A Call to Apply the Principle of Extraterritorial Obligations of States to International Investment Agreements to Protect Victims of Human Rights Violations

Jakarta, 22 January 2016—Indonesia for Global Justice (IGJ) together with Madhyam, the ETO Consortium and the EU-ASEAN FTA Campaign Network, organized a two-day regional workshop in Jakarta with the theme “Rethinking International Investment Agreements.” The workshop brought together regional and international activists and experts to discuss international investment agreements that provide extensive protection to foreign investors thus affording possibilities of human rights violation.

The workshop is a response to the Trans-Pacific Partnership Agreement (TPPA), which will be officially sealed in early February 2016 amidst protests and criticism, including from civil society organizations. The TPPA is a free trade agreement between big corporations and twelve nations in the Pacific Rim (United States of America, Canada, Mexico, Peru, Chile, Australia, New Zealand, Japan, Brunei Darussalam, Malaysia, Singapore and Vietnam), which requires each signatory government to conform its domestic policies to the terms of the TPPA. It has been criticized as a form of corporate aggression on national sovereignty and democracy.

Specifically, the workshop discussed trade agreements and foreign investments as well as the Extraterritorial Obligations (ETOs) of states with regard to potential human rights violations. The workshop focused on the ETOs as elaborated in the Maastricht Principles on the Extraterritorial Obligations of States in the Area of Economic, Social and Cultural Rights. The principles define ETOs to encompass (1) obligations relating to the acts and omissions of a state, within or beyond its territory, that have effects on the enjoyment of human rights outside of that State’s territory, and (2) obligations of a global character that are set out in the Charter of the United Nations and human rights instruments to take action, separately, and jointly through international cooperation, to realize human rights universally.

These principles are the outcome of an expert meeting convened by the Maastricht Centre of Human Rights and the International Commission of Jurists in September 2011. This set of principles clarify further states’ ETOs to realize economic, social and cultural rights to ensure the full realization of the Charter of the United Nations and international human rights, specifically pertaining to economic, social and cultural rights. The principles extend states’ ETOs to include responsibility for acts and omissions of non-state actors, including corporations, where they are empowered by the state to exercise elements of governmental authority. They also cover the responsibility of states to elaborate, interpret and apply relevant international agreements and standards in a manner consistent with their human rights obligations. Importantly, the principles mention the obligation of states to hold accountable those who violate human rights and provide remedies and reparation for the victims.

At the start of workshop, Professor M. Sornarajah from the National University of Singapore gave a keynote speech where he pinpointed the trend of foreign investments and highlighted the protection afforded for investors through Investor-State Dispute Settlement (ISDS). ISDS is a mechanism operating outside the domestic law and courts of the state parties, which has been used by foreign corporations to file lawsuits against governments if they pass public interest laws that infringe on the capacity of the corporations to profit.

Subsequent to Professor Sornarajah’s speech, the first panel of speakers discussed case studies on ISDS and analyzed Bilateral Investment Treaties (BITs) review process in several countries, i.e. Indonesia, India, Australia, Ecuador and South Africa. In this panel Ms. Rachmi Hertanti, Research and Knowledge Management Manager at IGJ; Ms. Wenny Setiawati, Indonesia Expert Team on BITs; Mr. Kavaljit Singh, Director of Madhyam; Ms. Brynn O’Brien, Director of Categorical Advisory; and Ms. Brid Brennan, Researcher at Transnational Institute gave enlightening presentations. During the session, the review of BITs in Indonesia was discussed. Initial findings have shown that the government of Indonesia has been systematically put in a disadvantaged position. For example, the present BITs prevent Indonesia from bringing foreign investor companies to justice when they breach Indonesian labor law. Mr. Joseph Purugganan, Southeast Asia Co-coordinator of the EU-ASEAN FTA Campaign Network at Focus on the Global South, also reported that a similar situation can be found in the Philippines where it is difficult for the government to defend the country’s national interests when dealing with foreign investment. Mr. Purugganan further pointed out, “In fact, foreign investment agreements would often be used as the main references to draft academic paper in the law making process.” In the Philippines, there have been discussions on how to incorporate TPPA stipulations in the law making process although the country is not yet a party to the agreement. This, he asserted, further evidenced foreign investors’ intervention on the State’s sovereignty.

The discussion on the Maastricht Principles was preceded by a presentation on the principles by Laura Michéle, Program Officer for Nutrition and Extraterritorial Obligations (ETOs) at FIAN International. Ms. Michéle in her presentation also referred to how panelists and participants at the 4th annual UN Business and Human Rights Forum in 2015 underlined the need to integrate ETOs into future trade treaties, including providing a mechanism for victims to file complaints against companies in their home or host states. This is especially important as many of the companies involved in human rights abuses are foreign-based.