’ constitutional and domestic law, receptiveness to international law, and potential impact on lex arbitri. Arbitral tribunals’ sense and understanding of the arbitral function must be calibrated according to the complex bodies of law involved. Interpretation of VCLT Article 31 can also alter how prior understandings and agreements bear on environmental obligations. Other bodies such as quasi-judicial or administrative agencies as well as human rights and environmental treaty bodies can affect fact-finding procedures and requirements.

[1] Diane Desierto, Invoking Climate Change, Environmental Law and Human Rights Law in International Arbitration: Utopia or Opportunity?, TagTime (June 17, 2020), available at https://member-delosdr.org/video-tagtime-prof-diane-desierto-discussed-invoking-climate-change-environmental-law-and-human-rights-law-in-international-arbitration-utopia-or-opportunity/.

[2] Supporting Indian Trade and Investment for Africa

* This post is part of a series summarising Delos Disputes Resolution’s TagTime webinars. A list of past TagTime webinars is available at https://delosdr.org/index.php/past-webinars/.
** J.D. Candidate 2023, Columbia Law School.
† Professor Diane A. Desierto holds a joint appointment in the Keough School of Global Affairs and the Notre Dame Law School, where she is professor of law and LLM faculty director. Desierto teaches, publishes, and practices in international law and human rights, international economic law and development, international arbitration, maritime security, Association of Southeast Asian Nations (ASEAN) Law, and comparative public law.