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Investment treaties & investor-state dispute settlements

A bilateral investment treaty (BIT) is an agreement made between two States establishing the terms and conditions for private investment by nationals and companies of one State in another State. This type of investment is usually called “foreign direct investment” (FDI).

Questions have been raised as to whether these agreements should include human rights concerns and/or provisions and about how investor-states dispute settlement (ISDS) arrangements of such agreements should be reformed.

The UN Business and Human Rights Guiding Principles (UNGPs), Guiding Principle 9, states:

“States should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives with other States or business enterprises, for instance through investment treaties or contracts.”

The Commentary to Guiding Principle 9 states:

“Economic agreements concluded by States, either with other States or with business enterprises – such as bilateral investment treaties, freetrade agreements or contracts for investment projects – create economic opportunities for States. But they can also affect the domestic policy space of Governments. For example, the terms of international investment agreements may constrain States from fully implementing new human rights legislation, or put them at risk of binding international arbitration if they do so. Therefore, States should ensure that they retain adequate policy and regulatory ability to protect human rights under the terms of such agreements, while providing the necessary investor protection.”

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What National Action Plans say on Investment treaties & investor-state dispute settlements