Human Rights and International Investment Protection: Why History Should Matter in the Making of International Investment Agreements by Developing Countries

Abstract

The international investment protection regime was established to provide legal certainty and protection for foreign investors while also fostering economic cooperation with host States. It aims to ensure that foreign nationals are treated fairly and equitably, without discrimination, and that their properties are not expropriated, either overtly or covertly, without adequate compensation, all within a framework that balances investor rights with State sovereignty. The regime establishes enforceable standards intended to protect foreign investors while promoting legal certainty in the host State. However, in recent years, it has been increasingly criticised for creating an imbalance between the rights granted to investors and the regulatory autonomy of host States, particularly in areas involving public interest concerns such as human rights. This paper examines this relational imbalance from a historic context and highlights the concerns it holds for the regulatory autonomy of capital-importing or developing countries, which are major recipients of Foreign Direct Investment (FDI). The paper utilizes a historical approach, complemented by doctrinal analysis, to explore the evolution of international investment law, offering a deeper understanding of legal frameworks and contemporary challenges in balancing investor protection with state sovereignty. This paper presents the view that this asymmetry can be rationalised and better understood by examining the historical objective of the investment protection regime and the underlying doctrines that shape its goals. The paper suggests that the valuable lessons embedded in this history should provide developing countries with the necessary impetus to adopt measures to balance this significant disparity. Finally, the paper concludes that the emerging treaty-making practices and other domestic measures of some developing countries provides some hopes towards restoring the regulatory space to legislate on human rights.