Inclusion of Investor Obligations and Corporate Accountability Provisions in Investment Agreements

Abstract

The terms “corporate social responsibility” and “responsible business conduct,” while growing increasingly popular in public discourse as consumers demand greater corporate accountability, are also being worked into clauses featured in international investment agreements (IIAs) to varying degrees and effects. These treaty provisions often focus on how to ensure that foreign investors making investments in host States are abiding by environmental, social, governance, or other norms and are normally voluntary in nature. They tend to apply to the State parties, rather than to investors directly, with some notable exceptions that have emerged in recent years and which are explored here. Also significant is how many IIAs have treated the subject of investment compliance with national laws, often building the definition of “investment” around those lines, though how arbitral tribunals have dealt with infractions of such laws has depended largely on the nature of the violation. Some of these IIAs have focused primarily on violations in the making of the investment, while others look further to the operations and closure phases, which have been considered in investment jurisprudence. In addition to requirements to comply with laws and regulations, several recent IIAs have begun spelling out specific investor obligations, ranging from anti-corruption to environmental and social impact assessment and management plans, along with providing company information. Given this context, this chapter features a detailed analysis of various bilateral investment treaties (BITs), model treaties, and arbitration cases that demonstrate some of these issues and their evolution, both in theory and in practice. It also places this discussion within the wider context of the push for IIA reform at multiple levels, from the bilateral to the multilateral.