International Finance Corporation (IFC) and the United Nations Secretary-General's Special Representative on Business and Human Rights (SRSG), Professor John Ruggie of Harvard University, released today a consultation draft of the research paper they commissioned on foreign direct investments and human rights.
This joint study aims to raise awareness of the relationship between the protection of investor rights and the host state's human rights obligations under international agreements. Specifically, it examined what, if any, impact stabilization clauses and similar risk allocation provisions in state contracts with foreign investors have on the host state’s ability to adopt and implement human rights laws and regulations in areas such as labor, non-discrimination, and protection of health and the environment.
The study found that stabilization clauses are sometimes drafted so as to insulate investors from having to implement new environmental and social laws, or to provide investors with an opportunity to be compensated for compliance with such laws. The sample of contracts gathered for this study showed that this was more likely to be the case in the contracts from countries outside OECD than in OECD country contracts.
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