fidh open letter: eu-myanmar/burma investment agreement and its sustainability impact assessment -...

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Dear Ms Malmström

Brussels, 7 December 2015

Open letter: EU-Myanmar/Burma Investment agreement and its sustainability Impact Assessment -

concerns on the way human rights are taken into account

Over the summer of 2015, the EU adopted new guidelines to enhance the quality of its human rights impactassessments1. In October 2015 the EU released its new strategy “trade for all, towards a more responsible

trade and investment policy”. This new strategy commits to “enhance the analysis of the impact of trade

policy on human rights both in impact assessments and in ex post evaluations based on the recently

developed guidelines”2 and to implement the EU 2015-2018 human rights action plan which commits the EU

to “continue to develop a robust and methodologically sound approach to the analysis of human rights

impacts of trade and investment agreements, in ex-ante impact assessments, sustainability impact

assessments and ex-post evaluations”.3

In October, the EU launched a sustainability impact assessment (SIA) for the EU-Burma/Myanmarinvestment agreement currently under negotiation. The terms of reference state that “the contractor shall

analyse the potential impacts of the proposed agreement on human rights, as set out in the Charter of

Fundamental Rights of the European Union and in the UN Conventions, in accordance with the Commission

guidance on the analysis of human rights in the toolbox of the Better Regulation Package and the Guidelines

on the analysis of human rights impacts in impact assessments for trade-related policy initiatives”4.

Commenting on the first draft report issued in the present SIA process, FIDH regrets that the SIA fails to

meet these standards, and that consequently, the new guidelines and commitments remain a dead letter.

We know the commitment you have shown to human rights, as seen in your statements, your new strategy

“trade for all” and your support for the new guidelines for human rights impact assessments adopted underyour mandate. All this underscores a clear improvement in comparison to previous trade policies. However,the challenge is now for those commitments to result in effective improvements of policies, practices andfinally to ensure trade better benefits human rights. In other words, your commitment should find ways to

become reality.

The quality of the impact assessment is the responsibility of the European Commission, but are a far cry

1 The “Better Regulation Package” adopted by the Commission on 19 May 2015, its “Better Regulation Guidelines” and

Better Regulation tool 24 on Fundamental Rights and Human rights Commission Staff Working Document, "BetterRegulation Guidelines", SWD(2015) 111 final, 19 May 2015, http://ec.europa.eu/smart-regulation/guidelines/docs/swd_br_guidelines_en.pdf http://ec.europa.eu/smart-regulation/guidelines/tool_24_en.htm

reaffirming the pre-existing “Operational Guidance on taking account of Fundamental Rights in Commission ImpactAssessments » dated 2011 Commission Staff Working Paper, "Operational Guidance on taking account of FundamentalRights in Commission Impact Assessments", SEC(2011)567, 6 May 2011, http://ec.europa.eu/justice/fundamental-rights/files/operational-guidance_en.pdf ; The “Guidelines on the analysis of human rights impacts in impactassessment for trade-related policy initiatives” adopted in July 2015 European Commission, DG Trade, “Guidelines onthe analysis of human rights impacts in impact assessment for trade-related policy initiatives”, 2 July 2015

http://trade.ec.europa.eu/doclib/docs/2015/july/tradoc_153591.pdf and The New "Handbook for Trade SustainabilityImpact Assessment", whose draft was published on June 20152 EU Commission, “trade for all. Towards a more responsible trade and investment policy”, October 2015,

http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153846.pdf3 Council conclusions on the action plan on human rights and democracy 2015 – 2019, July 2015,

http://www.consilium.europa.eu/en/press/press-releases/2015/07/20-fac-human-rights/ 4 ToR Related to a contract to provide a Sustainability Impact Assessment (SIA) in support of an investment protection

agreement between the European Union and the Republic of the Union of Myanmar. Multiple Framework ContractTRADE2014/01/01; request for services TRADE2015/B2/B03

http://trade.ec.europa.eu/doclib/docs/2015/october/tradoc_153820.pdf



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from the realisation of the declared objectives. Indeed, the consultations are there to improve the results and

the quality of the studies. By spending time in the consultation process to recall the minimal methodologicalrequirements, we are not given the opportunity to discuss the issues in depth. We consider that it is the roleof the steering committee to ensure that the guidelines are followed, and if needed the composition of thesteering committee should be reviewed to that end. Furthermore, the independence of the study should be

ensured. We regret the red lines placed by the Commission on several issues, namely, its refusal to provideadditional time to ensure genuine consultations and its refusal to ensure the assessment of the full range of

options, claiming that there are few realistic options besides an investment agreement framed on the EU’smodel used for TTIP5. It is in total contradiction with the guidelines and the basic essence of impactassessments. FIDH finally regrets that the minutes of the CSD meeting that took place on 5 November andthat is presented as part of the consultation process are not comprehensive. Among the things that are

missing are the comments we made on lack of rigor of the study, the lack of reference to the specific wordingof the clauses, the presence of biased assertions, incomprehensible choices in the identified impacts, the lack

of coherence, false and outdated information, our reserves on the selection and categorisation ofstakeholders, etc. All those points were illustrated by concrete examples drawn from the SIA incentive reportand raised in the meeting, but they are not echoed in the minutes

6. This is a serious breach of the rules on

consultation and impairs the information process, preventing stakeholders, to be consulted inBurma/Myanmar to have access to the main concerns already raised. Also, no mention is made in theminutes of the 5 November CSD meeting regarding the surprising assertion made by the Commission thatITUC’s study on FDI in Burma is irrelevant because it concerns direct investments and not the impacts of theinvestment agreement.

FIDH calls upon you to take the necessary remediation measures to ensure that the steering committeeeffectively applies the guidelines to their full extent. We consider that more time is required for therealisation of the study, and a guarantee of non-interference by the Commission into the methodologicalchoices of the consultant. We also recommend the setting-up of a quality check mechanism, with an

independent expertise on human rights should the steering committee show itself unable to play this role. Wewould like you to be provided with the CV of the expert on human rights in the consultant team. The website

indicates Ms Kamala Dawar as senior human rights and labour rights expert, but she seems to be specialisedin commercial law instead7.

FIDH has asked the Commission several times to inform civil society about the contacts details of theconsultant as soon as mandated. It is only by proceeding in such a manner that stakeholders are able toinform the consultant about the content of the guidelines on human rights, to provide them with relevantstudies and to give them contact details of experts in the matter. There is obviously no reason to be obligedto wait for flawed incentive reports before being able to provide those inputs and prevent the serious

shortcomings we face today. We regret that it has not been done for Burma SIA as requested, but we hopethat things will be resolved for the upcoming SIAs, like China, The Philippines etc.

5 Civil society dialogue meeting on the sustainability impact assessment (SIA) on the EU-Myanmar investment protection agreement, 5/11/2015, Minutes, http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153981.pdf 6 ibid.

7 http://www.eu-myanmarsia.com/guide.php?id=8



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FIDH comments on the EU-Burma investment agreement’ SIA Draft inception report

Below FIDH will first describe the main concerns regarding the incentive reports

I. FIDH concerns regarding the incentive report1. Consultations (timeframe, Selection and categorisation of stakeholders consulted)

2.

Methodology: definition of the objectives, options, quality and robustness of the study• Definition of the objectives of the investment agreement: human rights and PCD to be added;

• Definition of the different options to be assessed: provide adding options and provide the neededdetails including the specific wording of the clauses to be envisaged

• Enhance the quality and the clarity of the analysis, the robustness of the study, correctinaccuracies, assess the impacts in the EU, etc.

FIDH having regard to the current practices related to investment agreements and their impacts on humanrights will propose concrete solution and options to be assessed

II. Investment protection agreement models: a need to revise the global economy of the investment

agreements and revise the specific wording of their substantive clauses, what are the other options to be

assessed?1. Among the issues at stake:Substantive clauses excessively protecting the foreign investors, not

offering HR safeguards and enforced by ISDS mechanisms in a way that directly affect theobligations and ability of States to respect, protect and fulfil their HR obligations

2. EU models and modifications proposed in CETA and TTIP proposals: unable to address the problem3. The T&SD chapter: insufficient to provide corrective provision and mechanisms to the above

described problems

4. Current human rights clauses: a new model is needed5. Counter proposals, best options to be assessed

* *

*

I. FIDH concerns regarding the incentive report

1. Consultations

Timeframe: As an essential condition to ensure impact assessments reach their aims, all the applicableguidelines insist on the necessity of ensuring that consultations start at an early stage of the impactassessment and that stakeholders are given “sufficient time for planning and responses to invitations and

written contributions”.8 To define what is considered as sufficient time, the standards vary between 4 weeksand 12 weeks9.

In contradiction with this principle, civil society was given only 6 working days to read, analyse, verify andgather information to comment on a 100 page inception report before the first consultation meeting that took

place on 5 November, and only 9 working days were given to send written comments. The timeline plannedfor organising consultations on the subsequent steps of the SIA is of the same nature. This practice is notnew10, but we thought that the new EU commitments and guidelines adopted to enhance the quality of theimpact assessments would have remedied this serious breach of the principles of good administration.

The request made by civil society organisations to provide a more reasonable timeframe was purely rejected.

8 DRAFT SIA Handbook, july 2015, p. 25, see also p. 10 & Better Regulation Guidelines p. 65.

9 Better Regulation toolbox, 50, p 315-316

10 FIDH, Building Trade’s Consistency With Human Rights - 15 Recommendations to the EU on Impact Assessmentshttps://www.fidh.org/International-Federation-for-Human-Rights/european-union/building-trade-s-consistency-with-

human-rights-15-recommendations-to



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As stated in the minutes of the first round of consultations, “the European Commission replied that given the

short timeframe of this SIA, an extension of the deadline for submission of comments would not be possible

without affecting the timely implementation of the workshop and the delivery of the final report, which

should take place before the conclusion of the negotiations. In any event, the draft final report will constitute

an additional opportunity to provide comments” 11. Genuine consultation in Brussels, as well as consultation

of local NGOs and affected people is crucial at the stage of the inception report to comment on the sectors to be chosen for deep assessment, on the methodology used and on the accuracy of the study’s premises. The

incentive report does not indicate that local consultations took place for prior to its drafting. There isabsolutely no reason to precipitate the conclusion of the SIA, as it would directly undermine the quality ofthe assessment and the quality of the consultations however described as key. The negotiation with Burmaofficially began in February 2015 (9 months ago), and we know that legal proposals for an agreement were

circulating already for a long time, which would have enabled an earlier SIA process. Because an impactassessment is key for the EU to ensure that it complies with its human rights obligations and its founding

treaties, the willingness to rapidly conclude an investment agreement can in no case justify impeding thequality of study. It is not clear if an interim report is foreseen (although it has become common practice andwill be requested in upcoming SIA guidelines)

12. We consider that every step of the EU-Burma/Myanmar

SIA should be postponed to allow stakeholders to provide informed and useful comments. Given that the better regulation package fixes the medium standard up to 8 weeks, the Commission should apply this normalso for SIA consultations. At minimum, stakeholders should benefit from 4 weeks from the release of thereports in order to prepare oral comments at the civil society dialogues and workshop organised to discussthe outcomes of the SIA and then 4 additional weeks after these meetings to provide written inputs. Aninterim report should also be foreseen.

If the steering committee does not offer better timeframe, the consultant should ask for a postponement of

the deadlines and insist in its next report on the necessity to carry out complementary study if some

issues need to be clarified further. If the necessity of a complementary study is due to time constraints

imposed by the European Commission, it should be noted also.

Selection and categorisation of stakeholders consulted:

The guidelines require “wide-ranging" consultations, engaging "all relevant stakeholders" "inside and outside

the EU", and ensuring “an adequate and balanced coverage”, including “target groups that run the risk of being excluded” such as “religious communities, women, elderly, unemployed, ethnic minorities”, etc.Potentially affected people have to be consulted13. The guidelines also require to categorise stakeholders bytheir expertise on the specific issues at stake and, for affected people, to distinguish between those who will

benefit and those who will pay because of the policy, and within a specific stakeholder category which

stakeholders can be affected by the concrete initiative differently14

. Importantly, all applicable guidelinesrequire to set up “clear and transparent criteria for selection”

The consultation plan provided in the SIA draft incentive report is problematic in that regard. It distinguishesamong the stakeholders only by categorising them on structural criteria (government representatives,academia, businesses, NGOs and social partners). It does not provide any insurance that all relevant humanrights issues will be addressed and that relevant expertise on those issues will be sought out. It does not

provide the criteria used to select the specific stakeholders, it does not provide adequate balance andcoverage, etc.

In consequence, we urge the consultant to

• Foresee the consultation of affected population and communities in Burma/Myanmar, including peoplein conflict zones, discriminated people such as the Rohingya and Muslims, populations who are victimsof forced evictions, populations evicted in order to develop SEZ, people in remote areas, farmers, mine

workers, etc.

• Ensure adequate balance and coverage and replace the categorisation of the stakeholders based on their

11 Civil society dialogue meeting on the sustainability impact assessment (SIA) on the EU-Myanmar investment

protection agreement, 5/11/2015, Minutes, http://trade.ec.europa.eu/doclib/docs/2015/november/tradoc_153981.pdf 12 The New "Handbook for Trade Sustainability Impact Assessment", whose draft was published on June 2015https://www.fidh.org/IMG/pdf/2015_draft_handbook_for_trade_sustainability_impact_assessment.pdf13

Better Regulation guidelines p. 74 & Better Regulation toolbox, p. 31114

not. Better Regulation guidelines p. 75 & Better Regulation toolbox, p. 311



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structural characteristics (NGO, academics, social partners, businesses, etc.) with a categorisation by

topics. It should serve to ensure and justify the selection of stakeholders based on their expertise. Theconsultation should identify the stakeholders with expertise on the following issues: non-discriminationissues and religious and ethnic violence, rule of law and access to remedies, arbitrary arrest and use offorce by private and public sector to secure investments, legal challenges of the investment agreement

clauses and the impacts that the lack of safeguards may have on human rights. In that regard, we deplorethat

o Important human rights NGOs and INGOs are not listed despite their work on the impacts

investment agreement have on human rights and on Burma. Among others, EBN, GlobalWitness, FIAN, Actionaid, Oxfam, Transnational Institute, 11.11.11, Corporate Europe

Observatory, Friends of the Earth Europe, Powershift, EarthRights International, etc.

o The same for the UN special rapporteur on human rights in Myanmar and the UN committeesmonitoring the implementation of international human rights convention. Also the United

Nations Independent Expert on the promotion of a democratic and equitable international order,Alfred de Zayas who has issued several reports on investment treaties these last months

• Provide the names and justify the expertise of the academia selected. It should allow observers tounderstand their expertise. Identify the Chambers of Commerce as constituencies defending business

interests and the ILO as an international organisation with expertise on labour rights

• The consultation plan distinguishes between “high profile and low profile stakeholders”. This profile issaid to measure the “relevance of each stakeholder according to their interest in an IPA [Investment

Protection Agreement] and their potential influence on the outcome of a negotiated agreement ”. NGOsare classified as averagely interested or influential on the outcomes (a kind of middle profile

stakeholder), governments and businesses as the most interested and influential. The UN experts areexcluded of the matrix, as well as specific affected populations. The explanation provided by the

consultation plan is to ensure that the “opinions of potentially marginalized groups are still included in

this SIA” but the report fails to specify how the right balance will be ensured on this basis. The matrixshould be fine-tuned or removed. As stated in the guidelines, this kind of information should distinguish

between the different issues at stake and between the stakeholders listed in a same category based on the

different impacts that the agreement may cause. To ensure the consultation process is not high-jacked, aspecific strategy should be drafted; this is lacking in the inception report and should be corrected.

2. Methodology: definition of the objectives, options, quality and robustness of the study

Definition of the objectives of the investment agreement: human rights and PCD to be added

According to the guidelines, “an impact assessment should verify the existence of a problem, identify its

underlying causes, assesses whether EU action is needed, and analyse the advantages and disadvantages of

available solutions”15 “ A problem can be caused by several factors, such as […] the need to ensure respect

of fundamental rights”16 “The objectives of policy action should be clearly identified, including the level of

policy ambition and the criteria against which alternative policy options would be compared and the successof any initiative assessed” this supposes also “clarifying the relationship between an initiative's specific

goals and any horizontal EU objectives”17

The founding treaties of the EU reaffirm Human rights (see article 21 TUE and 207 TFUE) and policycoherence for development (PCD) (see article 208 (1) TFUE) are horizontal objectives to be taken into

account. In consequence, the consultant should complement the assertion p. 9. While stating that “theobjective is to increase bilateral investment flows and, ultimately, trade activity”, it has to be added, inconformity with the founding treaties: while respecting PCD, respecting human rights and designing its

policy in order to consolidate and support democracy, the rule of law, human rights18

. As stated in the

15 “Guidelines on the analysis of human rights impacts in impact assessment for trade-related policy initiatives” p2

16 Better Regulation Guidelines p.20.17

Better Regulation Guidelines p.2118

Articles 21 of the TUE and 207 of the TFUE (Treaty on the Functioning of the European Union) specify that theEU’s external action in the field of commercial policy shall seek “to advance in the wider world: democracy, the rule of



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guidelines, it serves to ensure “the link between objectives and problem analysis, identification of policy

options, assessment and comparison of options, future monitoring and evaluation activities”19

Definition of the different options to be assessed: provide additional options and provide necessary detailsincluding the specific wording of the clauses to be considered

The consultant distinguishes only between a baseline scenario (a scenario without investment agreement) and

a scenario with an investment agreement based on the new EU model for investment agreements. It is not in

line with the guidelines that require to identify several options, and that insist on the fact that “if it is difficult

to identify at least two credible alternatives on top of the baseline, make an extra effort to think 'outside of

the box' (e.g. have all choices been considered?)”20

Impact assessments must indeed “demonstrate that all

relevant options have been considered, taking into account stakeholders’ views and justifying why some

options were discarded without a full assessment of their impacts”21. The UN has continuously called for an

improvement of trade and investments and UN experts have regularly relayed this message22

. Below, we

propose concrete alternative options, and we insist on the fact that the incentive report must demonstrate that

all options were considered. The assertion made by the Commission’s representative at the CSD meeting on

5 November that “only the baseline scenario and a scenario in which a concluded IPA” “based on the new

approach for EU investment agreements” “could be realistically envisaged” should be rejected. We stronglycontest that the CETA-Singapore-TTIP model23 is the only alternative. Designing its trade policy in order to

ensure the respect and consolidation of human rights is an obligation set up by the EU founding treaties, and

the SIA is there to help the EU to ensure sound policy making. It necessarily supposes considering options

that fulfil the objective to respect and consolidate human rights which can be done only by offering several

options, “discarding some alternatives (e.g. those […], disrespecting fundamental rights)” 24 which is the

case when the negative impacts on human rights are not justified in terms of necessity and proportionality25.

It is also the aim of the impact assessment to identify “ those options which intrude less on fundamental

rights” or have “the highest positive impact on fundamental rights”26. Indeed, the ECJ requires that, from a

human rights perspective, EU institutions prove “that they have carefully considered different policy options

and have chosen the most proportionate response to a given problem”.27

law, the universality and indivisibility of human rights and fundamental freedoms, respect for human dignity, the principles of equality and solidarity, and respect for the principles of the United Nations Charter and international law”,and that the EU “shall define and pursue common policies and actions [...] in order to [...] (b) consolidate and supportdemocracy, the rule of law, human rights and the principles of international law”. Article 21 §3 specifies that “TheUnion shall respect the principles and pursue the objectives set out in paragraphs 1 and 2 in the development andimplementation of the different areas of the Union’s external action [...]and of the external aspects of its other policies”19

Better Regulation tool 24 on Fundamental Rights and Human rights, p. 177; Operational Guidance on taking accountof Fundamental Rights in Commission Impact Assessments, p 15.20

Better Regulation Guidelines p. 24;21 Ibid. 22

see notably HCHR report Human rights, trade and investment (E/CN.4/Sub.2/2003/9), 2 July 2003, http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G03/148/47/PDF/G0314847.pdf?OpenElement; /HRC/19/59/&dd.5, Report of the SpecialRapporteur on the Right to Food, Olivier De Schutter, Addendum, Guiding Principles On Human Rights Impact

Assessments of Trade and Investment Agreements , December 2011 ; Report of the Special Rapporteur on the right ofeveryone to the enjoyment of the highest attainable standard of physical and mental health, Anand Grover’, UN Doc

A/69/299, 11 August 2014, paras 48 to 59.23

The investment protection agreement scenario envisaged by the incentive report is based on CETA and Singapore(see p. 11 footnote 3), but during the CSD meeting the commission state it is negotiating a TTIP model court provisions

and the SIA team it will be taken into account.24

Better Regulation Guidelines p. 2425

Guidelines on the analysis of human rights impacts in impact assessment for trade-related policy initiatives, p 11;

Better Regulation tool 24 on Fundamental Rights and Human rights, p. 17726 Operational Guidance on taking account of Fundamental Rights in Commission Impact Assessments, p 21.27

Commission Staff Working Paper, “Operational Guidance on taking account of Fundamental Rights in Commission

Impact Assessments”, SEC(2011)567, 6 May 2011, http://ec.europa.eu/justice/fundamental-rights/files/operational-guidance_en.pdf



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Furthermore, the guidelines require that, “after a first assessment of impacts, it may be necessary to go back

[…] with modifications to the original alternatives to further improve them. This will typically be the case

when options fail to meet the objectives in a satisfactory way or when they are likely to lead to

disproportionate negative effects (of any type, for instance, on fundamental rights , […] developing

countries, etc.)”.28

In our case, “the preliminary assessment of potential human rights impacts on EU

investors and the third country’s population arising from investment protection agreement ” between the EU

and Burma/Myanmar, presented in Table 9, page 28 of the draft incentive report, confirms without anyambiguity that the original option of the EU CETA-Singapore-TTIP model is unsatisfactory. Indeed, itclearly shows that the only option retained for the impact assessment benefits the EU investors (whoencounter no negative impacts) while seriously impacting on the Burmese population who is quasi

exclusively concerned by negative impacts. In consequence, and in conformity with the guidelines, it resultsin the necessity to redefine the options to be assessed, and provide for options able to better reconcile the

objectives that should be fulfilled in the field of human rights. The proposal of new options should allow acomparison between different models of investment agreements in order to serve more balanced benefits tothe Burmese population in terms of human rights.

In any case, the options should be better detailed. As required, “a sufficiently detailed description of thealternatives retained should be provided” 29 taking into account the “ provisions built into the proposed

agreement 30 and “the possibility that dedicated provisions are included in the text ”31. All this is lacking inthe report.

Finally, the guidelines require that, “if there are no other alternatives, [which needs to be duly justified] the

focus of the subsequent analysis should be on determining the detailed design of the retained option, for

example, by considering alternative "sub-options" for some of the individual elements of the proposal or

different implementation modes”32.

Enhance the quality and the clarity of the analysis, the robustness of the study, correct inaccuracies, assessthe impacts in the EU, etc.

At the very base, impact assessments must be evidence-based, unbiased, informed and “show that there is aclear logic between the problems, objectives and policy interventions under consideration”

33.

In that regard, FIDH would like to express its concerns regarding the preliminary impact assessment made onhuman rights and what is qualified as the most relevant human rights potentially affected (see draft incentive

report table 9, p. 29 and 30). They are defined with no justification, no reference to any study and do notreflect due knowledge, either of human rights law or of the documented problematic effects investmentagreements have on human rights. In addition:

- The study fails to document the potential negative effects of those non-discrimination clauses onhuman rights.

- The protection against expropriation is listed as having potential negative impacts on the Burmese

population. Are listed: negative impacts on the right to property, freedom of opinion and expression,freedom of assembly, land rights, minority rights and rights of indigenous people. Other humanrights may be affected: adequate standards of living, right to water, to food, to adequate housing, to

health, to education, to private and family life, to fair trials, to be protected against arbitrary arrests,equality before law, disproportionate use of force, extra-judicial killings, etc.

- FET clause, also depending on its specific wording, may have the same effects.- The sustainability development chapter is described as having positive effects on the Burmese

population. However, it depends on the specific wording of its clauses. In addition, because nothingin the incentive report substantiated this assertion, we do not understand why the positive effects

28Better Regulation Guidelines p. 24

29 Ibid.

30 Guidelines on the analysis of human rights impacts in impact assessment for trade-related policy initiatives, p 931

Guidelines on the analysis of human rights impacts in impact assessment for trade-related policy initiatives, p 1232

Better Regulation Guidelines p. 24.33

Better Regulation Guidelines p.22 & 23, 25.



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described are on “women and minority rights” and “indigenous people”.

- The investment dispute settlement does not ensure, as stated in the report, positive impacts onfreedom of expression and opinion and on the rights to due process for the Burmese population. Ifthese positive effects are deduced by the consultant through the right to submit amicus curia, the

possibility of repression and the lack of consideration that tribunals show for those amicus curia

arguments34

should also be taken into account. For those positive effects to become reality, they haveto rely on substantive reforms of ISDS and of the other clauses of the EU’s model of investment

agreement. Instead, ISDS has potential negative impacts, not only on the right to property, rights todue process and non-discrimination, but potentially on all human rights depending on the specificwording of the different clauses of the agreements (see documentation on right to health, right towater, land reforms, etc.)

- The clause on right to regulate does not have any positive effect if it is not duly formulated, which isnot the case in the EU’s model, as demonstrated below.

- The table should also be completed with the impacts on the EU’s population and businesses. Indeed,these impacts must also be fully assessed in the EU.

- Other clauses, such as the sunset clause and clauses defining the amount of compensation, must bedully assessed.

Table 10 listing details what are considered as the most relevant human rights potentially affected by the EU-Myanmar investment agreement. It points out: right to property, right to due process, freedom of opinion andexpression, indigenous people and adequate standard of living. We suggest adding the right to peacefulassembly, to non-discrimination, the right to equal treatment before law, prohibition of arbitrary arrest, to be

protected against excessive use of force, right to health, right to food and the right not to be subjected toforced resettlement. In any case, the impacts on the prohibition of torture, slavery, and systematic

discrimination for example, being absolute rights, must absolutely be assessed.

The description of potential effects, pages 32 to 34, should be clarified and complemented, and avoidsimplistic reasoning, inaccuracies and bias:

- Among the positive impacts, the report notes the capacity of the agreement to improve “ life

standards by following international standards and norms” and adds, “during a session of the United

Nations Human Rights Council in June 2015, UN experts voiced their concern but also stressed thatthe EU- Myanmar IPA could lead to new economic opportunities and to improvements in life

standards if the investment activities it would give rise to were to be conducted in accordance with

international standards and laws. They will thereby influence local companies to do the same in

order to compete on the responsible business and CSR levels. In that sense, the IPA would contribute

to the promotion of democracy and the rule of law in Myanmar by foreign and local companies ”.

This is a complete misinterpretation of the words of the UN expert as it stems without a doubt fromthe press release that the report actually quotes. Instead, the UN expert stated that the investmentagreements currently negotiated should be deeply revised in order to not impede human rights, to notinterfere with human rights policies and to not aggravate the problem of extreme poverty. It adds,“robust safeguards must be embedded to ensure full protection and enjoyment of human rights”. Theadditional comment made by the incentive report of the potential effect of local companies aligning

on foreign companies CSR has not been supported by the UN expert and is not proved in practice.Assessing EU and UK practices in particular, studies have instead concluded that CSR guidelines arewithout significant impact in practice, are lacking in ambition, remain partial and lack effective

application35 - The reports consider the positive effects of the ISDS by stating that “the European Commission has

taken notice of concerns raised by some stakeholders, notably by NGOs, regarding social and

environmental rights’ violations potentially arising from the investment dispute resolution by

restating that this mechanism is framed by legal guarantees”. As demonstrated below, this shows

34 Sarah Schadendorf, Human Rights Arguments in Amicus Curiae Submissions: Analysis of ICSID and NAFTA

Investor-State Arbitrations, Transnatonal dispute management, vol 10 issue 1, january 2013,

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2206812.35 McCarthy, D. & Morling, P. (2015). Using Regulation as a Last Resort: Assessing the Performance of Voluntary

Approaches. Royal Society for the Protection of Birds: Sandy, Bedfordshire.

https://www.rspb.org.uk/Images/usingregulation_tcm9-408677.pdf



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bias, and the role of an independent SIA is necessary to verify this assertion.

- We can find some traces of a provisional conclusion. For example, the assertion that “due to

enhanced investment protection for investors from countries who have signed such an agreement

with Myanmar – notably China, Japan, Thailand and Singapore, EU investors continue to be

disadvantaged in entering the Myanmar market, in particular in light of large infrastructure

investments including three Special Economic Zones. Without an IPA with Myanmar, the EU’s

ability to support Myanmar’s political and economic development by encouraging responsible

investment and sustainable development in Myanmar, two key provisions in EU trade and investmentagreements, would therefore be very limited ”36. We do not need an expensive impact assessment toconclude that an institutionalised dialogue on CSR is better than nothing. However, it is not provedthat we need an investment agreement to that end, and in any case, this conviction cannot suffice in

itself. First, it remains to be seen how effective the mechanisms initiated in the agreements regardingresponsible investment and sustainable development are; second, it hides the negative impacts of the

other clauses of the CETA Singapore TTIP models. As previously stated, other options and modelsshould be assessed, so as not to choose between an agreement and its absence, but to ensure that ifthe EU does conclude this agreement, it encompass the most relevant and proportionate safeguardsto protect human rights.

Regarding the information provided on pages 56-61 describing the human rights situation in Burma, itappears that the baseline scenario is of poor quality, outdated, and neglects to talk about serious human rightsviolations that have continued to occur since 2011. A lot of the information concerning business and humanrights comes from one single source, the Myanmar Center for Responsible Business. There is no information

coming from the Business and Human Rights Resource Center, or from Burmese organisations. This sectioncontains many unacceptable statements/arguments:

- "The role of the military in Myanmar has been considerably reduced " (page 57) : it has to beconsiderably nuanced : the military retains its independence from the government (Article 20 of theConstitution), its budget expenditure has increased by 131% since 2011; 25% of the MPs areappointed by the Commander-in-Chief (Constitution); key ministry (Home Affairs, Border Affairs,

Defence), have to be serving military officers;- The Myanmar National Human Rights Commission does not meet the principles of Paris and cannot

be presented as an acceptable national human rights institution, at least in its current form. ThePresident appointed the members. The Chairman has denied human rights violations in ethnic areasand is strongly anti-Rohingya

37. The body has failed to conduct credible investigations into human

rights abuses and does not have the power to forward cases to the judiciary.

- "[...] a new type of direct engagement with local companies in Myanmar is emerging among Chinese

investors” (page 59): there is no evidence whatsoever of this; in fact, the problems that Chinese-

backed investments projects have caused have not been addressed. For example, they did build a fewschools in areas affected by the construction of the Kyaukphyu-Kunming pipeline or near theLetpadaung copper mine, but there are no teachers there.

- Almost no mention is made of all the existing and new repressive laws that authorities continue touse to restrict the right to freedom of expression and peaceful assembly38. There is just a bizarremention of the Emergency Provisions Act, which hasn't been used in quite some time.

-

No mention whatsoever of the fact that, in many ethnic minority areas of Burma, minority, conflict,displacement, attacks against civilians, and other serious human rights violations against localcommunities have been the result of the implementation of investment and infrastructure projects.

- UN Global compact cannot be quoted without referring to all the studies having expressed reserveson the initiative39

- All the assessment of land issues (forced eviction without compensation or access to remedies and all

36 see p. 44

37 http://www.altsean.org/Research/Regime%20Watch/Judicial/Human%20Rights%20Commission.php#Win).

38 See the list here https://www.fidh.org/en/region/asia/burma/burma-political-parties-neglect-human-rights-priorities

39 ex : A study released last year by ECCJ, together with IPIS, collected allegations from 2005 to 2013 about adverse

human rights impacts of 170 listed companies from the UK, France and Germany stock market indexes (FSTE100,

CAC40 and DAX30). The findings speak for themselves: in the last decade around half the companies listed on theseindexes have been named in human rights concerns, expressed by the media or non-governmental groups. The study

again shows the ineffectiveness of companies’ adherence to voluntary, non-enforceable standards: of the 90 listedcompanies identified in human rights-related concerns or allegations, 63 are members of the UN Global Compact.



10

the restriction of civil and political rights related as well as lack of access to adequate standards of

livings and ESCR rights) has to be better documented, also in SEZ 40.

The same remarks apply to the sectorial analysis. Statements like “ since building the Yadana Gas Pipeline

Project Total is the most well-known oil and gas company in Myanmar and is particularly noted for its CSR

contributions” should be revised. Once again, it is a misinterpretation of the source quoted. The article onlysaid that since 1998, “Total E&P Myanmar has spent US$35.66 million on education, health and social

development programs”. To be conclusive, the study should be less focused on philanthropic contribution, but on respect of human rights, prosecution and reparation for past serious violation, in Burma and in othercountries. Facts are that “since the [Yadana] project’s beginnings in the early 1990s, it has been marred byserious and widespread human rights abuses committed by pipeline security forces on behalf of the

companies, including forced labour, land confiscation, forced relocation, rape, torture, murder”. In 2010, itwas reported that “many of these abuses continue today”41. Because of the gravity of the human rights

violations linked to the oil and gas sector, mining, agriculture and infrastructure/construction, a deep

assessment is required. It has to be done on a wide range of human rights issues, access to land and theassociated human rights (civil and politic but also economic and social rights), effective access to remediesand equality before the law among them.

The draft analytical matrix of key sustainable impacts of the measures proposed in the EU-Myanmar IPA,table 14 p. 79: there is a need to complete the matrix, to better make the link between the situation on theground and the human rights and issues retained for analysis, explain why and how the positive and negativeeffects have been identified. The matrix is not convincing and lacks scientific background and

argumentation. Our remarks on table 9 & 10 are fully relevant. How the selection was made needs to beexplained.

II. Investment protection agreement models: a need to revise the global economy of the investment

agreements and revise the specific wording of their substantive clauses, what are the other options to

be assessed?

CETA and TTIP’s innovations show just how much of a need there is for caution and to avoid rushing to

conclude problematic agreements. Compared to other investment agreements, the CETA offers a more precise formulation of some provisions (such as on expropriation) and offers some innovation regardingISDS (mainly the possibility to agree later on an appeal mechanism and code of conduct for arbitrators, the

possibility for the parties to agree on specific interpretation and transparency rules in ISDS). However, those

proposals, despite some positive improvements, only provide a partial answer to human rights challenges.Improvements have been qualified as positive, but largely insufficient and mainly cosmetic42. Facing strong

opposition, the Commission suspended the negotiation of TTIP and promised reforms. The new model provided for TTIP proposes notably a new clause on the right to regulate, a professionalised ISDS Court(instead of the ad hoc arbitral tribunals), an appeal mechanism, and provides additional elements that mayhelp to preserve the autonomy of the EU legal order. Once again, those innovations are interesting, but donot appear to address human rights concerns. In that regard, and noting that the disproportionate effects onhuman rights shown in table 9 of the SIA incentive report remain unchanged, other options need to be

framed.

40 see Burma: FIDH/ALTSEAN BURMA Recommendations concerning EU-Burma investment relations,

https://www.fidh.org/en/region/asia/burma/14543-burma-fidh-altsean-burma-recommendations-concerning-eu-burma-

investment, 29/01/2014FIDH, burma/myanmar : arbitrary detention and sentencing of six human rights defenders, 19/05/2015,https://www.fidh.org/en/region/asia/burma/burma-myanmar-arbitrary-detention-and-sentencing-of-six-human-rights;

FIDH, Burma/Myanmar: Arbitrary detention and sentencing of Mr. Thein Aung Myint,https://www.fidh.org/en/region/asia/burma/burma-myanmar-arbitrary-detention-and-sentencing-of-mr-thein-aung,27/04/2015 ; FIDH, Burma: Killing of Mr. San Tun, https://www.fidh.org/en/region/asia/burma/15528-burma-killing-

of-mr-san-tun, 12/06/2014 ;41 Earthrights International http://www.earthrights.org/campaigns/yadana-pipeline 42

Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”, July 2015,

p. 98, http://www.cancer.ie/content/eu-us-trade-deal-likely-affect-irelands-ability-pass-public-health-laws#sthash.v7HBfTWs.dpbs



11

1. Among the issues at stake: substantive clauses excessively protecting the foreign investors, not

offering HR safeguards and enforced by ISDS mechanisms in a way that directly affect the obligations

and ability of States to respect, protect and fulfil their HR obligations

While the States have an obligation to regulate under human rights law, the investment agreements, in their

different formulations on expropriation or fair and equitable treatment (FET) and other clauses, affect theexact contours of the States’ ability to do so43. Investment agreements’ clauses define what is lawful under

the Investment Law created by the Agreement. Depending on the wording of its provisions, a same policy,regulation or measure taken by the State, might be considered as necessary and proportionate under humanrights international law, but unlawful in regard of international investment law. Any ISDS mechanisms,conceived to enforce investors’ protection clauses of the investment agreements, will in consequence have

important impacts. ISDSs offer a direct way for foreign investors to challenge the measures taken by theState, even those measures taken to comply with their obligation to respect, protect and fulfil human rights.

Foreign investors can rely on investment agreements’ standards to challenge government action thatadversely affects business prospects. Clashes between a State's investment treaties and human rightsobligations have notably been raised in the context of regulatory measures relating to water and sanitation,health, and land reform.

ISDS cases’ analysis reveals that, being lawful under the human rights law (because pursuing legitimate public purpose and being proportionate under HR law), a State measure may be judged unlawful under theinvestment agreement law, consequently opening a right to compensation for foreign investors. Thecompensations are not minor or anecdotal, “awards are regularly made in the hundreds of millions of US

dollars, and awards of billions are becoming more regular” 44. In addition, “average costs of litigating one

case are around US$ 8 million per claim per disputant, and have been as high as US$ 30 million (or ! 7.3

and ! 27.3 million respectively)”45. The case Occidental Petroleum against Ecuador (termination of an oil production site in the Amazon, Ecuador arguing of multiple human rights violations and environmentalimpacts) resulted in an award of $1.76 billion to Occidental ($2.4 billion with interest)46. Largecompensation amounts raise important challenges. Investment agreements are conceived to attract

investments and ultimately serve development goals, but “the more foreign investment it has accepted, the

more costly and difficult certain political choices may become with a view to the damages or compensation

expected to be awarded by arbitral tribunals. Such financial risks may even reach prohibitive levels”47

. UNexperts point out that developing countries are even more vulnerable since they lack the resources to defendthemselves against major transnational enterprises

48. In addition, countries like Burma face important risks

due to the important regulations, laws and measures they have to take to meet their human rights obligations.

Investment agreements, creating new and more stringent conditions for a State measure to be lawful, and

weighting seriously on public finances, have created a worrisome “chilling effect”. Indeed, it appears thatgovernments are now factoring liability risks into decision-making and States hold back from enactinglegislation due to concerns about arbitration claims

49:

- One of the most prominent cases illustrating this “chilling effect” is that of Vattenfall on the constructionof a new power plant at Moorburg near Hamburg. To avoid damages said to be of some 1.4 billion

Euros, Germany has issued, as part of the amicable settlement, “a modified water use permit”. 50

43 Lorenzo Cotula, property in a shrinking planet: fault lines in international human rughts and investment law,International Journal of Law in Context, June 2015, pp 119-120http://journals.cambridge.org/abstract_S1744552315000026

44Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”, op.cit., p4445 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,

op.cit., p 4446 UN Independant expert Alfred-Maurice de Zayas, Report, 14 July 2015, A/HRC/30/44, op.cit 47 Dr Ingolf Pernice, op.cit., p. 134 .

48 UN Independant expert Alfred-Maurice de Zayas, Report, 14 July 2015, A/HRC/30/44, op.cit§ 28

49 Lorenzo Cotula, property in a shrinking planet: fault lines in international human rights and investment law,International Journal of Law in Context, June 2015, p 129.

50 Dr. Pernice Study on international investment protection agreements and EU Law, Directorate General forexternal policies of the EU, INTA, Investor-State Dispute Settlement (ISDS) provisions in the EU's international



12

- Australia referred expressly to this “chilling effect” in its defence on the claim initiated by Philip Morrisagainst its decision on plain packaging. It says “many countries are now awaiting the results of the

litigation in order to decide on their own legislative proposals on plain packaging .” Australia adds thatthe case has " produced and is producing a deep and profound regulatory chill across the globe”51.

Indeed, New Zealand’s government decided “not to take any action before the resolution of on-going

investment claims by Philip Morris against Uruguay and Australia”52

. And “Uruguay itself reportedly

considered watering down its tobacco control regulations as an initial response to the claims”53.

- In the same vein, a Commission established by the Canadian government to enquire into the extension ofnon-profit public health insurance, to cover extra treatments such as prescription medicine and dental

care, warned that “this may not be feasible due to damage claims under investment treaties”54

. And thethreat of investment claims reportedly “ factored into the eventual decision of the Czech government not

to re-establish a number of hospitals as non-profit organisations” 55

.

This “chilling effect” known in developed countries could be far more important in developing countries andin countries, such as Burma, already reluctant to protect human rights. In Sawhoyamaxa v. Paraguay, anindigenous community claimed restitution of their ancestral lands. It is reported “the Paraguayan

government resisted restitution, arguing that the claim ‘collides with a property title which has been

registered’, lastly with a German investor protected under the Germany–Paraguay BIT ” 56

Finally, “investor-State dispute settlement has mutated from a corporate shield against allegedly unfair

behaviour by States into a tactical weapon to delay, weaken and kill regulation. Specialized law firms

actually encourage their multinational clients to scare Governments into submission: “It’s a lobbying tool in

the sense that you can go in and say, ‘Ok, if you do this, we will be suing you for compensation.’ It does

change behaviour in certain cases” 57.

“ Investment treaties act to effectively ‘lock in’ market oriented policies favourable to foreign investors and

their profit margins mak[ing] the reversal of these policies prohibitively expensive”58

. As observed by theUN independent expert, Alfred-Maurice de Zayas, “ it is not just a question of reforming the investor–State

dispute settlement system for the future, but imperative to review and revise existing bilateral investmenttreaties and free trade agreements, which were never intended to become prisons for States”59.

In the absence of adequate safeguards to ensure the right balance between collective and individual interest,

as does the HR law, serious impacts will be deplored. Past experience actually proves that “trade agreements

and their associated dispute resolution systems are currently failing to accommodate or facilitate human

rights, or are otherwise actively opposed to their protection and fulfilment ” 60

.

investment agreements, Vol 2-Studies, September 2014 , p. 139.

51 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,op.cit., p 6752 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,

op.cit., p 83.53 Ibidem. 54 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,op.cit., p 6755 Ibid.56 Lorenzo Cotula, property in a shrinking planet: fault lines in international human rughts and investment law,

International Journal of Law in Context, June 2015, pp 127 http://journals.cambridge.org/abstract_S1744552315000026 57 Report of the Independent Expert on the promotion of a democratic and equitable international order on theimpact of investor-State-dispute-settlement on a democratic and equitable international order (A/70/285), §46

http://www.un.org/en/ga/search/view_doc.asp?symbol=A/70/285 58 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,op.cit., p 72

59 UN Independant expert Alfred-Maurice de Zayas, Report, 14 July 2015, A/HRC/30/44, op.cit. §30

60 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,“TTIP, ISDS and the Implications for Irish Public Health Policy”, A Report for the Irish Cancer Society, Full Report,

July 2015, p.48 http://www.cancer.ie/content/eu-us-trade-deal-likely-affect-irelands-ability-pass-public-health-laws#sthash.AkkR1oIW.dpbs; citing Ernst Ulrich Petersmann, ‘The WTO Constitution and Human Rights’ 3 Journal of



13

ISDS cases’ review indeed confirms that insufficient clauses, such as vague formulation on rights to regulate,affirmation of environmental and development objectives, affirmation of the relevance of international lawand the reference to customary interpretation rules contained in Vienna Convention on the Law of Treaties,and T&SD chapter, remain insufficient61. Instead, “experience shows that arbitrators interpret international

investment agreements without human rights or environmental constraints”62

. And finally, “no investment

tribunal has yet engaged with international human rights law, let alone sought to apply it ” 63. The following

examples illustrate the tendency of arbitral tribunals to reject human rights law and to adopt narrowerinterpretation of what should be considered as lawful State measure exempting in consequence the State’sliability to serve prohibitive compensation:

o Eureko v. Slovak Republic, the tribunal reject the applicability of the EU Charter on Fundamental Rights:“ BIT protects “assets” and “investments” rather than the arguably narrower concepts of “possessions”

and “property” protected by the EU Charter on Fundamental Rights, give rise to the possibility of wider

protection under the BIT than is enjoyed under EU law.” 64

o

Rompetrol Group N.V. v. Romania, the arbitral tribunal stated “The ECHR has its own system and

functioning institutional structure for complaints of breach against States Parties. […] The governing

law for the issues which do fall to the Tribunal to decide is the BIT” .65

o

Siemens V. Argentina, the tribunal “observes that Article I of the First Protocol to the European

Convention on Human Rights permits a margin of appreciation not found in customary international

law or the Treaty”66.

o Bernhard von Pezold and Others v. Republic of Zimbabwe: human rights law is judged “unrelated to the

matters before the Arbitral Tribunals”. The case being related to a reform aiming to redistribute lands todiscriminated populations, and affecting property rights of foreign investors, the tribunal added “the

Petitioners provided no evidence or support for their assertion that international investment law and

international human rights law are interdependent such that any decision of these Arbitral Tribunals

which did not consider the content of international human rights norms would be legally incomplete”67.

o In Suez, the Tribunal explained that Argentina was “subject to both international obligations, i.e.

human rights and treaty obligation, and must respect both of them equally”. It added that “ Argentina’s

human rights obligations and its investment treaty obligations are not inconsistent, contradictory, or

mutually exclusive. Thus, as discussed above, Argentina could have respected both types ofobligations”68.

o

In SAUR: the tribunal did not reject the right of Argentina to regulate to fulfil its human obligations, butstated “these powers are compatible with the rights of investors to receive protection under the

[investment agreement]. The human right to water and the right of the investor to benefit from the

protection offered by [the investment agreement] operate on different levels. If the government decides

to expropriate […], the investor shall have the right to compensation in the terms that the Treaty

International Economic Law (2000); Robert Howse, ‘Human Rights in the WTO: Whose Rights, What Humanity?

Comment on Petersmann’ 13 European Journal of International Law (2002) and rank Garcia, ‘The Global Market andHuman Rights: Trading Away the Human Rights Principle’ 25 Brooklyn Journal of International Law (1999)61 OECD, « Investment treaty law, sustainable development and responsible business conduct : a fact finding

survey », June 2014 http://www.oecd.org/daf/inv/mne/2014RBCMinisterial-TreatyRBC.pdf62 UN Independant expert Alfred-Maurice de Zayas, Report, 14 July 2015, A/HRC/30/44, op.cit. p10.63 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,opcit., p. 9864 Eureko B.V. v. Slovak Republic UNCITRAL, PCA Case No. 2008 -13, Award on Jurisdiction, Arbitrabilityand Suspension, 26 October 2010 (para. 261) http://www.italaw.com/sites/default/files/case-documents/ita0309.pdf

65 The Rompetrol Group N.V. v. Romania, ICSID Case No. ARB/06/3, Award, 6 May 2013, §§ 154, 168-170,172, 206-261http://italaw.com/sites/default/files/case-documents/italaw1408.pdf66 Siemens A.G. v. ArgentineRepublic, ICSID Case No.ARB/02/8, Award, 6 February2007 (para. 354) ; see also

Quasar de Valores SICAV S.A., Orgor de Velores SICAV S.A., GBI 9000 SICAV S.A., ALOS 34 S.L. v The Russian

Federation, SCC CC Case No. 24/2007, Award, 20 July 2012 http://italaw.com/sites/default/files/case-documents/ita1075.pdf /

67 Bernhard von Pezold and Others v. Republic of Zimbabwe, ICSID Case No. ARB/10/15, procedural order n°2,

26 june 2012, §§ 57 TO 60 http://www.italaw.com/sites/default/files/case-documents/ita1044.pdf68 Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v. Argentina, ICSID

ARB/03/19, Decision on Liability, 30 July 2010, ICSID Case No. ARB/03/19http://www.italaw.com/sites/default/files/case-documents/ita0826.pdf



14

grants it ”69.

o

In EDF : “The Tribunal does not call into question the potential significance or relevance of human

rights in connection with international investment law. However, […] no showing has been made that

Argentina was not able to comply with the relevant treaty provisions […]. In short, no evidence

persuades the Tribunal that Respondent‘s failure to renegotiate tariffs in a timely fashion, […], was

necessary to guarantee human rights”70

.o In Chevron, a case were the oil company, being sued before Ecuadorian Courts for the environment and

human rights impacts in Lago Agrio region, used the ISDS to escape condemnation. The tribunalconsidered “ If there were an inconsistency between the Respondent’s obligations under the BIT and the

Lago Agrio plaintiffs’ rights as determined by the Courts in Ecuador, it would be for the Respondent to

decide how to resolve that inconsistency […] The question for this Tribunal is in essence whether the

Respondent has or has not violated rights of the Claimants under the BIT because of the way in which

the Respondent has, through its organs, acted […]. The question is one of the rights and obligations

existing between the Claimants and the Respondent; and the Lago Agrio plaintiffs, who are not parties

[…] to the BIT, do not have rights that are directly engaged by that question. If it should transpire that

the Respondent has […] taken a step which had the legal effect of depriving the Lago Agrio plaintiffs of

rights under Ecuadorian Law that they might otherwise have enjoyed, that would be a matter between

them and the Respondent, and not a matter for this Tribunal.”71

Arbitral tribunals obviously remain reluctant to consider human rights law, and when recognised as relevant,the “respect both” (investment agreement and human rights obligations) theory, made human rights lawunable to inflect the investment agreements obligations. The protection provided to foreign investors by

investment treaties consequently participate in impeding the capacity of States to protect human rights bycontrolling the activity of businesses, and to fulfil human rights by taking relevant policies and measures if

they affect foreign investors.

The solutions proposed by the Commission before the CETA and TTIP reforms remain insufficient (see forexample its position in EU-China investment agreement context “ In DG Trade's opinion there was no

inherent conflict between both sets of rights. States had the possibility to advance Human Rights obligations

as defence against investor claims. Arbitration tribunals had then to examine whether Human Rights

obligations were a valid defence for the state measures in question […] In this context, DG Trade had proposed to include a reference to the Vienna Convention in an article on rules of interpretation”)

72. Thissolution, being inefficient to address the human rights challenges described, should not be applied to the EU-Burma investment agreement.

2. EU models and modifications proposed in CETA and TTIP proposals: unable to address the

problem

The CETA and TTIP do not provide the needed reforms to address human rights issues. Far from beingexhaustive, on expropriation for example:

The proposal is the same for TTIP73 and for CETA74. The text prohibits expropriation without compensation,

69 SAUR International SA v. Republic of Argentina, ICSID Case No. ARB/04/4, § 331 décision on juridictionand liability, 2012 http://www.italaw.com/sites/default/files/case-documents/ita1015.pdf70 EDF International S.A., SAUR International S.A. and León Participaciones Argentinas S.A. v. ArgentineRepublic, ICSID Case No. ARB/03/23, Award, 11 June 2012 (paras. 194) France Argentine BIT & Belgique argentine

BIT http://italaw.com/sites/default/files/case-documents/ita1069.pdf 71 Chevron Corporation and Texaco Petroleum Corporation v. The Republic of Ecuador , UNCITRAL, PCACase No. 2009-23,,Third Interim Award on Jurisdiction and Admissibility, 27 février 2012,

http://www.italaw.com/sites/default/files/case-documents/ita0175.pdf , Part III, pt. 4.66 & 4.7072 SWD (2013) 185 final, Commission Staff Working Document – Impact Assessment Report on the EU-ChinaInvestments Relations - Accompanying the document Recommendation for a Council Decision authorising the opening

of negotiations on an investment agreement between the European Union and the People's Republic of China , Brussels

23 May 2013, available at: http://ec.europa.eu/governance/impact/ia_carried_out/docs/ia_2013/swd_2013_0185_en.pdf , pp. 78-8073

art 5 & annexe 1, 16 september 201574

X.11 and interpretation in annex



15

even in the case that it occurs for a public purpose, under due process of law and in a non-discriminatory

manner 75. Considered in isolation, this text does not, consequently, solve potential conflicts with humanrights law which gives States a large margin of appreciation on what is "for public purpose" and

proportionate, and which recognises, in some cases, the possibility of not compensating or offering onlylimited compensation76. In TTIP and CETA proposals, a way for the State to escape compensation is to argue

that the measures taken do not amount to expropriation. For indirect expropriation at least, using first “astandard and broad definition” that does not really help77, CETA and TTIP proposals offer a list of factors to

take into consideration78. Moreover, the text adds that, normally, if not judged too severe in light of their purpose and under certain conditions, measures that are “designed and applied to protect legitimate public

welfare objectives, such as health, safety and the environment ” do not constitute direct expropriation79

. Seenas a positive step80, observers nevertheless note that the capacity of these elements of definition to prevent

the abusive interpretation we have known in the past, remains limited. The lack of express mention of humanrights could invite tribunals to consider that the measures that do not appear to be directly linked to welfare

objectives, such as health, safety and the environment, cannot benefit from the presumption of legality provided by the text on indirect expropriation. In addition, the clause uses a number of “unclear and broad

aspects” that might invite the tribunal to evaluate whether the object and intent were legitimate and to reviewdomestic laws based on its own assessment of the measure’s necessity and relation to the goal that themeasure pursues81. The text is insufficient to prevent the tribunals to reject the State’s ‘margin ofappreciation’ and the ‘proportionality test’ recognised by human rights law and adds some problematicfactors to take into consideration such as the “legitimate expectations of the investor”82. Dr Joshua Curtis andDr John Reynolds argue: “While this text is a step in the right direction it does not secure the right to

regulate […] the text instead solidifies the role of tribunals in second guessing […] regarding a balance

75 Neither Party may nationalize or expropriate a covered investment either directly, or indirectly through

measures having an effect equivalent to nationalization or expropriation (hereinafter referred to as “expropriation”),except: (a) for a public purpose; (b) under due process of law; (c) in a non-discriminatory manner; and (d) against

payment of prompt, adequate and effective compensation.76

ECHR, Dennis GRAINGER and others against the United Kingdom, Application no. 34940/10, Decision 10July 2012, § 36 http://hudoc.echr.coe.int/sites/eng/pages/search.aspx?i=001-112312#{%22itemid%22:[%22001-

112312%22]}

77 Markus Krajewski, “Modalities for investment protection and Investor-State Dispute Settlement (ISDS) inTTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p. 13,http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf

TTIP annexe on exprorpiation and CETA annex on expropriation define: “1. Expropriation may be either

direct or indirect: (a) direct expropriation occurs when an investment is nationalised or otherwise directly expropriated

through formal transfer of title or outright seizure. (b) indirect expropriation occurs where a measure or series of

measures of a Party has an effect equivalent to direct expropriation, in that it substantially deprives the investor of the

fundamental attributes of property in its investment, including the right to use, enjoy and dispose of its investment,without formal transfer of title or outright seizure”78

TTIP annexe on exprorpiation and CETA annex on expropriation : “2. The determination of whether a

measure or series of measures of a Party, in a specific fact situation, constitutes an indirect expropriation requires a

case-by-case, fact-based inquiry that considers, among other factors: (a) the economic impact of the measure or series

of measures, although the sole fact that a measure or series of measures of a Party has an adverse effect on the

economic value of an investment does not establish that an indirect expropriation has occurred; (b) the duration of themeasure or series of measures by a Party; (c) the extent to which the measure or series of measures interferes with

distinct, reasonable investment-backed expectations; and (d) the character of the measure or series of measures,notably their object, context and intent ”.79

TTIP annexe on exprorpiation and CETA annex on expropriation : 3. For greater certainty, except in the rarecircumstance where the impact of the measure or series of measures is so severe in light of its purpose that it appears

manifestly excessive, non-discriminatory measures of a Party that are designed and applied to protect legitimate

public welfare objectives, such as health, safety and the environment , do not constitute indirect expropriations.80

Markus Krajewski underlines that whilst the rejects of the so-called “sole effects” doctrine (which would only

assess the effects of a measure to determine whether it amounts to indirect expropriation) even difficult questionsremain.81

Markus Krajewski, “Modalities for investment protection and Investor-State Dispute Settlement (ISDS) in

TTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p. 13,

http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf82


TTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p. 13,http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf



16

between public goals and costs incurred by foreign investors. Tribunals will again engage in inherently

subjective proportionality analysis, requiring evaluations of whether or not the measures at issue are

substantially and sufficiently related to the given public purpose, whether or not they are justified according

to their own cost-benefit analysis, and whether alternatives that are more desirable from the investor’s

standpoint should have been adopted instead ”83. The risk persists to see tribunals decide that investment

agreements set more stringent standards than human rights law.

Indeed, based on past cases, observers consider it insufficient to create a presumption in favour of some stateregulations; express mention that some measures are not indirect expropriation “regardless of their adverse

impact on investments” should be preferred84

. The list of factors to be taken into account to qualify indirectexpropriation is moreover considered as positive but only on the condition that the list avoids vague

reference to "legitimate/ reasonable expectations" of investors, and "character" of the measure, and introducea hierarchy of criteria that may be otherwise irreconcilable (like the economic effect and character of the

measure)85

.

When substantive clauses do not offer sufficient protection, the general exceptions can help the State toescape its liability. The EU CETA model, however, excludes expropriation and FET from the scope of thegeneral exceptions86. So measures amounting to an indirect expropriation or a measure violating the fair andequitable treatment standard could not be justified on the basis of the exception clauses 87. Even in their fieldof application, the model remains criticized. In the ISDS context, “ the vast majority of tribunals hearing this

defence rejected it on a narrow interpretation of the term ‘necessary’, finding in its proportionality analysis

that other measures less damaging to investors could have been taken by the State and that it remained

liable under the investment regime” 88. Under the CETA general exceptions regime, maintaining the‘necessity test’, arbitral tribunals will be charged “with a highly subjective task of weighing and balancing

the interests of investors against their perception of the validity, legitimacy and importance of the public

measures taken” 89. It continues in consequence to give credit to ISDS cases rejecting the ‘margin ofappreciation’ and ‘proportionality test’ making measures lawful under human rights law. In addition, in theEU’s approach, the general exceptions clauses only cover a limited set of policy goals. They include public

order and public security measures, health and safety measures and environmental measures90

. Human rights,social and labour policy measures are not covered.91 In other words, if human rights laws were to have a

83 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,

opcit., p. 94 they add: “The standard of review here, of ‘appearing manifestly excessive’, and the qualification involvedin a reference to ‘rare circumstances’, admittedly sets a relatively high threshold. However, the track record of tribunals

in skirting around restrictive wording does not instil too much confidence in the ultimate effectiveness of theseconditions. For starters, only the appearance of manifest excess is required, which may preclude an in depth analysis ofwhether a measure was in fact excessive”84

IISD, Bonnes pratiques, L’expropriation indirecte, Suzy H. Nikièma, mars 2012,http://www.iisd.org/pdf/2012/best_practice_indirect_expropriation_fr.pdf85

IISD, Bonnes pratiques, L’expropriation indirecte, Suzy H. Nikièma, mars 2012,

http://www.iisd.org/pdf/2012/best_practice_indirect_expropriation_fr.pdf86

They apply to National Treatment and Market Access for Goods, Rules of Origin, Origin Procedures, Customsand Trade Facilitation, Wines and Spirits, Sanitary and Phytosanitary Measures and for Investment on Establishment of

Investments and Non-discriminatory Treatment. ; see CETA consolidated text, 26 September 2014, Ch. 32 Exceptions,http://www.international.gc.ca/trade-agreements-accords-commerciaux/agr-acc/ceta-aecg/text-texte/toc-tdm.aspx?lang=eng87

Markus Krajewski, “Modalities for investment protection and Investor-State Dispute Settlement (ISDS) inTTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p.22; Applicable forexample to National treatment general exceptions would allow states to defend discriminatory measures taken for

specific legitimate policy goals provided that the measures are necessary and that their application is not discriminatoryand does not constitute a disguised restriction on trade88

Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,

opcit., p. 9189

Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,opcit., p. 9090


TTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, pp 11-12,http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf91

CETA adding even : ““The public security and public order exceptions may be invoked only where a genuineand sufficiently serious threat is posed to one of the fundamental interests of society” CETA, art 32 Exceptions, Article



17

discriminatory effect on foreign investors, they might not be justifiable under the general exemption

clauses.92

This model being unable to preserve the ability of States to meet their human rights obligations, Prof. L.Bartels proposed the following clause: subject to the requirement that such measures are not applied in a

manner which would constitute a means of arbitrary or unjustifiable discrimination between the Parties

where like conditions prevail, or a disguised restriction on trade in goods [services or establishment],

nothing in this Agreement shall be construed to prevent the adoption or enforcement by the parties ofmeasures undertaken for the purpose of respecting, protecting or fulfilling human rights and respecting

democratic principles and the rule of law in their internal and international policies”93

. A clause thatshould, in addition, go hand in hand with the reform of ISDS and interpretation rules.

Finally, to preserve the right to regulate in conformity with human rights law standards, additional

precautions should be taken. They must ensure that the global economy of the investment regime cannot beseen as deploying in parallel to public interest but effectively ensure the right and fair balance between

private interests and public interest. To that end, along with a deeper and more efficient protection of humanrights in the clauses, like those related to expropriation and general exceptions, specific provisions on theright to regulate and a reform of the dispute settlement may help.

CETA however, contains only a mention in the preamble that the “ provisions of this Agreement preserve the

right to regulate […] to achieve legitimate policy objectives” (once again without mentioning human rights),while the text only refers to the right to regulate in the T&SD chapter. The imprecision of the clauses cannot

prevent tribunals to consider, as they have done, that the right to regulate is simply not at stake becausehuman rights law and investment laws ‘operate on different levels’, so the State has to ‘respect both’. As said

by Dr. Pernice, that kind of clause does not give assurance to the host state that “their legitimate and

democratically decided policies are not impaired by the decision of an arbitration tribunal under ISDS ”94.Worst, CETA Article x-36(3), which gives direction to tribunals when calculating damages incurred byinvestors, states that “any repeal or modification” of the measure or measures complained, is to be taken into

account when calculating ultimate damages. “This could act as an incentive for States, either before or in the

course of litigation, to in fact change or withdraw the measure in the hope of ultimately paying less to the

injured investor. This text is highly undesirable as it “institutionalizes the pressure for a state to change itsdecisions in favour of foreign investors”.” 95

The September 16, 2015 TTIP proposal is more advanced but remains unclear. The clause on the right to

regulate effectively prevents tribunals from considering that investors may have legitimate/reasonableexpectations that the Sate will not change the legal and regulatory framework 96. This would be a clear

X.02: General Exceptions92


TTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, pp 11-12,http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf93

A Model Human Rights Clause for the EU’s International Trade Agreements, Lorand Bartels, February 2014,

p. 37 http://www.institut-fuer-menschenrechte.de/uploads/tx_commerce/Studie_A_Model_Human_Rights_Clause.pdf 94

Dr Ingolf Pernice, op.cit., p. 142- 14395


Transatlantic Trade and Investment Partnership TRADE IN SERVICES, INVESTMENT AND E-COMMERCE

CHAPTER II - INVESTMENT, Commission draft text TTIP - investment, 16 semptember 2015,http://trade.ec.europa.eu/doclib/docs/2015/september/tradoc_153807.pdf , Art. 2.2 « For greater certainty, the

provisions of this section shall not be interpreted as a commitment from a Party that it will not change the legal

and regulatory framework, including in a manner that may negatively affect the operation of covered

investments or the investor’s expectations of profits”. The clause provide some guarantees on State aid 2.3 “Forgreater certainty and subject to paragraph 4, a Party’s decision not to issue, renew or maintain a subsidy (a) in the

absence of any specific commitment under law or contract to issue, renew, or maintain that subsidy; or (b) in

accordance with any terms or conditions attached to the issuance, renewal or maintenance of the subsidy, shall notconstitute a breach of the provisions of this Section”. 2.4 “For greater certainty, nothing in this Section shall be

construed as preventing a Party from discontinuing the granting of a subsidy and/or requesting its reimbursement, or asrequiring that Party to compensate the investor therefor, where such action has been ordered by one of its competent



18

improvement compared to past practice. But beyond this, the provisions problematically only apply to a

specific section of the agreement (including expropriation and FET) but not to the entirety of the agreement 97 and the global efficiency of the clause to address the human rights concerns presented above remainsdoubtful. Indeed, the clause is formulated in vague terms and enters directly in contradiction with the otherclauses, whose terms are clearer and stronger, and will consequently prevail. The clause on the right to

regulate states: “the provisions of this section [ex: on expropriation] shall not affect the right of the Parties

to regulate within their territories through measures necessary to achieve legitimate policy objectives, such

as the protection of public health, safety, environment or public morals, social or consumer protection or promotion and protection of cultural diversity”. The use of the term “affect” is ambiguous, and ISDS's past practice has shown that even a narrow interpretation of the investment agreement is considered as notaffecting the right to regulate. The term “affect” offers even less protection as, immediately after, in the same

clause on the right to regulate and regarding State aids, we see what is said when the parties effectively wishto protect the right to regulate. For subsidies, the text indeed says “nothing in this Section shall be construed

as preventing a Party from discontinuing the granting of a subsidy and/or requesting its reimbursement, or

as requiring that Party to compensate the investor therefore, where such action has been ordered by one of

its competent authorities listed in Annex III ”. Finally, the real contour of the right to regulate remainsdependent on the formulation of the other clauses, and the clauses do not mention human rights. Even intheir field of application, they do not necessarily inflect the substantive clauses of the investment agreementand reintroduce instead a ‘necessity’ test.Minimal in the CETA, it is the reform of ISDS proposed for the TTIP that presents the more importantimprovements. Beyond the lack of safeguards in the text of the agreements, one of the more prominent

problems of ISDS decisions was the inconsistency of the arbitral jurisprudence, the lack of independence,

impartiality, and professionalism of the arbitrators and their abusive interpretation of the investmentagreements made in contravention of the international law and disregarding the authoritative interpretation

made by the other courts and tribunals98. As stated by UN independent expert de Zayas, “among the major

threats to a democratic and equitable international order is the operation of arbitral tribunals that act as if

they were above the international human rights regime” 99 “ Repeated findings by United Nations bodies

notwithstanding, including the 2003 report of the Subcommission and the reports of several special

procedures mandate holders, have remained without effect, since the arbitrators have continued their

practice of extensive interpretations and disregard of the human rights impacts”100. In the same vein, Dr

Pernice warned the EU about tensions existing between ISDS and the autonomy of the EU legal order 101

, andthe ECJ opinion 2/13 on the accession to ECHR confirms this threat has to be taken seriously. Dr Perniceconsiders that at minimum, the insurance of the exhaustion of local remedies should be provided giving “ the

ECJ an opportunity to decide upon the validity and interpretation of any EU law provision at stake before an

arbitration tribunal may base its award on its own understanding ”. But adds that “neither this solution nor a

authorities listed in Annex III”. On this issue see Dr. Pernice Study on international investment protection agreementsand EU Law, Directorate General for external policies of the EU, INTA, Investor-State Dispute Settlement (ISDS)

provisions in the EU's international investment agreements, Vol 2-Studies, September 2014, p. 132 -167,

http://www.europarl.europa.eu/RegData/etudes/STUD/2014/534979/EXPO_STU%282014%29534979%28ANN01%29 _EN.pdf97

For example « National treatment mandates that foreign investors must be treated the same as nationals of the

host State. This provision can cause problems with certain forms of positive discrimination legislation aimed atredressing societal imbalances, attending to human rights, protecting domestic industry, and correcting the legacies of

previously unjust regimes ». Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish PublicHealth Policy”, op.cit., p 5798

Lorenzo Cotula, property in a shrinking planet: fault lines in international human rights and investment law,International Journal of Law in Context, June 2015, pp 119-120

http://journals.cambridge.org/abstract_S1744552315000026; Alain pellet, The Case Law of the ICJ in InvestmentArbitration, Oxford Journals, Law & Social Sciences, ICSID Review,Volume 28, Issue 2, Pp. 223-240 ;99

UN Independant expert Alfred-Maurice de Zayas, Report, 14 July 2015, A/HRC/30/44, op.cit. p9.100

Report of the Independent Expert on the promotion of a democratic and equitable international order on theimpact of investor-State-dispute-settlement on a democratic and equitable international order (A/70/285), §54http://www.un.org/en/ga/search/view_doc.asp?symbol=A/70/285 101

Dr Ingolf Pernice, Study on international investment protection agreements and EU Law, Directorate General for

external policies of the EU, INTA, Investor-State Dispute Settlement (ISDS) provisions in the EU's internationalinvestment agreements, Vol 2-Studies, September 2014, p. 132 -167,

http://www.europarl.europa.eu/RegData/etudes/STUD/2014/534979/EXPO_STU%282014%29534979%28ANN01%29 _EN.pdf



19

“prior involvement procedure”, though, would exclude that a tribunal bases its decisions on substantive EU

law or on the conditions for the liability of the EU or Member States on an interpretation that could be in

tension with the interpretation of the ECJ and, thus, with the autonomy of EU law”.

The reform proposed for ISDS foresees the creation of a professionalised tribunal, with an “expertise in

international law” and a permanent appeal tribunal, and it provides rules on conflict of interest andguidelines for interpretation. Interpretation shall be made “in accordance with customary rules of

interpretation of public international law, as codified in the Vienna Convention on the Law of Treaties” and,“where the Tribunal is required to ascertain the meaning of a provision of the domestic law of one of the

Parties as a matter of fact, it shall follow the prevailing interpretation of that provision made by the courts

or authorities of that Party” even “ the meaning given to the relevant domestic law made by the Tribunal

shall not be binding upon the courts or the authorities of either Party. The Tribunal shall not have

jurisdiction to determine the legality of a measure, alleged to constitute a breach of this Agreement, under

the domestic law of the disputing Party”. Those rules do not seem sufficient to prevent an interpretation thatcould be in opposition with the authoritative interpretation of the EU law and human rights law. They do notsolve the problem of measures judged lawful under human rights law but unlawful in regard of theinvestment agreement, they are not able to avoid the ‘chilling effect’ described above. To solve the seriousconcerns that may arise as regards matters of interpretation, the text provides in consequence the possibilitiesfor the parties to agree on an interpretation that shall be binding for the Tribunal and the Appeal Tribunal.How this proposal will respect the respective powers of the Commission, the European parliament, theCouncil and the member states remains to be seen. In addition, Dr. Curtis and Dr. Reynolds warn that “while

such a mechanism has been a part for NAFTA for 20 years it has been used to issue an interpretive statement

on a substantive standard in the treaty only once. Furthermore, this statement was of questionable

effectiveness, which is the reason why the US and Canada have gone to lengths to change the wording of

their treaties in an attempt to gain more effective control. Outside of NAFTA the mechanism has never been

used at all in relation to investment agreements, despite the fact that it exists as a matter of international

treaty law” 102. As matter of concern, the proposal does not offer the exhaustion of local remedies and thesolution provided to avoid competing claims remains insufficient. In that regard, the proposal foresees a

“fork in the road” clause having shown its limits. The clause requires that the Tribunal dismiss a claim by aclaimant who has submitted a claim to a domestic court or tribunal concerning the same treatment. But it

only precludes simultaneous claims of the same type, and the Chevron v. Ecuador case provides a record onhow restrictive the interpretation of this clause may be in that regard 103. We should conclude, as did DrJoshua Curtis and Dr John Reynolds, that “The Commission itself is aware that there are many problems

with ISDS and proposes a number of further adjustments to the procedural aspects of an investment chapter

in TTIP. However, the Commission would seem to deliberately avoid some very simple and effective

solutions to these problems, such as instituting a requirement to exhaust domestic remedies […] , in favour of

more cosmetic but ultimately ineffective adjustments”.104

3. The T&SD chapter: insufficient to provide corrective provision and mechanisms to the above

described problems

The T&SD Chapter does not encompass all human rights but focuses on environment, CSR and labourstandards only. Commenting on this, the European Parliament adopted a resolution that “reaffirms the

principle of the indivisibility of human rights, and condemns attempts to consider any right or ground of


opcit., p. 97103

« Tribunals in earlier investment cases have applied a ‘triple identity’ test, requiring that in the dispute beforethe domestic courts and the dispute before the arbitration tribunal there should be identity of the parties, of the object,and of the cause of action. In the present case, there is no identity of parties, of object or of cause of action between the

Lago Agrio litigation » Chevron Corporation and Texaco Petroleum Corporation v. The Republic of Ecuador ,

UNCITRAL, PCA Case No. 2009-23,,Third Interim Award on Jurisdiction and Admissibility, 27 février 2012,http://www.italaw.com/sites/default/files/case-documents/ita0175.pdf , Part III, pt. 4.75104




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discrimination less important than others;”.105 The T&SD chapter is not flanked with enforcement

mechanisms but only fosters dialogue “ possibly coupled ” with target support, whatever the inadequacies ofthese tools as argued below. The T&SD chapter does not set up a dedicated mechanism to deal with theimpacts of the investment agreement on human rights and there is no Human Rights Committee dealing withthe impact of the agreement on human rights.

A Civil Society Monitoring Group, composed of representatives from the private sector, trade unions and

NGOs, traditionally accompanies the T&SD Chapter. These mechanisms are not dedicated to human rightsand may not be viewed as capable of improving human rights or dealing effectively with the impact onhuman rights. Such monitoring mechanisms work rather as a negotiation ‘antechamber’ where competinginterests are represented rather than as a mechanism able to enforce obligations106.

The T&SD Chapter is at any rate criticised for focusing on a limited range of rights, mainly the core ILO

conventions, and for being conceived in a way that make labour standards a second-class commitment,expressly excluded from the enforcement mechanisms applying to the other provisions of the agreements. InApril 2012, the European Parliament was still calling for the “ inclusion of a complaints procedure open to

the social partners and civil society, the establishment of an independent body to settle pertinent disputes

and the possibility of recourse to a dispute settlement mechanism” stressing the need for the mechanism to be equivalent to mechanisms provided for the other clauses of the agreement. It demanded that the objectivesof Corporate Social Responsibility (CSR) “ should be binding on European companies operating in countries

with institutional weaknesses”.107 Enforcement mechanisms (reporting, monitoring and remediationmechanisms) should be set up.

4. Current human rights clauses : a new model is needed

It should be clarified if the EU is negotiating a human rights clause, and in that case how it would be worded.The human rights clause is traditionally framed by four elements: a mention in the preamble, an essentialelement clause, a clause of non-execution and a clause dealing with urgent matters. It allows each party to

take appropriate measures, including the suspension of the agreement, when the other party to the agreementviolates its human rights obligations. The usefulness of this clause should be assessed in regard to past

practice and its wording.

Previous examples show that the preamble may be worded ambiguously. With Vietnam, the Commissionexplained that in the preamble “the Parties reaffirm their commitment to the Charter of the United Nations

signed in San Francisco on 26 June 1945 and have regard to the principles articulated in The Universal

Declaration of Human Rights adopted by the General Assembly of the United Nations on 10 December

1948”.

105 European Parliament resolution of 16 December 2010 on the Annual Report on Human Rights in the World2009 and the European Union's policy on the matter (2010/2202(INI)),http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bTA%2bP7-TA-2010-

0489%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN106 Regarding the FTA with Korea, on OIT standards, or CSR issues, no results have yet been granted. The mechanism

seems to have mainly allowing to keep these issues on the agenda of discussions. Maintaining dialogue can be held a positive impact but it remains far from what is to expect in order to consider well-founded the position of the EuropeanUnion to see in this kind of mechanism a sufficient or effective way to ensure that the interests of sustainabledevelopment are effectively protected. The EU domestic advisory group (DAG) faced many internal difficulties to

present views, information and analysis related to compliance with social standards. It affects the DAG's ability tofulfill its role of monitoring. The DAG is at this point as a bargaining chamber between competing interest with thedifficulties that follow. The DAG should be able to provide detailed analysis of the points covered by the sustainable

development chapter it has to monitor. Each member with expertise on particular issues of sustainable developmentchapter is legitimate in this respect. Reading reviews, recommendations and other productions of the EU DAG gives aincomplete representation of issues related to sustainable development chapter. Problems of indépendance remain in the

Korean DAG107 European Parliament resolution of 18 April 2012 on the Annual Report on Human Rights in the World and theEuropean Union's policy on the matter, including implications for the EU's strategic human rights policy

(2011/2185(INI)) http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bTA%2bP7-TA-2012-0126%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN



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• “having regard ”, instead of protecting and reaffirming the full relevance of human rights

international standards, tends to confirm that human rights have little to do with the exceptional rules provided by trade and investment protection. To take the case of investment protection, instead ofcorrecting the serious shortcomings of past practice of investment treaties, it even gives credit to thedire main ISDS outcomes relating to MNF, NT clauses, expropriation and Fair and Equitable

Treatment clauses for example.• “reaffirm their commitment ” to international convention will not provide much more of a guarantee.

At most, it says that if Burma encounters problems in fulfilling or enforcing human rights because ofthe investment agreement (something that will probably happen), this does not entitle it to disregardthem. In other words, Burma remains obliged to mitigate the potential negative effects of theagreement. As the reference in the preamble offers no guidance on how human rights modulate the

substantive investment obligations contained in the text of the agreement, it will have no effect.

The preamble is of limited practical value anyway. It is only a contextual clause that does not amount tosubstantive provisions. It cannot by itself compel a foreign investor or States 108 and loses any value if notreinforced by the text of the treaty. We think that this reference is even counterproductive, when formulatedin terms as vague as to “reaffirm their commitment to key convention” or worse to “commit … to have regard

to [not all the human rights obligations of the parties, but only] UDHR”:

Regarding a potential human rights clause, it has to be recognised that it does not suffice to safeguard humanrights as EU practice shows its reluctance to use it, and in any case, it needs to be adapted to address thespecific challenges created by an investment agreement.

• The EU rarely makes effective use of the HR clause to suspend an agreement partially or totally and

“conditionality is normally not activated when human rights violations routinely take place in a

country”109, which is the case in Burma. The essential elements clause has so far been activatedmainly against ACP countries and in exceptional circumstances such as a coup d’état or flawedelections.110 Observers warn that the sanctions, when applied, do not deal with trade “but rather

‘suspension of meetings and technical co-operation programmes’” 111

. They are not activated whenEU trade policies negatively impact on human rights. They are not designed as a tool to remedy the

negative impacts of a trade agreement on human rights. Ultimately, “ many observers have pointedout that […] the EU’s essential policies clauses are ‘aspirational’ and aimed at fostering dialogue”

112.

• As well as being condemned in studies, the European Parliament regularly regrets the lack of

enforcement and efficacy of the human rights clause. The Parliament attributes its shortcomings both to the reluctance of the Commission to activate the clause and to “the generic nature of its

wording, since this does not spell out detailed procedures for 'positive' and 'negative' interventions

under EU/third country cooperation”113; it “advocates the drafting of a new ‘model clause’ […]114 to establish a procedure for effective implementation of these clauses in the spirit of Articles 8, 9

108 See the position of Marc Jacob commenting on such clauses: Jacob, Marc (2010): International Investment

Agreements and Human Rights. INEF Research Paper Series on Human Rights, Corporate Responsibility and

Sustainable Development 03/2010. http://www.humanrights- business.org/files/international_investment_agreements_and_human_rights.pdf 109 ‘Essential elements’ clauses in EU trade agreements making trade work in a way that helps human rights?,

Nicolas Hachez, KUL, April 2015, p.17110 Ibidem 111 Ibidem

112 ‘Essential elements’clauses in EU trade agreements making trade work in a way that helps human rights?,op.cit., p.17113 European Parliament resolution of 14 February 2006 on the human rights and democracy clause in European

Union agreements (2005/2057(INI)) ; European Parliament resolution of 18 April 2012 on the Annual Report onHuman Rights in the World and the European Union's policy on the matter, including implications for the EU's strategichuman rights policy (2011/2185(INI)), considering L and §§54-55;

114 European Parliament resolution of 14 February 2006 on the human rights and democracy clause in European

Union agreements, op.cit, § 7 European Parliament resolution of 13 December 2012 on the annual report on HumanRights and Democracy in the World 2011 and the European Union’s policy on the matter (2012/2145(INI))

http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bTA%2bP7-TA-2012-0503%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN



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and 96 of the Cotonou Agreement ” 115; it recommends “a procedure for consultation between the

parties, detailing the political and legal mechanisms to be used in the event of a request for bilateral

cooperation to be suspended ”, but also a “warning mechanism”116 and “human rights and

democracy benchmarks for descriptive and evaluation purposes”117. Finally, the Parliament stressesthat the use of the human rights clause should go hand in hand with the improvement of the

dialogue118

and the development of dedicated monitoring mechanisms.119

. The necessity to reinforcethe usefulness of the human rights clauses is not only called for by observers and the European

Parliament, the Commission itself agreed it.

We are obliged to conclude that a human rights clause, despite being able to, actually offers no guarantees ofthe aforementioned advantage regarding the possible suspension of an agreement that might impact on

human rights. In addition, it does not address the issue of a party suspending its own investment agreement’sobligation to fulfil human rights and because of the competing effect of the other provisions in the text of the

investment agreement, affected investors could still challenge its use. If the clause is a necessity it has to gohand in hand with more important reforms.

5. Counter proposals, best options to be assessed:

ISDS Tribunals considered that the investment treaty is creating a particular regime. Adopting a ‘respect

both approach’ arbitral tribunals have shown abilities to completely annihilate the expected effect of severalsafeguard clauses. ISDS cases showed that clauses, referring to the Vienna Convention, to international lawor to the international obligations of the parties, have been insufficient to secure an interpretation conform to

human rights law. Simple reference to human rights, or right to regulate does not suffice to provide protection. Because of the ‘respect both’ theory, the “margin of appreciation” or the benefit of the special

“proportionality test” existing in human rights law were simply denied to States120.

The general exception clauses, allowing States to take measures to protect public morality, public order orhealth for example, do not help either, tribunals having also interpreted those clauses narrowly. They rejected

the State’s defence stating, for example, that they were “not convinced” that the State “was not able to

comply with the relevant treaty provisions”, that the measure “was necessary to guarantee human rights”,

that the “choice made was the only one available” or that the choices made “were the only means by which[the State] could have protected its public interests”.

In those conditions, even a reference to the prevalence of human rights obligations or the recognition of a

right for States to depart from the obligations of the investment agreement when they consider that theseobligations restrict their ability to meet their human rights obligations (clause that we do not find in the

Commission proposals, even in the most recent ones), might be insufficient. As the above case lawdemonstrates, Tribunals may consider that the capacity to meet human rights obligations is not restricted at

115 European Parliament resolution of 16 December 2010 on the Annual Report on Human Rights in the World2009 and the European Union's policy on the matter (2010/2202(INI)), §110http://www.europarl.europa.eu/sides/getDoc.do?pubRef=-%2f%2fEP%2f%2fTEXT%2bTA%2bP7-TA-2010-

0489%2b0%2bDOC%2bXML%2bV0%2f%2fEN&language=EN116 European Parliament resolution of 14 February 2006 on the human rights and democracy clause in EuropeanUnion agreements, op.cit, §7117 European Parliament resolution of 18 April 2012 on the Annual Report on Human Rights in the World and theEuropean Union's policy on the matter, including implications for the EU's strategic human rights policy, op.cit, TheParliament calls for “clear criteria for when these are to be applied and what type of sanctions should be applied, and

including transparent benchmarks for their lifting ” European Parliament resolution of 13 December 2012 on the annualreport on Human Rights and Democracy in the World 2011 and the European Union’s policy on the matter, op.cit, §78118 European Parliament resolution of 11 December 2013 on the Annual Report on Human Rights and Democracy

in the World 2012 and the European Union's policy on the matter (2013/2152(INI))http://www.europarl.europa.eu/sides/getDoc.do?type=TA&reference=P7-TA-2013-0575&language=EN EuropeanParliament resolution of 18 April 2012 on the Annual Report on Human Rights in the World and the European Union's

policy on the matter, including implications for the EU's strategic human rights policy, op.cit, §47

119 European Parliament resolution of 13 December 2012 on the annual report on Human Rights and Democracyin the World 2011 and the European Union’s policy on the matter, op.cit, §77

120 Lorenzo Cotula, property in a shrinking planet: fault lines in international human rughts and investment law,International Journal of Law in Context, June 2015, pp 125



23

all and that, because human rights obligations and investment obligations “operate on different levels”,

States should “respect both” or demonstrate they had “no other means” to meet their human rightsobligations. In consequence, human rights safeguard clauses cannot be conceived in isolation from the othersubstantive clauses of the agreement, their application to the entire agreement should be clear as to theirability to inflect all State agreement’s obligations. Any ambiguity in the substantive trade and investment

clause of the agreement in that regard should be left out.

The EU must ensure the introduction of efficient human rights safeguards in its investmentagreements. That supposes to adequately conceive its human rights clauses, to provide efficient

flexibility and exceptions, to adapt the formulation of the obligations (such as on expropriation, FET

and other clauses), and to completely revise the dispute settlement mechanisms. The entire economy of

the investment agreement should be revised to ensure the EU respects its obligations, and the States do

not enter in treaties that actually impede human rights' realisation.

A new model of human rights clause:

As requested by the European Parliament, and supported by academics, the UN and civil societystakeholders dealing with human rights121, the agreement should include a revised human right clause, and arecourse mechanisms for affected communities to avoid violations and to seek redress, whereby its impact onhuman rights may be measured and proper compensation found should violations finally occur.

• The human rights clause enables a State Party (like the EU) to take appropriate measures only if the

other party (e.g. Burma) violates its obligations under the agreement. It does not allow a Party (e.g.Burma) to depart from its obligations under the agreement (whatever impact they may have on

human rights). The human rights clause in consequence does not allow the State Parties to suspendthe provisions which oblige State Parties to adopt measures that may infringe human rights (nationaltreatment), that may prevent the State Party from controlling private stakeholders whose conductmay lead to the violation of others human rights (for example, as a result of an excessively high

level of protection for foreign investors operating in their territory), that would prevent the StateParty from adopting policies that move towards the full realisation of human rights (as a result of

economic impacts of costs of defence and compensation in investment agreements for example).122

Given that all these kinds of problems could occur, the human rights clause should be revised123:“The parties reaffirm their obligations concerning democratic principles and human rights, as laid

down in the Universal Declaration of Human Rights and other relevant international human rights

instruments, and the rule of law, and undertake to comply with these obligations in their internal

and international policies”. In addition to the non-execution clause allowing for the party to take

appropriate measures and suspend the agreement when the other party does not respect its humanrights commitments, there is a need also to ensure flexibility: in the event that one Party presents

difficulties in fulfilling its human rights obligations within the context of the FTA, it can take

appropriate measures, including the suspension of problematic clauses and obligations

contained in the investment agreement. Clauses reaffirming that development objectives andhuman rights prevail, and prevail in the case of inconsistency with the trade agreement, do exist in

the EU-Cariforum EPA124

and are required by UN experts and organs125

.

121 EP resolution: 25 November 2010 in its “resolution on human rights and social and environmental standards in

international trade agreements” and others, e.g.: European Parliament resolution of 29 April 2015 on the secondanniversary of the Rana Plaza building collapse and progress of the Bangladesh sustainability compact; A Model

Human Rights Clause for the EU’s International Trade Agreements, Lorand Bartels, February 2014,http://www.institut-fuer-menschenrechte.de/uploads/tx_commerce/Studie_A_Model_Human_Rights_Clause.pdf

122 On the conclusion that it would lead to incompatibilities with human rights obligations requiring adapting of

the trade and investment agreements see /HRC/19/59/&dd.5, Report of the Special Rapporteur on the Right to Food,Olivier De Schutter, Addendum, Guiding Principles On Human Rights Impact Assessments of Trade and Investment

Agreements, December 2011, pp. 6-7.123 A Model Human Rights Clause for the EU’s International Trade Agreements, Lorand Bartels, February 2014,http://www.institut-fuer-menschenrechte.de/uploads/tx_commerce/Studie_A_Model_Human_Rights_Clause.pdf 124

Economic Partnership Agreement between the CARIFORUM States, on the one hand, and the EuropeanCommunity and its Member States, on the other, JO 289/I/3, 30.10.2008, Article 241 Relations with the Cotonou



24

Because the human rights clause is conceived as a last recourse solution, other and more actionable meansshould be provided:

• A clause that legally establishes the State’s right to regulate in the public interest, with application to

agreement in its entirety; a provision requiring the agreement to be interpreted and implemented in

full consistency with the obligations of States and the responsibilities of corporations and investors

under international human rights law. A clear provision stipulating that in case of conflict between

the human rights obligations of a State and those under other treaties, human rights conventions

prevail. A clear provision that requests that when human rights are evoked, the margin of

appreciation recognised in human rights law is fully applied. A general exception clause that does

not adopt a test of necessity but employs a lower standard of causal connection for the exception of

government measures, also expressly excepting measures taken to fulfil States’ human rights

obligations under international and domestic law, and including reference to States’ human rights

obligations as specified grounds. 126

o

The agreement should set up a specific inter-institutional committee for human rights. Itshould also provide for a civil society monitoring mechanism that is dedicated to dealing with

human rights impacts of the agreement and composed, not of businesses (with whom dialogue is possible via the T&SD civil society monitoring mechanism), but of human rights defenders and

independent human rights NGOs. These mechanisms should have a dedicated budget to undertakefield visits and to interact with civil society and human rights experts. They would report to the

parties of the agreement, and other committees. They should aim to prevent any impacts on humanrights and to mitigate and help find remedies if violations occur.

o The agreement should also set up a complaint mechanism that can be accessed by individuals

and communities whose human rights are affected by trade and investments and by theirrepresentatives. This kind of mechanism exists in other fora127 and could be transposed and adapted

for investment agreements in order to avoid negative impacts and ensure access to remedy andcompensation, based on need and responsibility.

o The agreement should provide an obligation for the investor to respect not only the domestic

law and only at the time of the investment, but human rights international standards, at the

time of the investment and for the full duration of the investment. This clause should be

complemented by :

• a provision barring foreign investors from the protections of the investment chapter where there

is sufficient evidence of direct or indirect violation of national laws and international human

rights obligations and responsibilities, both their own and those of the State in which they

operate. Indeed, the investment agreements problematically contain no enforceable provisions on

investors’ obligations. The EU’s approach excludes investments that are not made in accordance

Agreements http://trade.ec.europa.eu/doclib/docs/2008/february/tradoc_137971.pdf 125

see notably HCHR report Human rights, trade and investment (E/CN.4/Sub.2/2003/9), 2 July 2003,http://daccess-dds-ny.un.org/doc/UNDOC/GEN/G03/148/47/PDF/G0314847.pdf?OpenElement; /HRC/19/59/&dd.5,

Report of the Special Rapporteur on the Right to Food, Olivier De Schutter, Addendum, Guiding Principles On Human

Rights Impact Assessments of Trade and Investment Agreements, December 2011 ; Report of the Special Rapporteur onthe right of everyone to the enjoyment of the highest attainable standard of physical and mental health, Anand Grover’,

UN Doc A/69/299, 11 August 2014, paras 48 to 59. ; Report of the Independent Expert on the promotion of ademocratic and equitable international order on the impact of investor-State-dispute-settlement on a democratic andequitable international order (A/70/285),126


opcit., p. 19, 20,151;127

E.g.: The mechanisms put in place in the World Bank for development and investment activities

http://ewebapps.worldbank.org/apps/ip/Pages/AboutUs.aspx : for IBRD & IDA or http://www.cao-ombudsman.org/about/whoweare/index.html for IFC & MIGA operations



25

with the applicable law at the time the investment was made (known as the “clean hands

doctrine”). The agreement should instead clearly foresee that the investor may not contravene the

human rights international standards and local law which is conform to human rights

international law, nor be complicit in its violation, for the full duration of the investment. In

addition, it should lay down basic duties such as ensuring respect for anti-corruption and

international human rights standards, and again avoiding complicity in human rights abuse by

others, including the host State. Additionally, it should be made explicit that the tribunal is notsimply allowed to refuse protection under such circumstances according to its discretion but is in

fact obliged to do so128

.

• a provision allowing for States to initiate counter-claims in cases where foreign investors are

suspected of having failed to meet their own obligations and responsibilities under national and

international human rights law. 129

• a provision that reconciles human rights law and investment law when there are competing rights

between the investor and the populations. This provision could be framed to ensure that prior to

providing compensation under the investment agreement, should obtain remedies for the

violation of human rights (equivalent notion to “le criminel tient le civil en état”), and to ensure

that if a compensation is finally due to the investor, it is calculated by taking due account of the

remedies due to the affected populations. In the case of land grabbing for example, and an

investment made despite forced eviction without compensation, the investor should not be able

to ask for compensation under FET, expropriation or other clauses before having been ensured

that the population are reinstated in their rights. And its rights to compensation should not be

necessarily at the market value. Depending on the circumstances, the compensation should

reduced to take into account the reparation needed for the population. If there is often complicity

of the investor in forced eviction, this solution works also in the absence of complicity - indeed

that does not mean no knowledge : the investor, because of its due diligence obligation (see the

UN guiding principles on business and human rights) should have know of the violation ofhuman rights (ex : in some SEZ in Burma). Had the investment been made in accordance with

international law, it would have been either impossible to relocate the evicted population where

they were placed or would have been more expensive, which fully justifies a limited

compensation.

• In case of claims implying human rights issues, a provision that sets up a dialogue mechanism

between the ISDS and the UN and regional human rights treaty bodies should be provided so

that recommendations may be made and advice given on the scope and application of human

rights norms, to better inform and to bind the investment tribunal.

•

A provision requiring the prior exhaustion of domestic remedies: There is no convincing argument to

not require the exhaustion of local remedies as a general principle. “ Even in investment agreements

with less developed legal systems, this principle should be included as it could provide an incentive

for reforms and improvements of domestic judicial systems”130.


opcit., p. 152, 88; Markus Krajewski, “Modalities for investment protection and Investor-State Dispute Settlement(ISDS) in TTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p. 9, 21,http://library.fes.de/pdf-files/bueros/bruessel/11044.pdf129


opcit., p. 152130


opcit., p. 19; Markus Krajewski, “Modalities for investment protection and Investor-State Dispute Settlement (ISDS) inTTIP from a trade union perspective”, Friedrich-Alexander-Universität Erlangen-Nürnberg, p. 19



26

• A provision that recognises the obligations of States and the responsibilities of corporations and

investors under the UN Guiding Principles on Business and Human Rights and the OECD

Guidelines for Multinational Enterprises, requiring the provisions of the agreement to be read in

consistency with these international instruments, in addition to further international instruments

detailing the specific obligations of States under international human rights law, as well as any future

treaties or instruments relating to human rights and business enterprises131

.

The agreement should provide an ex-post human rights assessment commitment, to be worded in thefollowing way:

“The Parties undertake to monitor continuously the operation of the Agreement through their

respective participative processes and institutions, as well as those set up under this Agreement, in

order to ensure that the implementation of the agreement does not affect the obligations of theParties in [the new model of human rights clause].

A comprehensive review of the Agreement shall be undertaken by the parties not later than five (5)

years after the date of signature and at subsequent five-yearly intervals, in order to determine the

impact of the Agreement on human rights , including the costs and consequences of implementation.

The review will be undertaken on the basis of a human rights impact assessment conducted by an

independent body with appropriate expertise in the subject of human rights impact assessments, on

the basis of transparent information and procedures, taking into account all available and relevant

evidence from all sources, especially civil society, and will be appropriately resourced.

The human rights impact assessment and a report of the review will be published. The parties, and

the Joint Council, as appropriate shall amend its provisions and adjust their application as

recommended by the review of the Agreement”132

The ex-post Impact Assessment is unable to avoid the impacts that the agreement could have in the interim.

Additional safeguards should then be provided. The capacity of an Ex-post HRIA to remedy negativeimpacts will depend on the willingness of the Parties to renegotiate the problematic clauses as necessary.Traditionally, the agreement does not offer any guarantee of adaptation.

The agreement should not have a sunset clause:

To give effect to the human rights clause and the ex-post HRIA clause, it is also essential to renounce theinclusion of a sunset clause. The possibility for the EU to terminate the Treaty in the event of its inability to

reach an agreement on the reforms required will have only limited impact if the agreement contains “a sunsetclause”. These clauses, also named “survival clauses”, provide for a party to notify the termination of thetreaty without affecting investment protection existing at the time of termination. The treaty continues to

provide investment protection, generally for a period of 10 or even 20 years after notification of termination.

The CETA (EU-Canada FTA) text confirms that the Commission has not renounced this disproportionateconcession overriding sovereignty. The CETA provides a sunset clause applying for a period of 20 yearsafter termination.133 It is a disproportionate benefit provided to the investors that damages the last means of

recourse for States to ensure the fulfilment of their human rights obligations if needed and should be simplyrejected.

Other paths:


opcit., p. 150132 A Model Human Rights Clause for the EU’s International Trade Agreements, Lorand Bartels, February 2014,http://www.institut-fuer-menschenrechte.de/uploads/tx_commerce/Studie_A_Model_Human_Rights_Clause.pdf 133

Comprehensive Economic and Trade Agreement (CETA), consolidated text, 26 September 2014, Final provisions, Article X.08



27

• provisions that take the status of developing countries into account: a provision barring foreign

investors from the protections of the chapter where a contribution to the economic development of

the host State cannot be sufficiently demonstrated134

. Facilities, and reductions of the costs of

procedure when the defending party is a developing state.

• the substantive provisions of the investment protection should be restricted to national treatment and

most-favoured nation treatment, excluding provisions on minimum standards of treatment andindirect expropriation, as does the “2015 China-Australia FTA”. At the least, the clause on indirect

expropriation should set out clearly that non-discriminatory measures taken in the public interest,

including human rights never amount to compensable expropriation. 135

• a provision setting out clearly that the treatment to be accorded to foreign investors under the

agreement cannot exceed the level of treatment afforded to domestic investors. 136

• a State-to-State dispute settlement mechanism instead of an Investor-State dispute settlement

mechanism137. Under this procedure, the home State would have discretion over whether to bring a

claim, and States would decide on the court that should hear the case, for example, the International

Court of Justice or ad hoc tribunals with appeal chambers138

. The UN also proposes “The creation ofan international investment court “where the judges would be bound not only to take into account,

but to give priority to the Charter and the core United Nations human rights treaties139

The role of the other human rights tools that the EU has at its disposal: a complement, not a substitute

to human rights safeguards in the agreement

To deal with human rights in its trade policies, the European Commission propose first initiatives and actionsthat belong to non-trade policy (dialogue, demarche, and development cooperation aid). However, dialogue,demarches and development cooperation are part of a long-term process to achieve any potential results.These tools also need to be improved upon to achieve results in their traditional field of application.

Moreover, they need to be adapted if it is hoped that they will effectively deal with the potential impacts ofthe FTA. Their capacity to effectively create an enabling environment in which trade and investments may

take place in a timely manner, and with due regard for human rights, is in any case challenged. The same istrue as regards their capacity to ensure effective remedies when violations occur. In these circumstances,they are sufficient to avoid negative impacts and enhance the positive ones, sustainable solutions are to befound in the agreement itself, which needs to include the safeguards and mechanisms required to avoid,

mitigate or remedy its potential negative impacts.

Dialogues still need to be improved. The most important challenge that the EU faces here is to make the

dialogue a means to achieve measurable, tangible results140. The “instrumentalisation” of the human rights

134 Dr Joshua Curtis and Dr John Reynolds, “TTIP, ISDS and the Implications for Irish Public Health Policy”,opcit., p. 152135



opcit., p. 151137


Report of the Independent Expert on the promotion of a democratic and equitable international order on the

impact of investor-State-dispute-settlement on a democratic and equitable international order (A/70/285), §55http://www.un.org/en/ga/search/view_doc.asp?symbol=A/70/285 139

Report of the Independent Expert on the promotion of a democratic and equitable international order on the

impact of investor-State-dispute-settlement on a democratic and equitable international order (A/70/285), §55

http://www.un.org/en/ga/search/view_doc.asp?symbol=A/70/285 140 European Parliament resolution of 18 April 2012 on the Annual Report on Human Rights in the World and the

European Union's policy on the matter, including implications for the EU's strategic human rights policy, op.cit, §46 ;European Parliament resolution of 13 December 2012 on the annual report on Human Rights and Democracy in the



28

dialogue in order to marginalise human rights discussions at other fora is also regularly denounced141.

Several dialogues (like Vietnam, China, etc.) despite being in place for over ten years, have not been able toachieve results. Dialogues serves multiple purposes, all of crucial importance in fostering improvements.Some of the reforms needed are trade-related because they deal with issues that are essential for creating afavourable trade environment (e.g. the penal code criminalising freedom of expression and assembly and

silencing protest against investment projects, forced eviction and poor working conditions). Other reformsare not or are less obviously trade-related, although they are crucial for ensuring that the EU pursues its

policy of promoting human rights. It could be useful to provide the EU representatives leading the dialoguewith a mandate to deal with trade-related issues, but there is also a need to establish specific dialogues ontrade and human rights issues, ensuring the link with political and human rights dialogue and other tools theEU has at its disposal. To avoid dialogues on human rights being completely diluted, dialogues devoted to

investment and human rights should be institutionalised in the investment agreement itself.

Demarches and statements are not suitable tools for addressing the impacts of the FTA, and feature similarshortcomings to dialogues. According to press statements following summits and high-level meetings andthe observations of the European Parliament made above, human rights are, on such occasions, addressed ingeneral terms without any specific follow-up to the main challenges identified during dialogues.

Development cooperation: the existing reports on previous cooperation programmes show how limited theireffects are when dealing with human rights issues, like the abuses committed by the police and the army, theindependence of the judiciary, access to justice and fair trials, religious intolerance, systematicdiscrimination, business and human rights, economic and social rights, land issues (see for Cambodia for

which cooperation has existed for several years on land issues). In addition, as a long-term strategy, andgiven the relative inflexibility of procedures of engagement and programming cycles, we cannot share the

view that they provide adequate tools to mitigate the negative impacts of the investment agreement, they arenot framed to avoid impacts of the investment agreement or to provide remedies.

In conclusion it is more than doubtful that these tools are fully relevant to address the challenges of the

impacts of an investment agreement. Dialogue, demarches and development cooperation aim to address theoverall situation with respect to human rights, but they have shown their limitations in practice and fall short

of being an appropriate mechanism to measure and respond to the potentially negative impacts of the FTA.These tools can only be envisaged as complementary means to support an agreement that already providesmechanisms and safeguards in order to maximize the positive impacts and prevent or mitigate the negativeimpacts on human rights that the investment agreement may have on human rights. When having made the

necessary proposals to that end, the SIA should identify complementary measures in terms of dialogue andtechnical and financial support that can facilitate the good implementation of the human rights obligations

and safeguards set up in the agreements.

Sincerely

Karim Lahidji, FIDH president

Cc:The consultant team in charge of the EU-Burma Investment agreement’s SIAMr Timmermans,

Ms Mogherini,Mr Lambrinidis

World 2011 and the European Union’s policy on the matter, op.cit, §64; European Parliament resolution of 16December 2010 on the Annual Report on Human Rights in the World 2009 and the European Union's policy on the

matter, op.cit, §157; European Parliament resolution of 18 April 2012 on the Annual Report on Human Rights in theWorld and the European Union's policy on the matter, including implications for the EU's strategic human rights policy, op.cit, §46 ; European Parliament resolution of 11 December 2013 on the Annual Report on Human Rights and

Democracy in the World 2012 and the European Union's policy on the matter, op.cit, §22

141 European Parliament resolution of 13 December 2012 on the annual report on Human Rights and Democracyin the World 2011 and the European Union’s policy on the matter, op.cit, §61; European Parliament resolution of 18

April 2012 on the Annual Report on Human Rights in the World and the European Union's policy on the matter,including implications for the EU's strategic human rights policy, op.cit, §45



DG trade representatives

EEAS representativesMembers of the European Parliament

International Federation for Human RightsPermanent Delegation to the European Union

11-15, rue de la Linière-1060 Brussels - Tel : 32 2 609 44 23 - Fax 32 2 609 44 33 www.fidh.org Twitter

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