2.1 The Context of the New Latin American Constitutionalism

The new Latin American constitutionalism is a phenomenon of recent years that describes the latest wave of constitutional reforms that took place in the late 20th century and early 21st century.⁵ This new constitutionalism is characterized by the inclusion of new social, economic, and cultural rights in the constitutions of the region, as well as greater citizen participation and increased protection of human rights.

However, as Roberto Gargarella points out, it is not only innovation, in many cases it is seen as a continuation of the “old” constitutionalism in terms of the organization of the state, with the inclusion of rights that have not necessarily changed the reality.⁶

In that sense, there is continuity with the “old” constitutionalism in Latin America because despite the more recent constitutional reforms, the organization of power remains elitist and authoritarian in many constitutions of the region. Additionally, although new social, economic, and cultural rights have been included in the constitutions, they are not always effectively protected or guaranteed by the states.

Some of the paradigmatic countries in the implementation of the new Constitutionalism are Colombia, Ecuador, Bolivia, and Venezuela. However, in the practice of the courts, there is evidence of the influence of the new Constitutionalism in other countries of the region such as Argentina or Brazil, or judicial practices that have common features among certain legal rules that tend to assign a central role to fundamental rights in legal systems.

The author agrees with Gargarella (2018) that this “new constitutionalism” is not as innovative as some present it and is rather a reflection of the process of constitutional transformations in Latin American countries since their independence.⁸ The so-called “new constitutionalism” simply reinforces some of the features already well present in the constitutional framework of Latin America. After the last wave of reforms, we find that the organizational part of the new constitutions continues to be characterized by a politically concentrated and territorially centralized power structure, while the doctrinal part continues to stand out due to the presence of robust, generous, and extensive declarations of rights that combine various types of individual and social rights. In other words, the “double hallmark” that began to define Latin American constitutionalism from the early 20th century remains as relevant as ever.

Stating the above does not imply that the “new” Latin American constitutionalism has achieved little, that it has not sufficiently innovated, or that it has not accomplished anything significant. The author simply points out that the old structures remain intact, which is very relevantto recognize the institutional stage in which Latin American countries are and the kind of constitutional problems they face. Next, the author will briefly review what today’s Latin American constitutionalism offers before delving into its critical analysis.

However, there is no doubt that there are some new elements in the Latin American Constitutions, including – particular to my research – the existence of new fundamental rights such as the rights of nature and indigenous peoples. There is a stronger rhetoric defending national sovereignty, the protection of natural resources, the environment, human rights, and prioritizing “national” interests over “foreign” interests.

It is particularly valuable that these Constitutions have a reinforced vision of protecting the rights of indigenous peoples and nature as rights-holders. However, there is a conceptual difficulty in showing how these new incorporated rights are linked to pre-existing rights.

This existential difficulty of conflicting conceptions is present in Bolivian constitutional jurisprudence and manifested with extreme clarity. Despite the creation of a “new” and “plurinational” institutional structure in Bolivia in 2009, the majority of constitutional jurisprudence developed between 1999 and 2011 by the Constitutional Court of Bolivia is based on the Political Constitution of the State of 1967 with reforms in 1994, and continues to be an essential source of inspiration for the judgments issued by the Plurinational Constitutional Court of Bolivia.⁹

Likewise, this existential difficulty is manifested in normative contents that appear irreconcilable and require at least a series of reflections. In this case, we will analyze some intersectional novelties of Bolivia’s 2009 Constitution, such as the right to a healthy environment, the rights of indigenous peoples, the rights of nature, and the constitutional approach to foreign investment, including methods of dispute resolution.

To organize these ideas, this research is summarized into three components: (1) the rights of nature and indigenous peoples; (2) the regime of foreign investment; and (3) the rights to private property, legal security, and access to justice for foreign companies. These sections will analyze the reality of Bolivia’s constitution and incorporate criteria that are transversal to the so-called vision of Latin American constitutionalism.

This section will address three topics considered special and important from the perspective of b&hr with a particular focus on Latin American constitutionalism. Section 2.2 details the right to a healthy environment. Section 2.3 speaks to the applicability of consultation as a human right of indigenous peoples. Finally, Section 2.4 outlines the relationship between constitutional law and arbitration.

2.2 The Right to a Healthy Environment in Latin America

The right to a healthy and sustainable environment constitutes a paradigmatic link to the foreseeable change in human rights in the coming years. This right has the potential to generate a paradigm shift in the overall understanding of fundamental rights.

What practical effects can the right to the environment have? First, it is important to note that the right to a healthy environment is considered a third generation right. The concern for environmental protection initially emerged at the international level due to the need to regulate technological development, which began posing significant threats to human health and life on a global scale.

This international concern, which manifested through the recognition of an associated human right (such as the Rio Declaration’s principle 1, Article 11 of the Additional Protocol to the American Convention on Economic, Social, and Cultural Rights, or Article 24 of the African Charter on Human and Peoples’ Rights), has been subsequently incorporated into constitutions, starting with Greece, Portugal, and Spain, that paved the way for the widespread inclusion of provisions on environmental protection since the 1980s.

The right to a healthy environment is recognized as a fundamental right in many constitutions around the world, and has been gaining international recognition as an autonomous human right. The United Nations Human Rights Council’s approval of Resolution a/hrc/48/l.23/Rev.1 on October 5, 2021, which explicitly recognized the right to a safe, clean, healthy, and sustainable environment as an important human right for the enjoyment of other human rights, signifies the recent international establishment of this right. Considering recent events and the complex reality of the planet, it can become a central fundamental right.¹⁰

The right to a healthy environment has a newer origin compared to other fundamental rights. This is because the right was not taken into account at the time of drafting the Universal Declaration of Human Rights and the International Covenants on Human Rights i and ii. Its emergence came later, primarily at the national level. There are many Constitutions that recognize it, although not always with the same wording. Over 100 states have recognized the right to a healthy environment in some form through international agreements, their constitutions, laws or policies, among other instruments.

In practice, other recognized human rights, such as the right to life and health, have been applied to address environmental issues. Human rights bodies have identified that environmental damage affects the full exercise of human rights and have established that states have human rights obligations to protect human beings from environmental harm.

Indeed, the United Nations Human Rights Council’s adoption of Resolution a/hrc/res/37/8, on April 9, 2018, that recognized or incorporated Resolutions a/hrc/res/34/20, 28/11 of March 26, 2015, and 31/8 of March 23, 2016, presents an interesting international normative panorama of recognizing the environment from a human rights perspective to justify the protection of the right to the environment due to its interrelation with other human rights.

In light of these considerations, there is no doubt about the existence of the right to a healthy environment at the national and international levels as an autonomous right. In fact, it refers to a global environmental constitutionalism, which signifies the growing trend in many countries to recognize that citizens have the right to a healthy environment and that constitutions should guarantee certain environmental rights. This phenomenon represents the convergence of constitutional law, international law, human rights, and environmental law. National and constitutional courts are showing increasing interest in environmental rights, and this momentum is likely to increase as courts become more aware of what its peers are doing.

The new Latin American constitutionalism comprises Constitutions that establish that nature has the right to exist, persist, maintain, and regenerate its vital cycles, structures, functions, and evolutionary processes. Additionally, under these constitutional regimes, any person can take legal actions to defend the environment without prejudice to the obligation of public institutions to act ex officio in the face of attacks against the environment.¹¹

Indeed, according to Zafarroni, Latin American constitutionalism protects the environment by recognizing the rights of nature and allowing any person to take legal action to defend them. In that regard, it is worth noting that the economic and political model in Latin America has stimulated the flow of investments and the development of extractive activities involving raw materials such as hydrocarbons, oil, mining, etc.¹² The activities of extractive companies in Latin America can have serious impacts on the environment, like the disaster caused by the mining company Samarco in Brazil in 2015, among many others.

The Samarco scandal was due to the rupture of a tailings dam in Brazil, which caused the largest ecological disaster in the history of the country. When the Samarco’s Fundão dam ruptured in November 2015, it released 39.2 million cubic meters of tailings waste into the Doce River basin and killed 19 people.

Samarco, a joint venture between bhp Group Limited (bhp) and Vale sa (Vale), closed for five years after the rupture. During that time, bhp and Vale focused on repairs, compensations, and cleanup efforts. bhp announced that it had lost an appeal in a London court seeking to block a lawsuit of over £5 billion (over $6 billion) filed by 200,000 Brazilians for the deadly dam failure. The lawsuit is ongoing, and the trial will continue throughout 2023.¹³

Under international law, States have the sovereign right to exploit natural resources within their jurisdiction or under their control. The sovereign right is granted in accordance to their own environmental and developmental policies, Principle 21 of the Stockholm Declaration on the Human Environment, Principle 2 of the Rio Declaration on Environment and Development, and the preamble of the United Nations Framework Convention on Climate Change.

Neither the American Declaration of the Rights and Duties of Man (American Declaration) nor the American Convention on Human Rights (American Convention) explicitly include references to environmental protection, although Article 11 of the Additional Protocol to the American Convention on Human Rights in the Area of Economic, Social, and Cultural Rights (Protocol of San Salvador) of 1988 recognizes the right by establishing that every person has the right to live in a healthy environment.

The Inter-American Court of Human Rights’ Advisory Opinion 23/17 on the environment and human rights constitutes a milestone in environmental protection. Advisory Opinion 23/17 reaffirmed the Court’s extensive jurisprudence on the matter, recognizing the undeniable interdependence and indivisibility between the environment and human rights.

In this context, the Inter-American Court of Human Rights recognized in Advisory Opinion 23/17 that the right to a healthy environment is an autonomous and justiciable right. The Court has used Article 26 of the American Convention to uphold the right.¹⁵

In the February 2020 judgment of the case Indigenous Communities Members of the Association Lhaka Honhat (Our Land) v. Argentina, the Inter-American Court of Human Rights used Article 26 to declare that Argentina was responsible for violating the right to a healthy environment and other interdependent rights.

In this regard, the Court noted that in certain circumstances, States have an obligation to establish adequate mechanisms to monitor and supervise certain activities in order to guarantee human rights, protecting those rights from the actions of public entities as well as private individuals. The state’s obligation to protect human rights is a means or behavior obligation, and its breach is not demonstrated solely by the fact that a right has been violated. Because this principle applies to the entirety of the rights recognized in the American Convention, it is worth noting that it also refers to the rights to adequate food, water, and participation in cultural life.

In Lhaka Honhat (Our Land) v. Argentina, the petitioners argued that the State’s failure to prevent the installation of fences, cattle grazing, and illegal logging in the territory of indigenous communities, grouped under the association Lhaka Honhat, constitutes a violation of the right to a healthy environment and other rights contained in Article 26.

The Court emphasized that in specific environmental matters, it should be noted that the principle of prevention of environmental damage is part of customary international law and requires States to take measures that are necessary to prevent environmental damage ex ante because, due to the particularities of environmental harm, it will often not be possible to restore the pre-existing situation after such damage has occurred.

In accordance with the duty of prevention, the Court stated that States are obligated to use all means at their disposal to prevent activities carried out under their jurisdiction from causing significant harm to the environment. This obligation must be fulfilled under a due diligence standard, which should be appropriate and proportional to the degree of environmental risk. Although it is not possible to provide a detailed enumeration of all the measures that States could take to fulfill this duty, the Court mentioned some measures including regulation, monitoring and supervision, requiring and approving environmental impact studies, establishing contingency plans, and mitigating environmental damage once it occurs.

The Lhaka Honhat (Our Land) v. Argentina clearly expressed that the environment is strictly linked to the rights of indigenous peoples, and that specific norms mandate the safeguarding of their environment, the protection of the productive capacity of their lands and resources, and the consideration of traditional activities and those related to their subsistence economy as “important factors in the maintenance of their cultures.”¹⁶ Therefore, the judgment establishes the basis for future similar cases in the Inter-American System.

The Court highlighted that the lack of access to territories and corresponding natural resources can expose indigenous communities to various violations of their human rights, in addition to causing suffering and harming the preservation of their way of life, customs, and language. The Court also warned that States must protect the close relationship that indigenous peoples have with the land and their life project, both individually and collectively.

Lhaka Honhat (Our Land) v. Argentina sets an important precedent in the region since indigenous communities in other countries are also similarly affected by environmental degradation caused by business activities.

Another jurisprudential advancement was evidenced in Judgment T-622 of the Constitutional Court of Colombia in 2016, which recognized the Atrato River as a subject of rights. The Atrato River is the most voluminous river in Colombia and the third most navigable in the country. It originates in the western part of the Andes Mountain range, specifically in Cerro Plateado, at an altitude of 3,900 meters above sea level, and flows into the Caribbean Sea. It stretches for 750 kilometers, of which 500 are navigable. The widest part of the river has a length of 500 meters, and the deepest part is estimated to be close to 40 meters. It receives more than 15 rivers and 300 streams, including Andágueda, Baté, Bojayá, Buchadó, Cabí, Cacarica, Capá, Domingodó, Napipí, Neguá, Muguindó, Murrí, Opogodó, Puné, Quito, Salaquí, Sucio, Tagachí, and Truandó.

The banks of the Atrato River are home to multiple Afro-Colombian and indigenous communities, including mestizo communities, descendants of migrants from various Colombian regions, and the plaintiffs in Judgment T-622, who have inhabited the Atrato River banks ancestrally. Traditional forms of life and sustenance practiced by these communities include artisanal mining, agriculture, hunting, and fishing, which have ensured a complete supply of their food needs for centuries.

The plaintiffs in the Atrato River case argued that the writ of tutela seeks to stop the intensive and large-scale use of various illegal mining and logging methods, including heavy machinery such as dredges and backhoes, and highly toxic substances such as mercury, in the Atrato River (Chocó), its basins, marshes, wetlands, and tributaries. The plaintiffs alleged that the use of these methods and substances have intensified over several years and had harmful and irreversible consequences on the environment, therefore affecting the fundamental right to a clean environment for ethnic communities and the natural balance of the territories they inhabit.

In response, the Colombian Constitutional Court recognized the Atrato River, its basin, and tributaries as entities subject to rights of protection, conservation, maintenance, and restoration by the State and ethnic communities, based on the following grounds:

1. (1)Justice with nature must be applied beyond the human realm and allow nature to be the subject of rights. Under this understanding, it is necessary to take a jurisprudential step forward towards the constitutional protection of one of the most important sources of biodiversity: the Atrato River. This interpretation finds full justification in the superior interest of the environment, which has been extensively developed by constitutional jurisprudence and is constituted by numerous constitutional clauses that form what has been called the “Ecological Constitution” or “Green Constitution.” These provisions affirm the significance of a healthy environment and its interdependence with human beings and the State;
2. (2)The aforementioned reasoning implies a series of obligations to protect and guaranties to the environment on the part of the State, which is primarily responsible for its protection, maintenance, and conservation, to be materialized through responsible environmental public policies (sustainable governance);
3. (3)The duty of protection and care is also incumbent upon civil society and the communities themselves to safeguard natural resources and biodiversity. In this sense, it is pertinent to call on the ethnic communities inhabiting the Atrato River basin to protect, within the exercise of their customs, practices, and traditions, the environment of which they are the primary guardians and responsible parties; and
4. (4)The actions taken by competent state entities, both at the local and national levels, have mostly been welfare-oriented and isolated, without sufficient coordination to guarantee the care, maintenance, or recovery of the Atrato River basin and its tributaries, as evidenced by the lack of response to these concerns by the Governorate of Chocó or the acknowledgment of the lack of personnel and administrative capacity of Codechocó, as corroborated by the Chocó Regional Prosecutor’s Office, the Office of the Ombudsman, and the General Comptroller’s Office during the judicial inspection carried out in the area where the events occurred, regarding the serious threat to the Atrato River basin due to illegal mining activities.

2.3 Indigenous Peoples’ Rights and the Human Right to Prior Consultation

The right to consultation constitutes an extremely relevant element in the consideration of human rights in Latin America, but considering the impact it has on associated rights like land, territory, culture, and living in a healthy and sustainable environment, the right to consultation is especially relevant in its interrelation with the environment.

In the case of Bolivia, the concept of indigenous people since the enactment of the new Constitution is complex but very important to understand the Bolivian reality. The complexity lies on the lack of clarity about what is understandood by indigenous under the definition provided by Article 30.i of the Political Constitution of the State, also known as Constitución Política del Estado (cpe).

The concept of “indigenous” in the constitutional text has both a “constituent impulse,” as a source of inspiration for the process of restructuring the state’s institutions, and an impulse to protect a particularly vulnerable human group in the country’s colonial and republican history: the indigenous communities. The current definition of “indigenous” in Bolivia is the result of a long-standing historical process, in which the last years have been particularly significant due to the magnitude of the changes brought about by the current Constitution regarding indigenous issues.

As Bartolomé Clavero, Professor at the Faculty of Law of the University of Seville in Spain and one of the most renowned authors in the field, points out: “[t]he Constitution of Bolivia in 2009 is the first Constitution in the Americas that lays the foundations for access to rights and powers for everyone, adopting a resolute and consistent anti-colonial position. It is the first one that decisively breaks with the typically American trait of constitutional colonialism or colonial constitutionalism since the times of Independence.”¹⁷

On the other hand, Judgment 1422/2012 of the Constitutional Court of Bolivia stated that despite the influence of organizational elements inherent to the process of mestizaje in Bolivia, which specifically refers to neighborhood associations, if any of the aforementioned elements of collective cohesion are identified, the persons involved will be entitled to collective rights. In this case, all the effects of Article 30, including its two paragraphs, of the Constitution will apply to them. This also includes the effects of the principle of self-determination inherent to indigenous, native, and peasant peoples, as enshrined in Article 2 of the Constitution.

In this context, we can observe that there is a gap between the constitutional text and its interpretation, aimed at promoting a broader understanding of indigeneity. We consider this to be an extremely dangerous position, as loosening and relativizing the conceptual definition of indigenousness may allow for harmful uses of the definition. The greatest danger lies in the instrumentalization of the term to support decisions that promote legal uncertainty in Bolivia.

The right to prior consultation is provided for in Article 30.ii.15 of the Constitution as a fundamental right of indigenous, native, and peasant peoples. This right recognizes a series of powers in favor of these peoples, including the right to be consulted through appropriate procedures, the right to be consulted through their institutions, the right to be consulted whenever legislative or administrative measures that could affect indigenous, native, and peasant peoples are foreseen, the right to prior and binding consultation, and finally, the right for the consultation to be managed and conducted by the State in good faith and in agreement with the involved indigenous, native, and peasant peoples.

A literal reading of Article 30.ii.15 of the Constitution might give the impression that mandatory prior consultation in Bolivia only applies when it concerns the exploitation of non-renewable natural resources. However, the scp (Plurinational Constitutional Judgment) 0300/2012 interpreted the constitutional norm more broadly, stating that this provision has two parts. The first part asserts that indigenous, native, and peasant peoples have the right to consultation whenever legislative or administrative measures that could affect them are foreseen, without specifying the types of measures involved. The second part establishes that prior consultation is guaranteed by the State regarding the exploitation of non-renewable natural resources, without using a term that affirms that prior consultation only applies in such cases. Therefore, this provision is not limited to non-renewable natural resources alone.

In this context, any decision that may affect an indigenous, native, and peasant people is subject to prior consultation, regardless of whether non-renewable natural resources are at stake or not. This understanding of constitutional jurisprudence is consistent with the International Labor organization (ilo) Convention 169, whose Article 6.1 states that when applying the provisions of the Convention, governments shall “consult the peoples concerned, through appropriate procedures and in particular through their representative institutions, whenever legislative or administrative measures may affect them directly.”

An important element of the right to consultation in Bolivia, as mentioned before, is that the consultation must be carried out in accordance with the traditions and customs of the involved indigenous, native, and peasant peoples. This was determined by Bolivian constitutional jurisprudence through scp 0300/2012 in the Tipnis case, which drew on the jurisprudence of the Inter-American Court of Human Rights in the Case of the Saramaka People v. Suriname.

In relation to the inter-American jurisprudence, it is important to recall the Saramaka People v. Suriname, which arose from the construction of the Afobaka dike in Suriname as a response to a flood in the 1960s. The construction resulted in the displacement of the Saramaka people from their territories, creating so-called “transmigration” communities. Delving into the merits of the case, the Inter-American Court of Human Rights ruled that the State had violated Article 21 of the American Convention on Human Rights by failing to consider that members of the Saramaka people have the right to use and enjoy the natural resources within their traditionally occupied territory necessary for their survival. The Court also decided that the State could restrict this right by granting concessions for the exploration and extraction of natural resources within Saramaka territory only if the State guaranteed the effective participation and benefits of the Saramaka people, conducted or supervised prior environmental or social impact assessments, and implemented appropriate measures and mechanisms to ensure that these activities did not have a greater impact on Saramaka traditional lands and natural resources. Lastly, the Court concluded that the concessions already granted by the State did not comply with these guarantees.

The Tipnis case in Bolivia emerged from the government’s decision to construct the Villa Tunari – San Ignacio de Moxos road. The construction of the road was determined through a State Law (Law 3477 of September 22, 2006), which declared its construction a national priority, crossing the territory of the indigenous peoples of Tipnis. On the other hand, Law 222 was issued with the purpose of convening the consultation process with the indigenous peoples of Tipnis and establishing the content and procedures of this process. Based on these circumstances, a motion of unconstitutionality was presented to the Plurinational Constitutional Court of Bolivia, arguing that the road construction plan violated the indigenous inhabitants’ fundamental rights, including the right to consultation, because consultation was not carried out prior to the administrative activities the State had already undertaken that directly affected the indigenous communities.

Despite having defined the essential elements of the right to consultation, the Plurinational Constitutional Court, in the scp 300/2012, declared the constitutionality of the law. The Court argued that although prior consultation was not carried out in the construction of the tipnis road and the rights of indigenous peoples were violated, declaring the law unconstitutional would not repair the injury to the rights of indigenous peoples. To the contrary, finding the law unconstitutional would lead to the absurdity of perpetuating the unconstitutional state of affairs indefinitely – a situation that is neither accepted nor desired by the constitutional order or the norms contained in international human rights treaties.

2.4 Arbitration and Human Rights

Bolivia, Ecuador, and Venezuela have withdrawn from the International Centre for Settlement of Investment Disputes (icsid), and several other countries in the region are reflecting on which model of Investment Agreement will be adopted in the future. However, regardless of whether countries are part of the icsid or not, there is an increasingly strong discussion in the region about adopting a more assertive rhetoric regarding the protection of natural resources. In Bolivia, for example, the Arbitration and Conciliation Law, Law 1770, which was based on the model law of the United Nations Commission on International Trade Law (uncitral), has been replaced by the Conciliation and Arbitration Law, Law 708. This new law aspires to establish a comprehensive legal framework for international investment arbitration.

States are increasingly using constitutional provisions as part of regulations that companies must comply with. In this regard, this section will provide an overview of what constitutional compliance for a company might look like in Bolivia.

The notion that fundamental rights are reserved exclusively for the State has changed significantly, and individuals are now subject to the horizontal effect of fundamental rights (Drittwirkung). In this sense, there are constitutional provisions such as Articles 13 and 14 of the Bolivian Constitution that establish the inviolability of fundamental rights, recognition of legal personality, prohibition of discrimination, free development of personality, equality, and other provisions that may have jus cogens status. These provisions are binding on everyone, including private entities.

On the other hand, the Bolivian Constitution also ensures private compliance with provisions related to the environment and natural resources. For example, Article 342 states that it is the duty of the State and the population to protect the environment. Constitutional compliance that includes both fundamental rights and norms for environmental protection and natural resources is absolutely admissible.

Today, there are works of reflection on b&hr that have a direct relationship with arbitration. This can be seen through the current multilateral discussions on b&hr. The discussion arises from a very complex relationship between arbitral decisions, decisions of ordinary jurisdiction, and the impossibility of enforcing international decisions, among other factors.

In Chevron/Texaco v. Ecuador, discussions revolved around acts of pollution and environmental damages allegedly caused during more than 30 years of oil exploitation in the Ecuadorian Amazon. An Ecuadorian national court ruled that Chevron/Texaco was responsible for ecological damage and human rights violations, particularly in the case of Lago Agrio, and imposed damages of over 9 billion dollars. However, an Arbitral Tribunal, the Permanent Court of Arbitration in The Hague, later declared that the decision was the product of corruption and therefore rendered it unenforceable.

The Arbitral Tribunal ordered Ecuador to “[t]ake immediate steps, of its own choosing, to remove the status of enforceability from the Lago Agrio Judgment (as also decided by the Lago Agrio Appellate, Cassation, and Constitutional Courts).” Ecuador tried to enforce the Lago Agrio decision in five countries but failed to do so after more than 15 years of litigation.

The paradox here is determining who has the final say. Can an arbitral tribunal oversee the enforcement of public norms by a State? The author believes there is an inseparable future between the commensurability of decisions that must consider Human Rights and Business Law and the exercise of domestic and international arbitral functions as part of the equation. This global phenomenon has generated relevant developments across different jurisdictions, such as the popular vote in Switzerland on the executive responsibility of transnational operations, the decision of the French Constitutional Court on this matter, and the Rio Tinto scandal in Australia.

In Azurix v. Argentina, the relationship between human rights and arbitration was a central issue. Azurix, a subsidiary of the United States (U.S.) energy company Enron, invested in a water concession in Argentina. Following the economic crisis in 2001, the government of Argentina implemented measures to address the crisis, including changes to the regulatory framework for water services. Azurix claimed that these measures amounted to expropriation and sought compensation through arbitration.

During the arbitration proceedings, Azurix argued that Argentina’s measures violated its human rights, including its right to property. However, the tribunal rejected these arguments, stating that the human rights treaties invoked by Azurix were “outside the scope of the protection of investment.”¹⁸ The tribunal also noted that the human rights treaties invoked by Azurix did not contain provisions that were “directly applicable” to the dispute. Despite rejecting Azurix’s human rights arguments, the tribunal considered other international legal instruments like the European Convention on Human Rights in its decision. Specifically, the tribunal relied on the principle of proportionality, which it borrowed from European human rights law, to limit the scope of regulatory expropriation.

Overall, the Azurix case highlights the challenges of incorporating human rights considerations into investment law and arbitration. While the tribunal in this case did not accept Azurix’s human rights arguments, it did rely on human rights norms in its decision-making process.

Similarly, in Suez v. Argentina, the relationship between human rights and arbitration was also a central issue. Suez, a French water company, invested in water concessions in Argentina. Argentina changed the regulatory framework for water services, and Suez claimed that the new measures amounted to expropriation and sought compensation through arbitration.

During the arbitration proceedings, Argentina argued that its measures were justified based on the human right to water. Argentina claimed that its human rights obligations to ensure its population the right to water took precedence over its obligations under the Bilateral Investment Treaties (bit), and that the existence of the human right to water also implicitly gave Argentina the authority to take actions in disregard of its bit obligations.

The tribunal rejected Argentina’s argument, holding that Argentina was subject to both international obligations, i.e., human rights and treaty obligations, and must respect both of them. The tribunal held that Argentina’s human rights obligations did not give it the authority to take actions in disregard of its bit obligations.

The Suez case highlights the challenges of balancing human rights considerations with investment protection in arbitration. While Argentina argued that its measures were justified on human rights grounds, the tribunal ultimately held that Argentina was bound by both its human rights obligations and its bit obligations.

In Santa Elena v. Costa Rica, the tribunal considered the relationship between environmental protection and investment protection. The case involved a mining concession held by Santa Elena, a subsidiary of the Canadian mining company Vanessa Ventures, in Costa Rica. In 2002, the Costa Rican government cancelled the concession, citing concerns about the environmental impact of the mining project.

Santa Elena brought a claim against Costa Rica under the Canada-Costa Rica bit, arguing that the cancellation of the concession amounted to expropriation and violation of its rights under the bit. Costa Rica argued that the cancellation was justified on environmental and human rights grounds, specifically the right to a healthy environment.

Approaching the question of compensation for the Santa Elena Property, the tribunal bore in mind the following considerations:¹⁹

1. (a)International law permits Costa Rica to expropriate foreign-owned property within its territory for a public purpose and against the prompt payment of adequate and effective compensation. This is not in dispute between the parties.
2. (b)While an expropriation or taking for environmental reasons may be classified as a taking for a public purpose, and thus may be legitimate, the fact that the Property was taken for this reason does not affect either the nature or the measure of the compensation to be paid for the taking. That is, the purpose of protecting the environment for which the Property was taken does not alter the legal character of the taking for which adequate compensation must be paid. The international source of the obligation to protect the environment makes no difference.
3. (c)Expropriatory environmental measures – no matter how laudable and beneficial to society as a whole – are, in this respect, similar to any other expropriatory measures that a State may take in order to implement its policies: where property is expropriated, even for environmental purposes, whether domestic or international, the State’s obligation to pay compensation remains.

In Metalclad v. Mexico, the tribunal again considered the relationship between environmental protection and investment protection. The case involved a hazardous waste facility operated by Metalclad Corporation, a U.S. company, in Guadalcazar, Mexico. In 1996, the Mexican government denied a permit for the facility, citing concerns about the environmental impact of the project. Metalclad brought a claim against Mexico under the North American Free Trade Agreement (nafta), arguing that the denial of the permit amounted to expropriation and a violation of its rights under the treaty. The tribunal ultimately sided with Metalclad, holding that the denial of the permit was a violation of the company’s rights under nafta.

The tribunal held that the denial of the permit amounted to expropriation under nafta, which includes not only open, deliberate, and acknowledged takings of property, but also covert or incidental interference with the use of property which has the effect of depriving the owner, in whole or in significant part, of the use or reasonably-to-be-expected economic benefit of property. The tribunal found that the denial of the permit had the effect of depriving Metalclad of the use or reasonably-to-be-expected economic benefit of the facility, and therefore amounted to expropriation.

The Metalclad case is significant because it highlights the potential tension between environmental protection and investment protection in international law. The case also underscores the importance of balancing environmental and investment considerations in investment arbitration, and the need for a more nuanced approach to resolving these competing interests.

The Tribunal established that:²⁰

1. 99.Mexico failed to ensure a transparent and predictable framework for Metalclad’s business planning and investment. The totality of these circumstances demonstrates a lack of orderly process and timely disposition in relation to an investor of a Party acting in the expectation that it would be treated fairly and justly in accordance with the nafta.
2. 100.Moreover, the acts of the State and the Municipality – and therefore the acts of Mexico – fail to comply with or adhere to the requirements of nafta, Article 1105(1) that each Party accord to investments of investors of another Party treatment in accordance with international law, including fair and equitable treatment. This is so particularly in light of the governing principle that internal law (such as the Municipality’s stated permit requirements) does not justify failure to perform a treaty. (Vienna Convention on the Law of Treaties, Arts. 26, 27).
3. 101.The Tribunal therefore holds that Metalclad was not treated fairly or equitably under the nafta and succeeds on its claim under Article 1105.

In Bayview Irrigation District v. Mexico, the tribunal considered the property rights of 28 US citizen and 17 US irrigation districts regarding the use of irrigation water of the Rio Grande River based on a bilateral US-Mexico treaty. Claimants alleged that between 1992 to 2002 Mexico captured and diverted more irrigation water of the Rio Grande River than that to which the country had right under that treaty, depriving claimants of their water rights.

The Tribunal decided that it was not competent to resolve the case, reasoning that:²¹

1. 115)There is an evident and inescapable conceptual difficulty in positing the existence of property rights in water up-river in Mexico in a context where the entitlement of each Claimant depends upon the apportionment of a certain volume of water, measured over a five-year period (or possibly longer, if the possibility of repayment of water debts in subsequent cycles is taken into account), which can be determined only by reference to the volume of water that actually reached the main channel of the Rio Bravo / Rio Grande.
2. 116)One owns the water in a bottle of mineral water, as one owns a can of paint. If another person takes it without permission, that is theft of one’s property. But the holder of a right granted by the State of Texas to take a certain amount of water from the Rio Bravo / Rio Grande does not ‘own’, does not ‘possess property rights in’ a particular volume of water as it descends through Mexican streams and rivers towards the Rio Bravo I Rio Grande and finds its way into the right-holders irrigation pipes. While the water is in Mexico, it belongs to Mexico, even though Mexico may be obliged to deliver a certain amount of it into the Rio Bravo / Rio Grande for taking by us nationals.
3. 117)Thus, the Claimants do not own any of the water within Mexico. Nor do the Claimants possess any water rights in Mexico and enforceable against the State of Mexico. Their water rights are granted by the State of Texas. Those rights are created in Texas and exercised in Texas.
4. 118)Furthermore, it is plain that under the Mexican Constitution and Mexican law, the Claimants could have no such property rights in water in Mexican rivers. Article 27 of the Mexican Constitution stipulates that the ownership of waters within the boundaries of the national territory originally belongs to the Nation, and that water from its rivers and tributaries are the property of the nation. Exploitation or use of those waters can only be carried out through concessions granted by the Federal Executive. The Mexican Law of National Waters confirms the need for the grant of a concession for the exploitation or use of waters, and specifies that a concession does not guarantee the existence or permanence of the water that is the subject of the concession. And Mexico’s General Law of National Assets stipulates specifically, in Article 16, that concessions do not create ownership rights (derechos reales) but simply grant a right of use and exploitation, without prejudice to third parties, and subject to conditions imposed by law and by the concession.

Aguas del Tunari v. Bolivia was a case that involved water privatization in Bolivia and is considered significant under both human rights and arbitration considerations.²² The case involved a water concession held by Aguas del Tunari, a subsidiary of the International Water Limited (iwl), in Bolivia. In 1999, the Bolivian government granted a concession to Aguas del Tunari for the provision of water and sanitation services in the city of Cochabamba. The concession was granted for a period of 40 years and included a provision that allowed Aguas del Tunari to increase water rates by up to 200%.

The concession was highly controversial, and in 2000, massive protests erupted in Cochabamba against the concession and the rate increases. The protests were led by a coalition of local groups, including labor unions, indigenous organizations, and environmental groups, and were supported by international nongovernmental organizations (ngos).

The Bolivian government eventually cancelled the concession, citing concerns about the human right to water and the lack of public consultation in the granting of the concession. Aguas del Tunari brought a claim against Bolivia under the icsid, arguing that the cancellation of the concession amounted to expropriation and a violation of its rights under the Bolivia-Netherlands bit.

Aguas del Tunari is significant because it highlights the growing recognition of the importance of human rights in investment arbitration. The case also underscores the challenges of balancing human rights considerations with investment protection, and the need for a more nuanced approach to resolving these competing interests. The case also highlights the role that ngos can play in investment arbitration, both in terms of bringing attention to human rights concerns and in terms of intervening in arbitrations through amicus curiae briefs.

Sornarajah argues that Aguas del Tunari represents a turning point in investment arbitration because it highlights the growing recognition of the importance of human rights in investment disputes. He notes that the case is significant because it recognizes that investment protection cannot be pursued at the expense of human rights, and that states have a duty to protect fundamental human rights, including the right to water.²³ Sornarajah also criticizes the narrow approach taken by some investment tribunals in interpreting investment treaties, arguing that this approach leads to a lack of accountability for multinational corporations and a disregard for human rights. He notes that the Aguas del Tunari case represents a departure from this narrow approach, as it recognizes the importance of balancing investment protection with human rights considerations.

As Thielborger mentioned,²⁴ in considering the case in light of the right to water, one should first acknowledge that one of the main problems in the Aguas del Tunari case, as in the Azurix case, is the missing guarantee of stable prices and the equity of pricing in the concession contract. This is in clear conflict with General Comment No. 15 of the Committee on Economic, Social and Cultural Rights (cescr), which clearly demands that “services, whether publicly or privately provided, are affordable for all, including socially disadvantaged groups.” Equity in this sense means that poorer households cannot be disproportionately affected by water expenses. Given that the prices increased so dramatically after the privatization in Cochabamba and poorer households had to spend an enormous part of their budget on water expenses, the right to water was clearly violated in this sense.

Aguas del Tunari teaches a public participation lesson. From a formal point of view, no participation by interest groups or civil leaders is possible: only the state and the company in question are eligible as parties to the arbitration. However, substantive rights need to be procedurally reflected in order to be effective.²⁵ It is likely that the right to water would have been brought forward in the arbitration process by interest groups or representatives of civil society. However, if the voice is not given the chance to speak, how is the message to be heard? Hence, procedural rights often ultimately lead to a violation of substantial rights.

Bolivia should have made sure that its bits allow participation of third parties in the arbitration process or should have tried to make an effort to convince the investor to allow third-party participation. Finally, the right to water was also invoked as a substantive argument by the petitioners. They relied in their reasoning on a ‘direct interest’ in the matter, which should award them standing in the dispute. Although stated indirectly, this is clearly another implication of the right to water. It is exactly the above-mentioned link between substantive law and procedural rights that the petitioners refer to.

It would have been a stronger argument if the petitioners clearly stated that the “direct interest” was related to their right to water, however, given the ambiguous legal status of the right to water, it might also have been considered an invitation for the arbitrators to reject the argument by simply reasoning that the right is not clearly accepted in international law. Hiding behind the fuzzy ‘direct interests’ term seemed to be more reliable for the petitioners in their attempt to get party status. At the same time, it was nevertheless a missed opportunity for the right to water to play a decisive role in the settlement of an international water dispute.²⁶

Additionally, in the Achmea case, the European Court of Justice (ecj) held that an arbitration clause in an investment treaty between two EU member states was incompatible with EU law.

The Achmea case, also known as Slovakia v. Achmea, was a landmark case in investment arbitration that raised important questions about the relationship between investment law and EU law. The case involved a dispute between the Dutch insurance company Achmea, which invested in the Slovak health insurance market after its liberalization, and the Slovak Republic.

Achmea initiated arbitration proceedings against Slovakia under the bit, seeking compensation for losses it claimed to have suffered as a result of measures taken by the Slovak government towards reversing the liberalization of the health insurance market, which affected the company’s prior investments.

Slovakia argued that the arbitration clause in the bit was incompatible with EU law, and that the tribunal lacked jurisdiction to hear the case.

The case was ultimately referred to the ecj, which issued a landmark ruling in March 2018. The ecj held that the arbitration clause in the bit was incompatible with EU law, and that it had the effect of undermining the autonomy of EU law and the role of the EU courts in interpreting and applying that law.

The ecj’s ruling was significant because it called into question the validity of hundreds of investment treaties between EU member states and third countries. The ruling was also seen as a victory for EU institutions and member states, which had been seeking to limit the scope of investment arbitration and to promote the role of the EU courts in resolving disputes.

Following the ecj’s ruling, several EU member states announced that they would terminate their bits with other EU member states, and that they would seek to renegotiate their investment treaties with third countries to ensure that they were compatible with EU law. The ruling also had implications for ongoing investment arbitration cases, many of which were put on hold pending the outcome of the case.