4 Investor Rights andWell-BeingRemarks on the Interpretationof Investment Treaties in Lightof Other RightsLuigi Crema

4.1 Preliminary Clarifications of the Issue at StakeThe elusive question of interpreting international agreementsin light ofother competing principles and obligations has, over the last two decades,been drawn into and included within the debate over the fragmentation ofinternational law. In this debate, many distinguished voices, coming fromthe academy as well as practitioners, have intervened: Presidents of theInternational Court of Justice;1 university professors;2 international judges;3and a dedicated study group of the International Law Commission (ILC)

1 R.Y. Jennings, ‘The Proliferation of Adjudicatory Bodies: Dangers and Possible Answers’, inL. Boisson de Chazournes and K. Beeckman (eds), Implications of theProliferation of International Adjudicatory Bodies for Dispute Resolution, ASILBulletin, 1995, issue 9, pp. 2–7; see also the Address to thePlenary Session of the General Assembly of the United Nations bythe Presidents Schwebel (26 October 1999) and Guillaume (26October 2000) presented and commented upon M. Koskenniemi and P.Leino, ‘Fragmentation of International Law? PostmodernAnxieties’, Leiden Journal of International Law, 2002, vol. 15, pp.553–6;R. Higgins, ‘A Babel of Judicial Voices? Ruminations from theBench’, International and Comparative Law Quarterly, 2006, vol. 55, pp.791–804.

2 Among many, see P.M. Dupuy, ‘L’unité de l’ordre juridiqueinternational, Cours général de droit international public’,Recueil des Cours, 2002, vol. 297, pp. 9–489; C. McLachlan, ‘ThePrinciple of Systemic Integration and Article 31.3.c) of theVienna Convention’, International and Comparative Law Quarterly, 2005,vol. 54, pp. 279–319; B. Conforti, ‘Unité et fragmenta- tion du

droit international: «Glissez, mortels, n’appuyez pas»’, Revuegénérale du droit interna- tional public, 2007, vol. 111, pp. 5–18; L.Gradoni, ‘Regole di interpretazione dif cilifi da interpretare eframmentazione del principio di integrazione sistemica’, Rivista didiritto internazionale, 2010, vol. 93, pp. 809–17.

3 B. Simma, D. Pulkowski, ‘Of Planets and the Universe: Self-Contained Regimes in International Law’, European Journal ofInternational Law, 2006, vol. 17, pp. 483–529;T. Treves, ‘Fragmentation of International Law: The JudicialPerspective’, Comunicazioni e Studi, 2007, vol. 23, pp. 821–76,referring also to the positions of two former Presidents of theITLOS, Rao and Nelson, at p. 831.

Investor Rights and Well-Being 51under the guidance of Martti Koskenniemi.4 This extensive literature sharessome questions in common with a re ectionfl on investment agreements incontext; however, some features of the two elements here at stake– investmentagreements and competing regulations – place the subject on a differentground from these past discussions and require some distinctions.

4.1.1 The Treaties…

Investment agreements individually do not set up ‘self-contained regimes’,and nor do they do so when taken together.5 They are, together with inter-national customary law, state contracts, statutes and the awards implement-ing them, as well as with the profuse legal literature dedicated to the topic,part of a specific eldfi of international law6 (with its own (in)visible college7and ethos, whose business orientation has been criticized).8 Butthey did notcreate stable, self-contained systems of law.9

4 Report of the Study Group of the International Law Commission, Fragmentation ofInternational Law: Difficulties Arising from the Diversification and Expansion ofInternational Law, nalizedfi byL. Koskenniemi, UN ILC, 58th Sess., UN Doc. A/CN.4/L.682 (2006).

5 C. McLachlan, ‘Investment Treaties and General InternationalLaw’, International and Comparative Law Quarterly, 2008, vol. 57, pp.361–401, 369. Contra see P.M. Dupuy, ‘Uni cationfi Rather thanFragmentation of International Law? The Case of InternationalInvestment Law and Human Rights Law’, in P.M. Dupuy, F. Francioniand E.U. Petersmann (eds), Human Rights in International Investment Law andArbitration, Oxford: Oxford University Press, 2009, pp. 45–62; S.W.Schill, The Multilateralization of International Investment Law, Cambridge:Cambridge University Press, 2009, pp. 362 ff.

6 S.W. Schill, ‘W(h)ither Fragmentation? On the Literature andSociology of International Investment Law’, European Journal ofInternational Law, 2011, vol. 22, pp. 875–908. In this sense, it ispossible to talk of an international law regime, see J.E.Alvarez, The Public International Law Regime Governing International Investment,The Hague: The Hague Academy of International Law, 2011, p. 25,fn. 30, which follows the Keohane de nitionfi of regime as the‘sets of implicit and explicit principles, norms, rules anddecision-making procedures around which actors’ expectationsconverge in a given area of international relations’.

7 O. Schachter, ‘Invisible College of International Lawyers’,Northwestern University Law Review, 1977–1978, vol. 72, p. 217. A.Roberts, commenting on investment law, speaks about epistemiccommunity; see A. Roberts ‘Clash of Paradigms: Actors andAnalogies Shaping the Investment Treaty System’, paper presentedat the IILJ International Legal Theory Colloquium, NYU Law School, 1 February

2012. Online. Available: http://www.iilj.org/courses/documents/Robertsclash.pdf (accessed 27 December 2012).

8 D. Schneiderman, ‘Judicial Politics and International InvestmentArbitration: Seeking an Explanation for Con ictingfl Outcomes’,Northwestern Journal of International Law & Business, 2010, vol. 30, pp. 383–416; B. Simma, ‘Foreign Investment Arbitration: A Place for HumanRights?’, International and Comparative Law Quarterly, 2011, vol. 60, p.576.

9 The expression self-contained regime is somehow problematic, because,as it has been stressed by the ILC, it encompasses concepts verydifferent from each other: ‘Fragmentation of International Law:Dif cultiesfi Arising from the Diversi cationfi and Expansion ofInternational Law’ (Finalized by M. Koskenniemi), UN Doc.A/CN.4/L.682, 13 April 2006, pp. 65–101, paras 123–193;‘Conclusions of the work of the Study Group on the

52 Luigi CremaThe agreements protecting foreign investment are mostly of two kinds:

bilateral investment treaties (BITs), and dedicated chapters of bilateral andmultilateral free trade agreements (FTAs). BITs are characterized by veryshort and open-ended texts; clauses and exceptions drafted in these treatieshave many terms in common with other, similar treaties, and they refer tothe same concepts; but their clauses usually differ in some terms or excep-tions, and are then interpreted by arbitrators in different ways.10 A bit differ-ent is the panorama involving FTAs, such as the North AmericanFree TradeAgreement (NAFTA), Central America Free Trade Agreement (CAFTA),Association of Southeast Asian Nations (ASEAN), and many otherbilateraland multilateral FTAs. Here the protection of the investments is part of abroader system, and therefore an intra-systemic, more inward-looking, inter-pretive reasoning is more likely to be followed. Their text is often inter-preted ‘as a whole’,11 and they have speci cfi provisions that aim at openingthe treaty to, and coordinating with, other obligations.12 But this interpretiveattitude regards the whole agreement, and not just the chapteron invest-ments’ protection.Moreover, all these agreements are applied not by stable courts, but by

ad-hoc arbitral tribunals, and they have proven to be more carefully atten-tive to the speci cityfi of the dispute and to the text of the treaty than to itscoherent and homogeneous application (and, even more, of the whole bodyof investment law).13 Thus, for the purpose of studying the interpretation ofinvestment treaties in light of other concerns, rather than focusing on the

Fragmentation of International Law’, Yearbook of the ILC, 2006, vol.II, part 2, pp. 410–12, para. 251 (11–16). For this reason thisexpression will not be used in the next pages.

10 See J. Waincymer, ‘Balancing Property Rights and Human Rights in Expropriation’, and

F. Ortino, ‘Non-discriminatory Treatment in Investment Disputes’,both in Dupuy, Francioni and Petersmann (eds), op. cit.,respectively at pp. 293–4 and at p. 365. Also the conclusion ofT.J. Grierson-Weiler and I.A. Laird (‘Standards of Treatment’, inP. Muchlinski, F. Ortino, and C. Schreuer (eds), The OxfordHandbook of International Investment Law, Oxford: OUP, 2008, pp. 301–2)acknowledge this situation. Looking at some recent decisions theimpres- sion is con rmed:fi the interpretation of the ‘mostfavored nation clause’ in the case ICS Inspection and Control ServicesLimited v. Argentine (PCA Case No. 2010-9, Jurisdiction of 10February 2012, paras 285–317) is very attentive to the draftingof the treaty and the original intentions of the parties; inGlamis Gold v. USA, Award, 8 June 2009, para. 609, the Tribunal foundthat the claim that BIT jurisprudence on minimum standard hasconverged with customary international law is an over-statement.

11 See among many United Parcel Service of America (UPS) v. Canada, Merits, 11June 2007, paras 57–62.

12 For example, CAFTA Chapters 16 (Labor) and 17 (Environment);NAFTA Articles 104 (Relation to Environmental and Conservation Agreements)and 1114 (Environmental Measures). The three NAFTA Members alsosigned a side treaty, the North American Agreement onEnvironmental Cooperation, 14 September 1993.

13 A NAFTA Ch. 11 Tribunal also dedicated some scholarly paragraphsto explain the dif cul-fi ties arising from a system protected byarbitral panels, Glamis, op. cit., paras 3–9, in particu- larpara. 5.

Investor Rights and Well-Being 53relevance of other obligations in an organic, well-de nedfi body of law, ascould be done for the World Trade Organization (WTO), it is more appropri-ate to have in mind the traditional arbitral framework, characterized by aspecific, declaredly not complete, agreement in a broader contextof interna-tional law.

4.1.2 …and Common Concerns: That Is?The second preliminary comment regards the realities that interact orcompete with treaty obligations. The title of this book refersto commonconcerns, which is a different concept from the ‘other rules of internationallaw’, mentioned in Art. 31.3(c) of the Vienna Convention on the Law ofTreaties (VCLT),14 and already extensively lingered upon by legal literature.The expression common concerns is all but clear: what is a concern?Is it bindingas a rule? When is it common, and common to whom?

4.1.2.1 Other rules, common concerns, or planetary welfare?In international law a re ectionfl on the concept of commons rstfi developedwith regard to the exploitation of the seabed15 and then through the conceptof the common heritage of mankind.16 These speculations mainly saw in theexternal world (environment, atmosphere, arctic, moon and seas)a realitytruly common to the states – common because they affect every person ofthe world, common because nobody can own them, and common alsobecause everybody should pro tfi from their exploitation. At the time concernwas just a state of mind – literally a feeling of apprehension – that arose fromfacing a common heritage.17Later, since the late 1980s, the expression common concern was used in a

more de nedfi way, as ‘common concern of mankind’18 or of ‘humankind’,19and called attention to the need for shared action to protect a fundamentalreality: the environment.

14 Entered into force 27 January 1980.15 22nd Session of the General Assembly (1967), reproduced in The Law of the Sea.

Concept of the Common Heritage of Mankind, New York: United Nations,1996, pp. 8–25. The theoretical problems surrounding thecommons are well analyzed in K. Baslar, The Concept of the CommonHeritage of Mankind in International Law, The Hague: Kluwer, 1998, pp. 1–61.

16 R. Wolfrum, ‘The Principle of the Common Heritage of Mankind’,Zeitschrift für ausländisches öffentliches Recht und Völkerrecht, 1983, vol. 43,pp. 312–37.

17 Baslar, op. cit., pp. 107–8.18 UNGA Resolution 43/53, Protection of global climate for present and future

generations of mankind, 6 December 1988: ‘climate change is a commonconcern of mankind, since climate is an essential conditionwhich sustains life on earth’.

19 It was used in this sense in the preambles of the United NationsFramework Convention on Climate Change, New York, 9 May 1992; andof the Convention on Biological Diversity, Rio de Janeiro, 5June 1992; see also Baslar, op. cit., pp. 287 ff.

54 Luigi CremaThis need for coordinated action to address an important issue was not

new in international law, having appeared under different names at the baseof collective actions undertaken by states since the nineteenth century toprevent outrageous offences to human dignity during wartime (humanitarianlaw).20 In this context, only the dignity of the subject (the human being) andthe external world (the environment) raise common concern and call for jointaction, because of their importance, the existence of common interest, andthe impossibility of their being effectively safeguarded by some states alone.This narrow, select approach was the expression of a world based on

sovereignty, in which collective action was exceptional and required justi -fication. A step forward from this approach can envisage a larger role forinternational law in many areas. In very clear terms the International Courtof Justice (ICJ) Vice-President Weeramantry, in his separate opinion to theGabcˇíkovo–Nagymaros decision, observed:

international law subserves not only the interests of individual States,but looks beyond them and their parochial concerns to thegreater inter-ests of humanity and planetary welfare … Internationalenvironmentallaw will need to proceed beyond weighing the rights andobligations ofparties within a closed compartment of individual Stateself-interest,unrelated to the global concern of humanity as a whole.21

Theoretically, this marks further steps forward from the common concerns justdescribed above, by calling for a global re ectionfl not on specific issues –environment and humanitarian law – but on planetary welfare: environmentallaw becomes one prong of the wider reality of welfare. This expression,‘planetary welfare’, although powerful, never gained success; however, theidea it captures is popular and alive: international law and legal scholarship

shape this realm through the language of human rightsand theirspeci cations,fi 22 such as labour rights,23 the right to live in asafe place, theright to food and water, the right to a healthy environment,24 the rights of

20 The ‘laws of humanity and the requirements of the publicconscience’ were already mentioned in the so-called II HagueConvention, Laws and Customs of War on Land, The Hague, 29 July1899. D. Shelton, ‘Common Concern of Humanity’, Iustum AequumSalutare, 2009/1, pp. 33–40.

21 ICJ, Gabcˇíkovo-Nagymaros Project (Hungary/Slovakia), Judgment, 25September 1997, Separate Opinion of Vice-President Weeramantry,at p. 118, emphasis added.

22 L. Henkin, The Age of Rights, New York: CUP, 1990, pp. 12–41; A.Cassese, Il sogno dei diritti umani, Milano: Feltrinelli, 2008, pp. 27–30; M. Sornarajah, The International Law on Foreign Investment, 3rd ed.,Cambridge: CUP, 2010, pp. 225 ff.

23 On labour rights, see in this volume the chapter by S. Brugnatelli.24 For the subsequent rethinking of the environmental law as a branch of human

rights, seeL. Horn, ‘The Implications of the Concept of Common Concern of aHuman Kind on a Human Right to a Healthy Environment’, MacquarieJournal of International and Comparative Environmental Law, 2004, vol. 1, pp.233–69, especially pp. 259 ff.

Investor Rights and Well-Being 55the indigenous people, cultural rights,25 etc. The problems arising in theinterpretation of international investments in light of competing regulationspoint more to this dimension, of human rights and social welfare, than to‘common concerns’ as traditionally understood in international law.

4.1.2.2 Other concerns are often not codified in rules, or theirconcrete content is not determined

The expression ‘common concerns’ also leaves some ambiguity as to thelegal nature and content of what it indicates: it encompasses realities whichprovoke concern, but that may not be rules, or that are rules, but are verygeneral and not clearly de ned.fi The speci cfi content of human rights is oftencontested, and in fact fairly recent model BITs still do not mention generi-cally ‘human rights’ among the just causes to suspend the application of atreaty, but rather prefer to list some of them.26 Recent decisions have alsoshown that arbitral tribunals have trouble declaring the specificlegal contentof human rights.27The same caution can be seen where the protection of the environment

is involved. Even when the term ‘environment’ is clearly mentioned in atreaty, its concrete application can be problematic. For example, in the S.D.Myers case the tribunal said that NAFTA Art. 1141(1), which provides thatnothing in NAFTA can be construed to prevent member states from regulatinginvestments sensitive to environmental concerns, has a merely ‘hortatory’nature.28 And decisions that took into consideration the ‘rights of theenvironment’,29 like Methanex and Glamis, did not specify the extent of theserights, but rather considered them generically in evaluating the reasonable-ness of a measure.30This issue adds a variable: not only in the case of competing obligations

and rules is it problematic to decide which one should prevail (the one estab-

lished in the treaty or the other not included in it but still valid) but it is alsoproblematic to justify the interpretation of a treaty in light of a concern – a

25 For an overview on many examples of this instances see Baslar,op. cit., pp. 296–334. On cultural rights, see in this volumethe chapter by G. Bigi.

26 C. Reiner and C. Schreuer, ‘Human Rights and InternationalInvestment Arbitration’, in Dupuy, Francioni and Petersmann(eds), op. cit., p. 82.

27 See e.g. EDF International, SAUR International, and León Participaciones Argentinasv. Argentina, ICSID Case No. ARB/03/23, Award, 11 June 2012,paras 909–914.

28 S.D. Myers v. Canada, Partial Award, 12 November 2001, reproduced inInternational Legal Material, 2001, vol. 40, pp. 1408–92.

29 I use ‘rights of the environment’ because here we are speakingneither of the body of environmental law, nor of the human rightto a healthy environment, but of certain rights that may attachto the environment itself.

30 See section 6 below.

56 Luigi Cremahuman or environmental right – that has not (or not yet) become a rule, orthat it is not clear in content.

4.1.2.3 Concerns common to whom? The interpretation does not entail a conflictbetween rules, but between jurisdictions

The third remark on the expression ‘common concern’ regards the adjectivecommon. While the expression ‘common concern’ as traditionally usedin international law looks at the commonality of all the states (‘commonconcern of humankind’), investment awards often face a concernthat iscommon within a speci cfi society: the common regards a state, alocal commu-nity, separated from other communities.This is the reverse of what Judge Weeramantry expressed above: he, and

with him other distinguished scholars,31 had conceptually positionedcommon concerns and planetary welfare above and opposed to state sover-eignties. However, what happens in investment arbitrations is that thecon ictfl of interpretations is reversed: it involves, on the one hand, the inter-nationally granted rights of an investor, and, on the other, the actions takenby states, their subdivisions, and their societies to implementother rights.

4.1.2.4 To sum up, by way of introduction

Given these clari cations,fi this chapter will not focus only onthe systemicinterpretation of investment treaties and other international law rules, but itwill go through the different ways and techniques proposed by parties todisputes and by arbitral tribunals to consider investment treaties and otherconcerns – more precisely, human and environmental rights withthe aim ofunderstanding their dynamics and which ones are more successful.The rstfi way is completely internal to the text of the agreements, and acts

within the broad and generic content of certain clauses and exceptionsincluded in investment agreements (see section 4.2). The

second way looksoutside the treaty, and aims at enlarging the relevant legal context. This canbe done: by looking down and considering domestic regulations (section 4.3);by looking around (integrationist approach) and considering other treatiesand customs, either for the purpose of interpreting the treaty(section 4.4.1),or for the purpose of considering them qua applicable law (section 4.4.2); or,by looking up, and attributing a higher rank to competing rights (ius cogens,section 4.5). Finally, a section will be dedicated to commenting on some deci-sions that framed the problem in a different way, as an issue of jurisdiction,

31 See e.g. L. Henkin, ‘That ‘S’ Word: Sovereignty, andGlobalization, and Human Rights, Et Cetera’, Fordham Law Review,1999, vol. 68, pp. 1–14; F. Francioni, ‘Beyond StateSovereignty: The Protection of Cultural Heritage as a SharedInterest of Humanity’, Michigan Journal of International Law, 2004, vol.25, pp. 1209–28; Shelton, op. cit., p. 40.

Investor Rights and Well-Being 57with international rights protecting foreign investments on oneside, and thedomestic jurisdiction of the state on the other (section 4.6).

4.2 Application of the Treaty, Its Broad Clauses,and Their ExceptionsThe rstfi place in which an integration of investor rights and other rulescan take place is the treaty itself. Two clauses in particular are important forthis topic: the duty of the host state to grant fair and equitable treatment(FET) to foreign investments, and the prohibition of expropriation withoutcompensation. New regulations passed to promote and implement otherrights can be contested as unfairly and inequitably affecting aprecedinginvestment, or as a creeping expropriation, which deprive an investment ofits original value. Consider, for example, Art. IV of the 1991 BIT betweenArgentina and the USA:

Investments shall not be expropriated or nationalized eitherdirectlyor indirectly through measures tantamount to expropriation or nation-alization (expropriation) except for a public purpose;in a non-discriminatory manner; upon payment of prompt, adequate and effec-tive compensation…32

A broad interpretation of this clause, and a narrow interpretation of theexceptions, would easily uphold mostly of the investors’ claims, as has beencorrectly pointed out.33However, strong protections of investors have been due not only to an

expansive interpretation of investor rights by arbitrators, butalso to thesimple text signed by the states themselves, which provides strong guaran-tees for investors.34 Under the treaty provision just quoted, a new law,approved for any reason, could be justi edfi as having a ‘public purpose’, andindeed, arbitrators have been generous in recognizing the public purpose of

a law. The question is not so much to understand the distinctionbetweenlawful (having a public purpose) and unlawful expropriation; rather, it is thatthe condition of compensation is nearly unavoidable: a literal interpretationof the expression ‘indirect expropriation through measures’ demandsprompt, adequate and effective compensation. This is true even when thenew regulations have been enacted for protecting important rights, and

32 USA–Argentina BIT, signed 14 November 1991, Art. IV.33 Public Statement on the International Investment Regime, 31 August 2010.

Online. Available http://www.osgoode.yorku.ca/public_statement(accessed 27 December 2012): ‘Awards issued by internationalarbitrators against states have in numerous cases incorporatedoverly expansive interpretations of language in investmenttreaties’.

34 Alvarez, op. cit., pp. 340 ff.

58 Luigi Cremaaffect, without discrimination, all investors and society as awhole, or affecta very speci cfi area (geographical or categorical) for important publicpurposes, unrelated to the investments made in this area.35A textual approach, although consistent with the arbitral mandate circum-

scribed within parties’ will, reveals itself to be insuf cient.fi This situationprovokes a need for other interpretive solutions in order at the same time toenrich and reconceive the content of a treaty in a coherent and fair way, andto avoid losing and perverting the purpose of the treaty itself.

4.3 Integration of Treaties with DomesticRegulationsRespondent states have often proposed a vertical integration of the meagretreaty regulations with the more complete and balanced panorama ofdomestic regulations. In dealing with this question, a tribunal observed:

[i]t may well be that a national court deciding analogous issues wouldcome to a different conclusion. However, in the present dispute the BITsupplies the primary foundation and framework for the Tribunal’sconsideration of investor protection.36

An integration of the two disciplines, international and domestic, is quitedif cult.fi The provisions regulating the applicable law put thetreaties rst,fiand placed international law and internal regulations on a secondary,supplementary level.37 Furthermore, Art. 27 of the VCLT (‘Internal law andobservance of treaty’), af rmsfi the primacy of the treaty over national regula-tions: ‘A party may not invoke the provisions of its internal law as justi ca-fition for its failure to perform a treaty’. The typical conclusion about thisclash of orders is that ‘[i]nternational law overrides domestic law when thereis a contradiction’.38 The latter can be considered to the extent that it repro-

duces international law and, in any case, ‘[t]o the extent that there may be

35 See Metalclad v. Mexico, ICSID Case No. ARB(AF)/97/1, Award, 30August 2000, paras 102–116; Técnicas Medioambientales Tecmed v.Mexico, ICSID Case No. ARB (AF)/00/2, Award, 29 May 2003, paras95–151; and below at section 4.4.1.2.

36 EDF, op. cit., para. 904.37 Cf. NAFTA Art. 1131(1); ECT Art. 26(6); ASEAN Comprehensive

Investment Agreement, Art. 40(1); ICSID Convention Art. 42(1).38 LG&E Energy Corp. et al. v. Argentina, ICSID Case No. ARB/02/1, Decision

on Liability, 3 October 2006, para. 94; see also Suez, SociedadGeneral de Aguas de Barcelona and Vivendi Universal v. Argentina, ICSID CaseNo. ARB/03/19, Decision on Liability, 30 July 2010, para. 65; ASwiss Claimant v. Slovakia, Award, 5 March 2011, paras 193–199, inparticular at para. 197.

Investor Rights and Well-Being 59any inconsistency between the two bodies of law, the rules of public interna-tional law must prevail’.39In fact, the vertical integration of the applicable law is dif cultfi to imple-

ment. The rules and decisions granting primacy to internationallaw areexpressions of an important practical point: if every domestic regulationbecomes per se applicable law, the autonomy of international law would beaffected, and the entire enterprise of international protection of foreigninvestments would be seriously weakened.

4.4 Integration of Investor Rights with OtherInternational RightsGiven the impracticability of integrating international and national levels ofregulation, another possibility for recalibrating treaty content is to attempt asynthesis of the best applicable law at the international level(integrationistapproach). Arbitral tribunals have faced this issue in several different ways,integrating or refusing the integration of investment treaties withother regu-lations. A rstfi way is the interpretation of an investment treaty in light ofother rules of international law. A second way is to apply, beside investmentagreements, other rules of international law qua applicable law.The tech-niques are often overlapped, as in Grand River;40 however, they maintaincertain conceptual differences, and therefore will be addressedin two sepa-rate subsections.

4.4.1 Interpretation of Investment Agreements in Lightof Other International Rules

The content of the clauses of investment treaties has been determined bothby interpreting the text, and by reference to the customary rule to whichthey refer. This section will only look at the former; the latter being basedon the customary process and considered below, in section 6.

4.4.1.1 Art. 31.3(c)

Scholars have recently put emphasis on the role that Art.31.3(c) of theVCLT can play in harmonizing different obligations at theinternationallevel.41 This idea is clearly expressed by Philip Sands whilecommentingupon the interpretation of the WTO agreements:

39 Compañía del Desarollo de Santa Elena v. Costa Rica, ICSID Case No. ARB/96/1, Award, 17 February 2000, para. 64.

40 See subsections below.41 See e.g. Dupuy, ‘Uni cation’,fi op. cit., pp. 57 and 62; see, in

addition to the literature quoted above supra notes 1–6, M. Hirsch, ‘Interactions between Investment and Non-Investment

60 Luigi CremaArticle 31(3)(c) … appears to be the only tool available under interna-tional law to construct a general international law by reconciling normsarising in treaty and custom across different subject matter areas. Article31(3)(c) is of interest for these reasons … [It] has a potentially genericapplication, which could encompass the relationships between otherareas and other norms, including human rights and development, tradeand labor, and even the law of the sea and human rights.42

This hypothesis is fascinating, and appears to provide an instrument toimplement the ‘planetary welfare’ mentioned by Weeramantry. The idea hasbeen proposed and used elsewhere for many good or less convincingpurposes: to enlarge the reasoning of a decision;43 to provide coherence inan otherwise fragmented world of international laws;44 to promote thehegemonic enlargement of the scope of an effective treaty to include andpromote other rights;45 to address a sensitive political issue,e.g. squeezingthe question of the use of armed force through the needle of aprovision onfreedom of commerce,46 etc.Beside certain real concerns that this provision makes it possible to

address, there is a concrete risk that an instrumental visionof the treaty

Obligations in International Investment Law’, in Schreuer,Muchlinski and Ortino (eds), op. cit., pp. 154–81; B. Simma, T.Kill, ‘Harmonizing Investment Protection and Human Rights: FirstSteps towards a Methodology’, in C. Binder, U. Kriebaum, A.Reinisch and S. Wittich (eds), International Investment Law for the 21stCentury: Essays in Honour of Christoph Schreuer, Oxford: OUP, 2009, pp.678–707; M. Paparinskis, ‘Treaty Interpretation and CustomaryInvestment Law’, C. Brown and K. Miles (eds), Evolution inInvestment Treaty Law and Arbitration, Cambridge: CUP, 2011, pp. 65–95.

42 P. Sands, ‘Treaty, Custom and the Cross-fertilization ofInternational Law’, Yale Human Rights & Development Law Journal, 1998,vol. 1, pp. 85–105. See more recently Simma, ‘ForeignInvestment Arbitration’, op. cit., pp. 573–96.

43 Sands, op. cit., pp. 86–7.44 J. Combacau, ‘Le Droit International: Bric-à-Brac ou Système?’,

Archives de Philosophie du Droit, 1986, vol. 85, pp. 88–105;‘Conclusions on the Fragmentation’, op. cit., para. 251 (17)–(23).

45 E.U. Petersmann, ‘Time for a United Nations “Global Compact” forIntegrating Human Rights into the Law of WorldwideOrganizations: Lessons from European Integration’, European Journalof International Law, 2002, vol. 13, pp. 621–50; P. Alston,‘Resisting the Merger and Acquisition of Human Rights by TradeLaw: A Reply to Petersmann’, European Journal of International Law, 2002,vol. 13, pp. 815–44, but with the further notes on this dialoguedes sourds in the ‘Introduction’ of T. Cottier, J. Pauwelyn and E.Bürgi, Human Rights and International Trade, Oxford: OUP, 2005, pp. 7–8, and in M. Koskenniemi, Hegemonic Regimes, in M.A. Young (ed.),Regime Interactions in International Law, Cambridge: CUP, 2012, pp. 305–24,especially at pp. 318 ff.

46 See Simma, separate opinion, ICJ, Oil Platform (Iran v. USA), Judgment,6 November 2003, para. 2, and the critics at para. 41. See alsothe critics in the separate opinions of Kooijmans, para. 4, andHiggins, para. 49. See also the brief comments by F. Berman,‘Treaty “Interpretation” in a Judicial Context’, Yale Journal ofInternational Law, 2004, vol. 29, pp. 315–22.

Investor Rights and Well-Being 61would deprive it of its primary function of protecting investors from unfairinterventions of the states, as evinced by certain arbitral decisions.47 In real-ity, international law has traditionally applied the rule now expressed by Art.31.3(c) as if the treaties must be interpreted in conformity with internationallaw,48 while in the instrumental vision of Art. 31.3(c) the treaty can becomejust a gate, a tool, to adjudicate on other questions.It is probably to avert such a possibility that this provisionhas so far not

been popular in investment disputes.49 Where it has been used,it hasreferred to general rules of public international law, but not to human rightsor to the rights of the environment. For example, in Ioannis KardassopoulosArt. 31.3(c) was used to interpret the ECT in light of customaryrules on theprovisional application of treaties;50 in UPS it was used to refer to instru-ments drawn up within the Universal Postal Union and the World CustomOrganization.51 The application of Art. 31.3(c) to include ruleson humanrights was rejected in Grand River. In that award, a NAFTA tribunal repliedto the requests of the claimant to consider the customary duty to consultindigenous people by saying:

The Tribunal understands the obligation to ‘take into account’ otherrules of international law to require it to respect the Vienna Convention’srules governing treaty interpretation. However, the Tribunaldoes notunderstand this obligation … to allow alteration of an interpretationestablished through the normal interpretive processes of theViennaConvention. This is a Tribunal of limited jurisdiction; it has no mandateto decide claims based on treaties other than NAFTA.52

47 See on this point Biloune and Marine Drive Complex v. Ghana, Award onJurisdiction and Liability, 27 October 1989; Methanex Corp. v. USA,Final Award on Jurisdiction and Merits, 3 August 2005, Part II,Ch. B, para. 5; Grand River Enterprises Six Nations et al. v. USA, Award, 12

January 2011, para. 71.48 ICJ, Right of Passage over Indian Territory (Portugal v. India), Preliminary

Objections, 26 November 1957, ICJ Reports, 1957, p. 142; ‘Lagunadel desierto’ Arbitration (Argentina/Chile), Award, 21 October 1994, , para.76; R. Jennings and A. Watts, Oppenheim’s International Law. Peace, vol.I, 9th ed., London: Longman, 1992, p. 1275.

49 For example, a 2006 paper by C. Schreuer, published after yearsof work of the study group on fragmentation of the ILC(‘Diversity and Harmonization of Treaty Interpretation inInvestment Arbitration’, Transnational Dispute Management, 2006/2) andanother by O.K. Fauchald (‘The Legal Reasoning of ICSIDTribunals. An Empirical Analysis’, European Journal of International Law,2008, vol. 19, pp. 301–64) do not comment on this provision.

50 Ioannis Kardassopoulos v. Georgia, ICSID Case No. ARB/05/18,Jurisdiction, 6 July 2007, paras 215–223. In Loewen Group therules on nationality were recalled through a reference tosystemic interpretation, without referring to Art. 31.3(c), TheLoewen Group and RaymondL. Loewen v. USA, ICSID Case No. ARB(AF)/98/3, Decision on hearingof Respondent’s objection to competence and jurisdiction, 5 January 2001, para. 73.

51 UPS, op. cit., paras 42, 117–118. 52 Grand River,op. cit., para. 71.

62 Luigi Crema

Another case, Saluka, is interesting for this inquiry;53 however, even if the

arbitral tribunal quali edfi its own reasoning under Art. 31.3(c),54 what wasreally at stake was another kind of reasoning: the analysis ofa ‘term of theart’, of the customary content of a term, and not the analysisof a term in lightof other rules.In Merrill & Ring, in 2010, a tribunal observed that under international

law, NAFTA can be construed with reference to other rules of internationallaw. However, in this case again what was at stake was not theuse of humanrights to interpret NAFTA, but the use of WTO provisions.55

4.4.1.2 Interpretive role of customs and other treaties outside Art. 31.3(c)

In the Grand River case, the claimants invoked the customary internationalrule that requires authorities to consult indigenous peoples on decisionssigni cantlyfi affecting them, saying it was relevant to determining the contentof the FET. The tribunal admitted the existence of such rule56 and noted thatthe USA had failed to consult indigenous people57 but did not give relevanceto such a nding,fi the question falling outside its jurisdiction ratione personae:such a principle implies the duty of consultation with indigenous peoples,not with investors.58 In general, as far as NAFTA is concerned, its threemembers have been clear in discouraging the use of other internationalagreements and rules to determine the meaning of this clause: in 2001 theyissued a joint statement expressely excluding such a dynamic in interpretingthe FET clause.59In an arbitration based on a BIT, Compania del Desarrollo de Santa Elena,

the existence of environmental obligations were considered in the interpre-tation of the duty of the state to pay compensation in lawful expropriation.The tribunal, however, ultimately rejected this argument:

– International law permits the Government of Costa Rica toexpropri-

ate foreign-owned property within its territory for a public purpose andagainst the prompt payment of adequate and effective compensation…– …the purpose of protecting the environment for which the Property

was taken does not alter the legal character of the taking for which

53 Saluka Investments v. Czech Republic, Partial Award, 17March 2006. 54 Ibid., para. 254, n. 6.55 Merrill & Ring Forestry L. P. v. Canada (NAFTA – UNCITRAL), Award, 31

March 2010, para. 84.56 Grand River, op. cit., para. 210.57 Ibid., para. 212 (see also para. 186). 58 Ibid., para. 213.59 Notes of Interpretation of Certain Chapter 11 Provisions, NAFTA Free Trade

Commission, 31 July 2001, Art. 2.3.

Investor Rights and Well-Being 63adequate compensation must be paid. The international source of the obliga-tion to protect the environment makes no difference. (emphasis added)60

It goes on to say:

Expropriatory environmental measures—no matter how laudable andbene cialfi to society as a whole—are, in this respect, similarto any otherexpropriatory measures that a state may take in order to implement itspolicies: where property is expropriated, even for environmentalpurposes, whether domestic or international, the state’s obligation topay compensation remains.61

Also in Glamis, a decision in which the investor’s claims of expropriation andrequest for compensation were rejected, state international obligations hadlittle role: a UNESCO recommendation and the World Heritage Conventionof 1972 were listed in ‘The Domestic Regulatory Landscape’,62 anddid notplay any part in the tribunal’s ndings.fi The evaluation of the expropriationwas based only on a careful analysis of the value of the investment loss;63 theanalysis of the compliance of California with FET (violated if the conduct isarbitrary, evidently discriminatory, or exhibits a complete lack of reasons)considered only national regulations.64All these decisions show a clear reluctance of arbitrators to consider other

international law rules for the interpretation of investment treaties.

4.4.2 Application of Investor Rights and OtherInternational Rules and Regulations

Another way to consider other obligations beside those envisaged by invest-ment agreements is to consider them qua applicable law, and not through themediation of interpretation.

4.4.2.1 Investor rights and other treaties

In Southern Pacific Properties (SPP)65 a company signed an agreement withEgypt in 1974 to develop touristic facilities at several historical sites in Egypt;the project was then popularly protested, and in 1978 Egypt declared somelands marked for the project as antiquities, under the protection of the World

60 Compagñia de Santa Elena, op. cit., para. 71, internal footnote omitted.61 Ibid., para. 72.62 Glamis, op. cit., paras 36–84, in particular paras 83–84. 63 Ibid., paras 367–533, and 534–536 for the conclusions.64 Ibid., paras 628–788.65 Southern Pacific Properties (SPP) v. Egypt, ICSID Case ARB/84/3, Award, 20 May 1992, in

ICSID Review – FILJ, 1993, vol. 8, pp. 328–99.

64 Luigi CremaHeritage Convention, thereby preventing the investors from using thosesites. This case is unusual because it was based on a contractdirectly signedbetween the investors and Egypt, and the choice of law was contested andunclear.66 In this framework, the arbitral tribunal interpretedboth the agree-ment and the Convention, concluding that: ‘In the Tribunal’sview, theUNESCO Convention by itself does not justify the measures taken by theRespondent to cancel the project, nor does it exclude the Claimant’s right tocompensation’.67Apart from this example, unique because of the particular legal frame-

work of the dispute, the case law in which international agreements havebeen applied along with state contracts or investment treatiesis quite poor.In a few cases the applicability of other treaties was evoked by amici curiaebut tacitly or explicitly dismissed by the arbitral tribunal.68 In Grand Riverthe amici claimed the applicability of the ‘ILO Treaty 169’ (sic) on the rightsof indigenous and tribal peoples.69 A similar argument was proposed by theamici curiae in Bernard Von Pezold and others, but was refused by the tribunalon several grounds, including the irrelevance of human rights to the meritsof the case.70

4.4.2.2 Investor rights and other customs

The same dif cultyfi emerges as regards the application of customary rulesalong with investment treaties. In Grand River, where certain claimantsinvoked the customary rule requiring the consultation of indigenous peoplesin public decisions involving them,71 the tribunal observed that it ‘cannotavoid noting the strong international policy and standards articulated innumerous written instruments and interpretive decisions that favour stateaction to promote such rights and interests of indigenouspeoples’;72however, it concluded by declaring its absence of

jurisdiction over thoseinvestors, and therefore it did not decide on this question.73

66 Ibid., pp. 350–2, paras 74–80, 84–85.67 Ibid., p. 371, para. 154.68 On amici curiae, see in this volume the chapter by C. Ragni.69 Amicus Curiae Submission of the Office of the National Chief of the Assembly of Nations,

Re: Grand River Enterprises et al. v. USA, 19 January 2009, p. 4. Online.Available: www.state.gov/docu- ments/organization/117812.pdf(accessed 27 December 2012).

70 Bernhard von Pezold et al. v. Zimbabwe, ICSID Case No. ARB/10/15, Procedural Order No. 2, 26 June 2012, paras 59–60.

71 Grand River, op. cit., para. 182.72 Ibid., para. 186.73 Ibid., paras 5 and 187.

Investor Rights and Well-Being 654.5 Non-Application of Investment TreatiesConflicting with Ius CogensThe application of international rules on human and environmental rightsagainst investor rights can be justi edfi by the higher hierarchical rank of theformer. In EDF the respondent state, Argentina, explained that certain meas-ures passed in the acute phase of the economic crisis of 2001 were justi edfiin order to protect fundamental human rights:

it was necessary to enact the Emergency Tariff Measures in order toguarantee the free enjoyment of certain basic human rights “such as,inter alia, the right to life, health, personal integrity, education, the rightsof children and political rights” which were “directly threatened by thesocio-economic institutional collapse suffered by the Argentine Republic,where tens of people lost their lives, the right to health,to personalintegrity, to work and safety.”74

Argentina, by referring to several binding and non-binding internationalinstruments, argued that those fundamental rights prevail over the treatyrights because they are ius cogens: ‘the non-derogable nature of such rights issaid to be conclusive evidence that they are tantamount to jus cogens’.75The tribunal did not contest the existence of ius cogens norms, but rather

their content76 and the effective relevance of the contested regulations fortheir enjoinment:

The Tribunal does not call into question the potential significance orrelevance of human rights in connection with international investmentlaw. However, regardless of any political wisdom in a temporary pesi -fication or provisional freeze of tariffs during the period ofcrisis, no show-ing has been made that Argentina was not able to comply with therelevant treaty provisions later … no evidence persuades theTribunal

that Respondent’s failure to re-negotiate tariffs in a timelyfashion, so asto re-establish the economic equilibrium to which Claimants were enti-tled under the Concession Agreement’s Currency Clause, was necessaryto guarantee human rights.77

Again, the tribunal did not exclude in principle the in uencefl of humanrights on investment treaties, but af rmedfi that they were not relevant for thefacts of the case.

74 EDF, op. cit., para. 192, quoting the Respondent’s Rejoinder.75 Ibid., para. 193.76 Ibid., paras 909–911.77 Ibid., paras 912–914.

66 Luigi Crema

4.6 Interpretation of Clauses and Exceptions –RevisedEven if the techniques of adjusting investment treaties through reference toother rules do not seem so far popular, international tribunals have notavoided considering this issue. However, they did not do so byadjustingtreaties with certain interpretive arguments, but by recognizing to the statesthe possibility of implementing legitimate domestic regulations for publicpurposes, without paying compensation. The ascertainment of the good faithof a state in implementing a national measure – e.g. distinguishing the SPPpolitical trickery (using cultural exceptions to obstruct an investment) fromthe protection of public health in Methanex – cannot be based on an interpre-tive argument, but rather requires a careful analysis of the facts and motivesinvolved in the case.78The discussion between the parties and in the decisions, therefore,

becomes one of jurisdiction, between international investment rights on theone hand, and a protected sphere in which it is possible for states to imple-ment domestic welfare on the other. The clauses protecting theinvestmentsare interpreted in a more limited way, without any reference to other rules ofinternational law, but in such a way as not to threaten a determinate sphereof the state within which it can implement other legitimate regulations.Arbitral decisions have used different expressions to refer to this sphere.

A tribunal referred to the ‘public welfare’ mentioned in the Preamble ofNAFTA;79 another arbitral award,80 quoting the US Restatement of 1987,talks about ‘the police power of State’.81 Other decisions refer to otherexpressions, like ‘public purpose’, ‘general welfare of the state’ and ‘regula-tory actions aimed at the maintenance of public order’.82In most of the cases the soil to ground this kind of reasoning, deferential

to state freedom to pursue local welfare, was found in the treaty, not in

general international law. NAFTA tribunals have adopted this reasoning insome decisions: in Methanex, a new statute enacted by California to protectwater from the contamination deriving from a gas previously used in manyactivities, was considered a legitimate regulation, not amounting to expro-priation, and not requiring compensation.83 In Grand River the tribunal, as

78 Saluka, op. cit., para. 264: ‘The context within which an impugnedmeasure is adopted and applied is critical to the determinationof its validity’.

79 Grand River, op. cit., para. 69.80 Marvin Feldman v. Mexico, ICSID Case No. ARB(AF)/99/1, Award, 16

December 2002, paras 105–106.81 L. Henkin (ed.), Restatement, Third, Foreign Relations Law of the US, vol. 2,

American Law Institute: Saint Paul, 1987, pp. 200–1, sect. 712,comment (g).

82 Methanex, op. cit., Part IV, Ch. D, para. 7; Saluka, op. cit., paras 275 and 254.

83 Methanex, op. cit., Part IV, Ch. D, para. 7: ‘the Tribunalconcludes that the California ban was made for a public purpose,was non-discriminatory and was accomplished with due process.Hence, Methanex’s central claim under Article 1110(1) ofexpropriation under one

Investor Rights and Well-Being 67described above, did not give weight to the indigenous peoples’right to beconsulted invoked by the claimants; however, it considered the public policygoal of new US legislation on tobacco to protect public health,and rejectedall the claims.84 In Glamis certain Acts passed by the state of California toprotect an area that was important for environmental and cultural reasons,but had been previously given in concession for mining, were consideredreasonable and not discriminatory.85This ‘room’ for domestic authorities to implement competing rights

has also been created by considering the provisions of a treatyto refer to acustomary de nitionfi which allows it. This reading can end up going againstthe clear text of the treaty. For example, in Saluka, the tribunal interpretedArt. 5 of the BIT between the Netherlands and the Czech and SlovakFederal Republic86 saying:

The Tribunal acknowledges that Article 5 of the Treaty in the presentcase is drafted very broadly and does not contain any exception for theexercise of regulatory power. However, in using the conceptof depriva-tion, Article 5 imports into the Treaty the customary international lawnotion that a deprivation can be justi edfi if it results from the exercise ofregulatory actions aimed at the maintenance of public order. … States arenot liable to pay compensation to a foreign investor when, inthe normalexercise of their regulatory powers, they adopt in a non-discriminatorymanner bona fide regulations that are aimed at the general welfare.87

The arbitrators found that ‘[I]n the present case … the measures at issue canbe justi edfi as permissible regulatory actions’88 (even if, at the end, theyconsidered that the state had violated the FET).

4.7 Conclusions

In conclusion, after years of decisions enforcing treaties oriented to protectforeign investors, some decisions make evident that there areseveral

of the three forms of action in that provision fails. From thestandpoint of international law, the California ban was a lawfulregulation and not an expropriation’; see also Ch. E, para. 20,referring to the ‘environmental interest of the citizens ofCalifornia’. A. Alvarez-Jiménez, ‘The Methanex Final Award. AnAnalysis from the Perspectives of Environmental RegulatoryAuthorities and Foreign Investors’, Journal of International Arbitration,2006, vol. 23, pp. 427–34.

84 Grand River, op. cit.85 Glamis, op. cit., paras 794–797, and 805.86 Signed on 29 April 1991, reproduced at para. 245 of the award.87 Saluka, op. cit., paras 254–255. Similarly see the analysis of

the violation of the FET, paras 304–306.88 Ibid., para. 265.

68 Luigi Cremaattempts to reconceptualize investment treaties in light of human and envi-ronmental rights. There are several legal techniques availableto carry outthis important revision, and this chapter went through the main onesattempted by parties in the proceedings. However, arbitrators have beenextremely cautious in opening their arbitral mandate, which isbased on theconsent of the parties, to encompass other international law rules in theirreasoning. The most successful vehicle for tribunals to consider those otherrights and concerns has been the re-af rmationfi of a domestic sphere ofautonomy in which states are free to introduce reasonable new regulationsof general, public interest, without the need to compensate foreign investors.The arbitrators, operating within a limited arbitral jurisdiction, instead ofbuilding sophisticated legal techniques allowing them to extend the applica-ble law, have recognized its limited role, and the broader scope of regulationof the states.This must not be seen as a step back towards the S-Word world stigma-

tized by Henkin (the world of state sovereignty),89 but rather a step awayfrom a certain kind of internationalist planetary welfare – aninternationalwelfare different from the idea of Weeramantry,90 but still unequivocallybased upon a common ideology. Investment treaties, and the strong inter-pretation of them given by arbitrators, express a certain ideaof ‘commonconcern of humankind’, of a humanity concerned with reallocating produc-tion and capital throughout the world and with strengthening private andinterconnected economies, according to the idea that a well-regulated, openand free market will allocate resources in a way that maximizes the bene tfifor everybody.91 This idea gave rise to the strong protection of private rightsin investment treaties, and spurred the interpretive attitude of arbitrators.92In this cultural framework excessive domestic regulation,

discriminatory ornot, unfair or not, is in any case problematic: it is a local, particularistic obsta-cle to the bigger game of reallocating resources in a better way for the goodof a greater number of persons. Art. IV of the BIT between Argentina andthe US, envisaging the right to be compensated for essentiallyevery newstate regulation affecting an investment (international, not national; there-fore, discriminating against local investors), is a good expression of such aconception (see above section 4.6).

89 See above, note 31.90 See above, section 4.1.2.1.91 This thought, present in political debate since the invisible hand of

Adam Smith, was still alive and well at the dawn of the currentnancialfi crisis, see the column by B. S. Wesbury, ‘A Portraitof Economy’, Wall Street Journal, 14 February 2007, p. A21: ‘Free-market capital- ism is not perfect. But it remains the singlemost ef cientfi and powerful system for creating wealth, reducingpoverty and developing less wasteful ways of organizing outputand consuming resources’.

92 See above, notes 33 and 34.

Investor Rights and Well-Being 69In this cultural milieu the treaties protecting investments endedup having,

in practice, two objects and purposes, two functions. The rst,fi clearly statedin their preambles, is the protection of foreign investments against abuses ofthe state. The second, implicit function is to diminish domestic regulationsprotecting other rights, and to avoid new regulations, setting up a moreinterconnected, ef cientfi global economy. Of this second functionthere areno traces in the treaties, even if their drafting embodied sucha mission,which was typical of the time in which they were written.In order to mitigate the extremes of this vision, one possibility is that arbi-

tral tribunals begin considering another conception of common concern,and take an integrationist approach, balancing competing internationalrights, including investor, human, and environmental rights, and enforcingthe best compromise between them. However, this has not been the case:arbitral tribunals have preferred to stay away from this reasoning. On theone hand, the integrationist approach can hardly be reconciled with theconsensual and limited jurisdictions of arbitral tribunals. On the other hand,it opens to the risk of using the treaty for other purposes, avoiding its object,the protection of foreign investments. Moreover, this solution would still notsettle the problem, but would rather open a new one. Already insome cases,like Grand River, both parties used human rights to support theirclaimsagainst each other (indigenous rights v. right to health): thisapproach wouldsimply shift to the arbitral level the decision of which concern has priority incomplicated cases. It is preferable to interpret investment treaties as justprotecting investors from abuses, not as actors in a specific political project,free-marketist or not.The integrationist approach, however, should be used in cases in which

the contested regulations defend against or repair outrageous offenses to

human dignity, as they surely would have in Foresti if the dispute hadreached a decision on the merits.93 In that case the claims regarded the alleg-edly expropriating effects of an act aimed at increasing the participation ofblack shareholders in South African mining companies,94 but the partiesreached an agreement, and the case was discontinued.95The approach deferent to a domestic autonomy seems to be the current

evolution of investment jurisprudence. Rather than building a second inter-national common welfare, based on different premises than the previous one,arbitral tribunals, especially in NAFTA, have ne-tunedfi their degree ofintervention, checking the reasonableness reached by the state (expressionof the local common welfare) in reconciling different rights, butstill grantingindependent protection to foreign investments against discriminatory meas-ures (see section 4.6). It is at this level, in the work of de ningfi the boundaries

93 Piero Foresti, Laura de Carli et al. v. South Africa, ICSID Case No. ARB(AF)/07/01. 94 Ibid., Award, 4 August 2010, paras 64–65.95 Ibid., paras 79–82.

70 Luigi Cremaof the power of the state to address public issues, that, contrary to the holdingin Santa Elena (see section 4.4.1), the reference to other international obliga-tions can, and should, play a role, in understanding the legitimacy andreasonableness of a domestic measure implementing human and environmen-tal rights. Of course they cannot be by themselves a suf cient fijusti cation fi –the SPP award provides a good example of how it is possible to make use ofthis reasoning in bad faith. However, along with additional criteria necessaryto assess the good faith and legitimacy of a domestic measure, other interna-tional regulations are an important factor that must be considered.