Sustainable Trade, Investment and Finance
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Sustainable Trade, Investment and Finance

Toward Responsible and Coherent Regulatory Frameworks

Edited by Clair Gammage and Tonia Novitz

Sustainable development remains a high priority in international politics, as governments seek new methods of managing the consumption of resources while maintaining national economic growth. This timely book explores how the contours and facets of sustainability shape international laws and regulations that govern trade, investment and finance.'
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Chapter 9: Human rights obligations in investor-state contracts: reconciling investors legitimate expectations with the public interest

Enrique Boone Barrera

Abstract

This chapter argues that the concept of ‘legitimate expectations’, as interpreted in international investment arbitration, poses challenges for the state while enacting public policy. A state may need to drastically change its legal framework when responding to human rights considerations, potentially leading to a foreign investor’s claim before an arbitral tribunal. A costly award complicates the state’s ability to respond to a crisis, particularly when the foreign investment itself is contributing to the problem. Furthermore, an expectation of stability of the legal framework creates problems, especially for developing countries which need to attract investment while taking steps to reduce deep inequalities. This chapter suggests that investor-state contracts can reduce these tensions by clarifying to both the foreign investor and the arbitral tribunal the expectations of the state regarding human rights obligations. Furthermore, it is advised that states introduce limitations to the concept of ‘legitimate expectations’ at the treaty level.

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