Obligations Undertaken by States under International Conventions for the Protection of Cultural Rights and the Environment, a Limitation to Investor’s Rights?

Obligations Undertaken by States under International Conventions for the Protection of Cultural Rights and the Environment, a Limitation to Investor’s Rights?

This memorandum by Monika Feigerlova Alexandre L. Maltais investigates to what extent obligations undertaken by States under International Conventions for the Protection of Cultural Rights and the Environment constitute a limitation to investor’s rights under bilateral or multilateral investment treaties and investment contracts.


Executive Summary

This memorandum was prepared by students of the Trade and Investment Law Clinic at the Graduate Institute of International and Development Studies as a response to a request by the Office of International Standards and Legal Affairs of the UNESCO. The aim of this memo is to analyse the interactions between investment and non-investment treaties, in particular the extent to which obligations undertaken by States  under  international conventions for the protection of cultural and natural heritage constitute a limitation to investor’s rights under bilateral or multilateral investment treaties and investment contracts.

There has been an intensive debate on the links between international investment law and international law aimed at protection of human rights and environment over the last ten years and the main recent scholarly writings are summarized in the Bibliography section. As requested, this paper focuses on two UNESCO Conventions that deal with tangible cultural and natural heritage, including underwater, namely the Convention Concerning the Protection of the World Cultural and Natural Heritage and the Convention on the Protection of the Underwater Cultural Heritage.

After defining the two fields of international law, the analysis outlines possible interactions and overlaps between States’ commitments at the international level to protect cultural and natural heritage on the one hand and States’ commitments undertaken in bilateral and multilateral investment treaties to ensure agreed standards of protection to foreign investors on the other. Some scenarios under which investors’ rights may be affected negatively or positively by a governmental measure concerning the protection of cultural and natural heritage are suggested. The section concludes that the two different policy objectives may compete.

In the following Chapter 3, obligations of the State Parties to the UNESCO Conventions as well as their enforcement mechanisms are briefly described. A focus is put on the obligations that could limit investors’ rights. The analysis of the WHC and the UWCH concludes that cultural and natural heritage is a shared interest of humankind. This memo is based on this premise.

Chapter 4 is devoted to ways of reconciling conflicts between UNESCO Conventions’ obligations and investors' rights. Several possibilities are regarded in order to achieve a balance between the two types of obligations: the inclusion of cultural exceptions in IIAs,  the

consideration of UNESCO Conventions by investment tribunals as an (i) applicable law, (ii) interpretative means of IIA obligations, or (iii) as a fact (datum) in the course of interpreting the investment protection standards. The impact and specificities of an investment contract is also analysed.

The aim of the fifth Chapter is to demonstrate how, in practice, the full realization of foreign investors’ rights and the protection of natural and cultural heritage may come into conflict, and what tools investment tribunals have used when considering UNESCO or other non-investment treaties. References to available case law and the actual approach of relevant arbitral tribunals were made. Outside the NAFTA framework, three investor-state cases have directly involved the WHC, namely SPP v Egypt, Santa Elena v Costa Rica and Parkerings v Lithuania. Under the NAFTA, the WHC was partly dealt with in the Glamis Gold case. A detailed description of these cases is included in Annex 1. Analogies will also be drawn from cases in which investment tribunals considered environmental and human rights obligations arising from other domains of international law.

Obligations under UNESCO Conventions may impact differently depending on the stage of the case. At the jurisdictional stage, this paper suggests that if investment tribunals applied UWCH provisions, or if they adopted a systemic interpretation of the host state obligations, such obligations could preclude a tribunal to have jurisdiction over a case regarding underwater heritage. At the merits, UNESCO Conventions may have three different impacts on when it comes to expropriation: (i) they can legitimate governmental measures, (ii) help to distinguish between an indirect expropriation and a legitimate governmental regulation, and

(iii) influence the legitimate expectations of an investor. With regards to the MFN  and national treatment principles, cultural heritage obligations may impact the assessment of the existence of 'like circumstances'. Also, they may play a role in the analysis of the legitimate expectations of an investor as well as the governmental intentions that are related to the FET. 

Finally, the paper describes the three positions taken by investment tribunals with regard to the question whether provisions of the UNESCO Conventions may impact on the assessment of compensation. The first one is that non-investment obligations of the host State must not be taken into consideration. The second approach is that relevance of the non- investment obligation is not excluded in abstracto, but it is refused in concreto by  the tribunal. The final position is to consider UNESCO Conventions obligations as fully relevant in assessing the level of compensation.


 

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