Investment and Human Rights in Armed Conflict

Charting an Elusive Intersection

Daria Davitti

• Publisher: Hart Publishing
• Year: 2019
• Print ISBN: 9781509946143
• eBook ISBN: 9781509911646
• Edition: 1
• Topic: Jura
• Subtopic: Völkerrecht

This book analyses the way in which international human rights law (IHRL) and international investment law (IIL) are deployed – or fail to be deployed – in conflict countries within the context of natural resources extraction. It specifically analyses the way in which IIL protections impact on the parallel protection of economic, social and cultural rights (ESC rights) in the host state, especially the right to water. Arguing that current responses have been unsatisfactory, it considers the emergence of the 'Protect, Respect and Remedy' framework and the Guiding Principles for Business and Human Rights (jointly the Framework) as a possible analytical instrument. In so doing, it proposes a different approach to the way in which the Framework is generally interpreted, and then investigates the possible applicability of this 'recalibrated' Framework to the study of the IHRL-IIL interplay in a host country in a protracted armed conflict: Afghanistan. Through the emblematic example of Afghanistan, the book presents a practical dimension to its legal analysis. It uniquely portrays the elusive intersection between these two bodies of international law within a host country where the armed conflict continues to rage and a full economic restructuring is taking place away from the public eye, not least through the deployment of IIL and the inaction – or merely partial consideration – of IHRL. The book will be of interest to academics, policy-makers, and practitioners of international organisations involved in IHRL, IIL and/or deployed in contexts of armed conflict.

1

Extractive Sector Investment in Conflict Countries: The Situation in Afghanistan

In this chapter I problematise the activities of foreign extractive companies¹ in conflict countries, especially in terms of their human rights impact within a context of heightened vulnerability and flux. An analysis of these dilemmas makes it possible to highlight the tension between, on the one hand, the need for a conflict country to ensure financial resources to stabilise and reconstruct its systems and infrastructures and, on the other hand, the need to ensure that natural resources extraction does not further exacerbate the situation in which the civilian population finds itself in the midst of armed conflict. Linked to the latter, there is also the need to maintain the necessary regulatory space to pursue public policies, as discussed in the Introduction. This tension, as I discuss further in chapter four, lies at the interface of the relationship between international investment law (IIL) and international human rights law (IHRL) and influences the way in which these two bodies of international law are deployed in the specific context of conflict areas. In this chapter I also explore how the potential for clash between relevant IIL and IHRL provisions is clearly reflected in a lack of terminological clarity when corporate actors, on the one hand, and human rights actors and/or victims of human rights abuses, on the other, use the term ‘protection’. Whilst conceptualising the latter term, I focus inter alia on the meaning of human rights protection in field operations and discuss in particular the essential role of preventative action in conflict contexts. I conclude the chapter by examining the situation in Afghanistan and outlining the practical challenges of human rights protection against corporate abuse once extractive sector foreign investments have started flowing into the country.

I.EXTRACTIVE COMPANIES IN CONFLICT COUNTRIES: AN ISSUE OF HUMAN RIGHTS PROTECTION?

A.The Human Rights Impact of Extractive Companies in Conflict Countries

The activities of extractive companies are generally recognised as inherently complex as they may impact on various aspects of societal life,² not least the economic, social and cultural rights (ESC rights) of local communities. With the arrival of extractive companies in conflict areas, this inherent complexity becomes even more apparent, as in these volatile contexts extractive activities may exacerbate already existing human rights problems. It is generally acknowledged that ‘armed violence provides the setting for the most egregious human rights abuses, and that abuses feed conflict’.³ The additional link between armed conflict and natural resources exploitation is also widely recognised, both in the way in which resources extraction may cause or exacerbate violence, and in the way in which it may undermine governance, where both state and non-state actors vie to control and personally profit from the revenues deriving from natural resources.⁴ Weak governance,⁵ lack of rule of law, corruption and crony capitalism are often perceived as typical of conflict contexts, whereby the effective exploitation of natural resources for the benefit of the host country’s population usually remains unattainable.⁶ In conflict contexts, however, extractive companies are perceived as having the potential of bringing benefits to the conflict host country in terms of local economic development, at least in the short term. The negative impacts of large-scale extractive projects, on the other hand, are also well known, particularly in conflict countries.⁷ Although these impacts may be unintended, they can have negative effects for already fragile and destabilised areas, as they may lead to further conflicts for access to and control over land and resources. Common impacts may include, inter alia, displacement of local communities; irreversible contamination of freshwater sources; damage to human and animal health, usually linked to environmental pollution; increased corruption and armed violence.

Despite the severity of the potential impacts described above, conflict host governments often encourage or even exert pressure on extractive companies to aggressively develop natural resources deposits, even in disregard of the human rights consequences of such extraction activities.⁸ Although it has been widely documented that the mere presence of natural resources does not, in itself, engender prosperity and economic stability,⁹ conflict host countries often justify their deregulated approach to natural resources exploitation in the name of stabilisation and development.¹⁰ International donors and members of the international community, not infrequently, turn a blind eye to (or even actively encourage) unbridled investment, support aid projects aimed at stimulating foreign capital inflows and enthusiastically celebrate the granting of new extractive concessions as successful steps towards financial self-reliance. Proponents of market liberalisation essentially conceive of reforms towards a free market economy as a panacea, and the only viable alternative to aid dependence. They support regulatory and market restructuring aimed at attracting Foreign Direct Investment (FDI) and, more generally, at creating an environment ‘conducive’ to investment. With these ultimate aims in mind, a ‘race to the bottom’¹¹ is often generated, both in terms of the elimination of all barriers to investment and of a trading off in human rights protections, in order to signal to foreign investors that the conflict host country is committed to full market liberalisation, including of sensitive economic sectors. Free market supporters also promote, in parallel, a liberal concept of peace,¹² which

posits that MNCs [multinational corporations] can play a constructive role in transforming armed conflict and building peace through their economic activities and corporate social responsibility (CSR). Backed up by the notion of market fundamentalism, the proponents of this theory call for corporate investment and engagement in promoting stability by accelerating much-needed economic growth and generating peace dividends.¹³

Other commentators, on the other hand, are more sceptical of the good intentions of corporate actors and perceive them as potential ‘spoilers of peace’.¹⁴ According to this view, extractive companies are seen as often fuelling armed conflict¹⁵ because they benefit from a weakened state capacity and/or willingness to protect the interests of its people. In this way extractive companies may end up participating in war economies¹⁶ which revolve around the exploitation of natural resources and create ‘new opportunities for the elites of competing factions to pursue their economic agendas through trade, investment and migration ties, both legal and illegal, to neighboring states and to more distant, industrialized economies’.¹⁷

Whether extractive companies are presented as ‘pro-peace entrepreneurs’ or as predatory ‘conflict profiteers’¹⁸ depends on polarised views that do not always reflect the practical situation on the ground. In practice, extractive companies often play both positive and negative roles, and are usually placed in an intermediate position between the two extremes outlined above. Yet, in their relationship with host governments, they are mainly interested in securing a stable operational environment for their activities, and in order to do so they often lobby their home countries in order for them to sign international investment agreements (IIAs) with the relevant host conflict country, and elicit consent to investor-state arbitration.¹⁹ It is tenable, however, that corruption and co-option do sometimes come into the equation at this stage. At this juncture the role of IIL also becomes crucial to ensuring that foreign investments are ‘protected’, or for a better term ‘insulated’, from political and legal instability that may threaten the profitability of foreign investment.²⁰

Foreign investment, as outlined in the introductory chapter of this book, is frequently portrayed as bearing the potential to contribute to peace and stabilisation by unlocking sustainable development and contributing to poverty reduction.²¹ This ‘potential’, however, does not automatically translate into concrete benefits for the host countries:²² if left unchecked, investment risks exacerbating volatile contexts, such as those of conflict countries²³ and entrenching power structures and systems which enable violence and perpetuate inequality. At a time when both home and host countries are often ready to trade off human rights protections in the attempt to establish a legal and regulatory framework capable of signalling to foreign investors that the host country is ready to grant priority to investment protection,²⁴ it is important to understand the implications of this trend when extractive companies invest in conflict countries. The remainder of this chapter looks at the different meaning that the term ‘protection’ acquires when utilised in IHRL and in IIL discourses,²⁵ in order to then consider the human rights impact of extractive activities in Afghanistan, in particular in relation to the protection of the right to water.

B.Conceptualising the Term ‘Protection’

The notion of ‘protection’ is used in IIL to indicate a foreign investor’s need to ensure the stability of the investment environment before investing in a conflict host country, as I explained in the previous sections of this chapter. The focus is on ensuring that the foreign investment is insulated by changes which may adversely affect its profitability. The term itself, therefore, mainly refers to the standards of investment protection that are usually enshrined in IIAs, and that are then invoked in investor-state arbitration,²⁶ when the foreign investor seeks compensation for alleged violations of these standards. In IHRL, by contrast, the term is often used, inter alia, to outline the need to prevent certain harmful activities which may negatively impact on the enjoyment of human rights. Through this term it is also possible to highlight the specific needs of individuals or groups who might need particular attention.

In IHRL there is no universally accepted definition of protection. There are, however, at least three ‘operational’ conceptualisations of the term on which I rely in order to outline its inherently preventative nature. First, there is the understanding of protection derived from the International Covenant on Economic, Social and Cultural Rights (ICESCR) and related to the state parties’ obligations to respect, protect and fulfil these rights. Within this context, as I explain in chapter three, state parties must ensure that third parties do not interfere with the enjoyment of economic, social and cultural rights (ESC rights). As I argue in chapter five, this obligatio...

Table of contents

• Cover
• Dedication
• Title Page
• Table of Contents
• Table of International Instruments
• Table of Judgments and Decisions
• Introduction
• 1. Extractive Sector Investment in Conflict Countries: The Situation in Afghanistan
• 2. The Relevant Legal Framework: Investment Protection in Conflict Settings
• 3. The Relevant Legal Framework of Human Rights Protection: ESC Rights and the Right to Water
• 4. Human Rights and Investment: Analysing the Relationship
• 5. Business and Human Rights: A Tool for Investment and Human Rights Protection in Armed Conflict?
• Conclusion: Implications for Afghanistan
• Bibliography
• Index
• Copyright Page