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Press Conference – The promotion of a democratic and equitable international order Dr. Alfred de Zayas
26 Oct 2015 – Press conference by Ms. Victoria Tauli-Corpuz, Special Rapporteur on the rights of indigenous peoples and Mr. Alfred De Zayas, Independent Expert on the promotion of a democratic and equitable international order.
Please view the press conference in New York at:
Statement by Alfred-Maurice de Zayas
Independent Expert on the promotion of a democratic and equitable international order
70th session of the General Assembly
26 October 2015
Item # 73 (b & c)
Ladies and Gentlemen,
A democratic and equitable international order as envisaged in the United Nations Charter requires international solidarity to achieve sustainable development and human rights for all.
My 2015 reports to the Human Rights Council and General Assembly explore systemic problems associated with the international investment regime, which too often has hindered States in the fulfillment of their human rights treaty obligations.
Grave issues of incompatibility with human rights norms must be addressed, both from the procedural aspect of the elaboration, negotiation and adoption of free trade and investment agreements, and from their substantive impacts. My report to the Human Rights Council focuses on bilateral investment treaties and multilateral trade agreements. The report I am presenting to you today highlights the negative effects of ISDS – the investor-State dispute settlement mechanism that accompanies most of these agreements. It shows that necessary fiscal, budgetary, labour, health, social, and environmental policies initiated by governments have often resulted in frivolous lawsuits by investors before this unbalanced form of dispute settlement, where only investors can sue governments but not vice versa.
There is no justification for the existence of a privatized system of dispute settlement that is not transparent nor accountable and often ends with inconsistent, unpredictable and arbitrary awards that courts worldwide should refuse to implement as contrary to national and international ordre public.
ISDS is not needed. Investors can have their day in court before national jurisdictions bound by article 14 of the International Covenant on Civil and Political Rights, which, unlike ISDS offer multiple appeal instances. Investors can also rely on diplomatic protection and State to State dispute settlement procedures. Rather than attempting to privatize the rule of law, what is necessary is a strengthening of the domestic and regional system of public courts and ensuring adequate funding.
In my report I refer to the alternative proposal of establishing an International Investment Court. This proposal suffers from fundamental flaws and can only be considered if the primacy of human rights is guaranteed and if the State’s regulatory space is ensured by carving out health and environmental protection from the court’s jurisdiction.
My report provides an analysis of legal issues concerning ISDS as well as incompatibilities with the Purposes and Principles of the UN Charter and human rights treaties. It also refers to numerous cases where ISDS arbitrations have penalized States for adopting regulations, for example to raise the minimum wage, protect food security, access to generic and essential medicines, and reduce smoking, as required under the WHO Framework Convention on Tobacco Control.
Expansive interpretations by specialized corporate-sector arbitrators of terms like “investment”, “indirect expropriation” and “fair and equitable treatment” are well beyond their legal meaning and outside what could be derived from article 31 of the Vienna Convention on the Law of Treaties. The ongoing Philip Morris v. Argentina and Philip Morris v. Uruguay litigations, in which the tobacco giant is suing sovereign nations because of their tobacco reduction programmes, prompt moral vertigo in the unbiased observer.
Over the past 25 years ISDS has undermined fundamental principles of the United Nations, State sovereignty, democracy and the rule of law. Far from contributing to human rights and development, they have resulted in growing inequality among States and within them. ISDS cannot be reformed. It must be abolished.
Today I call upon the General Assembly to convene a World Conference with a view to phasing out existing ISDS and preventing the adoption of any new agreements with ISDS. This Conference could be organized under the auspices of the United Nations Trade and Development Organization, which, alas, bears a certain responsibility for the proliferation of investment agreements, and for the harm caused to many developing States who relied to their detriment on UNCTAD’s advice to adhere to toxic agreements whose dangers they could not possibly have anticipated, particularly the ISDS Trojan horse.
The unbiased observer will have no problem understanding the two basic ontologies at stake. First, the ontology of the State, which is to legislate for the welfare of all persons under its jurisdiction. Second, the ontology of investment, which by its very nature entails risk-taking, What is aberrant is for an investor or speculator to demand a guarantee of profit and to create a rigged system of extra-judicial dispute resolution to enforce it. Risk insurance for investors is available and should be seen as part of the cost of doing business.
There are many examples of abuse of rights by investors and unconscionable ISDS arbitral awards, which have not only led to violations of human rights, but have engendered a “chilling effect”, deterring States from adopting necessary regulations for fear of being sued before ISDS tribunals. General principles of law including the prohibition of contracts or treaties that are contra bonos mores and the prohibition of abuse of rights must be used by national and international courts to challenge the egregious abuses that have accompanied ISDS.
The General Assembly has just celebrated the 70th anniversary of the entry into force of the Charter. Over the past seventy years, the Organization has hosted a magnificent normative orchestra which has put on the world stage not only the Universal Declaration of Human Rights, but legally binding instruments including ten core human rights conventions, countless declarations and resolutions and the 17 Sustainable Development Goals for 2030. Moreover, the United Nations has established implementation mechanisms, including treaty-based bodies like the Human Rights Committee and the Committee on Economic, Social and Cultural Rights. The Human Rights Council engages through its Special Procedures in monitoring activities and in situ visits. States have also accepted and actively cooperate in the Universal Periodic Review, evidencing the emergence of opinio juris that human rights entail international obligations that must be met.
Paradoxically, States also enter into bilateral and multilateral free trade and investment treaties that hinder their compliance with their human rights treaty obligations. Perhaps they follow the siren call of promised growth and job-creation, which all too often has been disappointed. Only too late do they realize that investors and enterprises oppose scrutiny by human rights bodies and reject legally binding obligations. A solution to this dilemma is the expeditious adoption and ratification of a treaty on corporate social responsibility. This is why I urge States to engage in the ongoing negotiations before the Human Rights Council’s inter-governmental working group on transnational corporations, which held its first session in July of this year. John Ruggie’s Guiding Principles on Business and Human Rights are commendable, but they only constitute soft-law. Alas, self-regulation by investors and corporations has failed miserably. 
Precisely because States are bound by ICCPR and ICESCR, they must ensure that non-State actors operating in their territories and extra-territorially do not violate human rights, do not exert pressure on governments to weaken social regulations or threaten to reduce investments if their demands are not met.
Paradoxically, although States are bound to observe the public participation clause of article 25 ICCPR, they negotiate international investment treaties in secret and exclude key stakeholders. Sometimes opaque treaties are fast-tracked through Parliaments so as to avoid public participation. This renders the agreements democratically illegitimate.
All States Members of the United Nations are bound by the UN Charter, which is akin to a World Constitution. Pursuant to article 103: “In the event of a conflict between the obligations of the Members of the United Nations under the present Charter and their obligations under any other international agreement, their obligations under the Charter shall prevail.” This means that bilateral and multilateral free trade and investment agreements that contain provisions that conflict with the letter and spirit of the Charter must be revised or terminated. Incompatible provisions can be eliminated according to the doctrine of severability, without overthrowing the entire international investment regime.
Pursuant to article 96 of the Charter, the General Assembly can request an advisory opinion on any legal question from the International Court of Justice. It is necessary to settle once and for all the priority of human rights treaties over other agreements and the primacy of the UN Charter, including its provisions on sovereignty, self-determination, human rights and development.
Today I urge the General Assembly to request an advisory opinion on a series of legal questions, the full list of which can be read in my report, including:
- The legal consequences of the primacy of the UN Charter over all other treaties, in particular with regard to international investment agreements and investor-state-dispute-settlement awards.
- The priority of the international human rights regime, including the ICCPR and the ICESCR as well as FAO, ILO, UNICEF, and WHO Conventions over conflicting obligations under trade and investment agreements; and
- The application of norms of customary international law to non-State actors, in particular the respect for the sovereignty and independence of States and the prohibition of interference in matters that are essentially within the domestic jurisdiction of States.
By way of conclusion I wish to urge the Assembly not to underestimate the adverse impacts of free trade and investment agreements on human rights, development and democratic governance. A World Conference to mainstream human rights into the international investment regime, abolish ISDS and strengthen the public regional court system is necessary to make trade and investment work for human rights and not against them. A binding treaty on business and human rights is long overdue.
Finally, I would like to reiterate my appreciation of the very hard-working and competent staff of the Office of the High Commissioner, and request the General Assembly to allocate greater resources to the Office.
I thank you.
 Alexandre Kiss “Abuse of Rights” Max Planck Encyclopaedia of Public International Law, Vol. I, pp. 20-26. M. Byers, “Abuse of Rights: an Old Principle in a new Age” 47 McGill Law Journal, 389-431. See for instance the reference to abuse of rights in the Trail Smelter Arbitration and in article 300 of the UN Convention on the Law of the Sea “States Parties shall fulfil in good faith the obligations… in a manner which would not constitute an abuse of right”. V. Paul, “Abuse of Rights and Bona Fides in International Law” Österreichische Zeitschrift für öffentliches Recht und Vökerrecht, vol. 28 (1977) 107-130, B.O. Iluyomade, “The Scope and Content of a Complaint of Abuse of Right in International Law”, Harvard International Law Journal, Vol. 16 (1975) 47-92.
 Pia Eberhardt and Cecilia Olivet, Profiting from Injustice, Corporate Europe Observatory, Transnational Institute, Brussels 2012¸Profiting from Crisis, Brussels 2014.
 Hersch Lauterpacht’s First Report on the Law of Treaties (1953) to the International Law Commission suggested that ‘rules of international morality so cogent’ could constitute principles of international public policy that void treaties. Ybk Int L Commission Vol II, Part 2, 154-156, at para 4. See also Michael Akehurst who argues that morality underpins the process through which conventional or customary rules acquire a peremptory character, ‘Notes: The Hierarchy of Sources in International Law’ (1975) XLVII (47) BYIL 273, 283. Summary records, A/CN.4/SR.683, Law of Treaties, 1963 http://legal.un.org/ilc/documentation/english/a_cn4_sr683.pdf, para. 45. Alfred Verdross advanced the position that the ‘higher interests of the whole international community’ were capable of voiding ‘immoral treaties’ in violation of a compulsory norm of general international law. Verdross, Die Verfassung der Völkerrechtsgemeinschaft (Springer, Vienna, 1926), 21 et seq. Verdross, “Jus Dispositivum and Jus Cogens”, International Law in the Twentieth Century, pp. 222-23. Hermann Mosler, The International Society as a Legal Community, 1980, p. 142, RY Jennings, ‘Nullity and Effectiveness in International Law’, in D Bowett (ed), Cambridge Essays in International Law (London, 1965) 64, 74. G. Hernandez, “A reluctant guardian: The International Court of Justice and the Concept of ‘International Community”. BYIL, vol. 83, pp. 13-60.
 See summary records of ILC http://legal.un.org/ilc/documentation/english/a_cn4_sr683.pdfAlso: Human Rights Committee, General comment 24. Roslyn Moloney, “Incompatible Reservations to Human Rights Treaties: Severability” in Melbourne Journal of International Law, vol. 5 (2004).
 Robert Kolb, Recueil des Cours 367, Hague Academy of International Law, Summer 2013 “L’Article 103 de la Charte des Nations Unies”; Rain Liivoja, The Scope of the Supremacy Clause of the United Nations Charter, International and Comparative Law Quarterly 2008 http://journals.cambridge.org/action/displayAbstract?fromPage=online&aid=2052764; Istrefi Kushtrim “The Application of Article 103 of the United Nations Charter in European Courts” http://cadmus.eui.eu/handle/1814/28723
Photo credit: UN Web TV