Stabilization Clauses and Human Rights: The Role of Transparency Initiatives
This chapter examines the impact of transparency initiatives undertaken by several African countries as part of the Extractive Industries Transparency Initiative (EITI) on the scope of stabilization clauses in these countries’ contracts. In particular, it looks at the effect of the transparency initiatives on the potential impact of stabilization clauses on the protection and promotion of human rights.
Using case studies of Tanzania, Liberia, Sierra Leone and Zambia, it argues that there is a link between a lack of transparency in the extractive industry contractual process and the scope of stabilization clauses, and this has implications for human rights. The broadest and most stringent forms of stabilization clauses exempting investors from the applicability of all change in law are usually agreed upon under opaque circumstances and promoted by regimes known or widely perceived to be corrupt. The broad scope of these clauses allows investors to rely on them to evade laws enacted to promote and protect human rights. As a result, the clauses impose constraints on the countries’ abilities to implement their human rights obligations under international law.
Conversely, the introduction of transparency initiatives in the extractive industries of the countries as a result of their involvement with the EITI contributed, at least in part, to a reduction in the scope of stabilization clauses or an abolition of stabilization clauses altogether. As a result, investors are less likely to be able to rely on stabilization clauses to avoid complying with laws enacted to promote and protect human rights. The findings therefore suggest that as more African countries join the EITI and begin to implement measures to improve transparency in their extractive industries, the potential impact of stabilization clauses on human rights diminishes.
- Bernardini P (1998) The renegotiation of the investment contract. ICSID Rev Foreign Invest Law J 13(2):411–425Google Scholar
- Campbell B (2010) Revisiting the reform process of African mining regimes. Can J Dev Stud 30(1–2):197–217Google Scholar
- Cotula L (2008) Reconciling regulatory stability and evolution of environmental standards in investment contracts: towards a rethink of stabilization clauses. J World Invest Law Bus 1(2):158–179Google Scholar
- Hirsch M (2011) Between fair and equitable treatment and stabilization clause: stable legal environment and regulatory change in international investment law. J World Invest Trade 12(6):783–808Google Scholar
- Kolstad I, Søreide T (2009) Corruption in natural resource management: implications for policy makers. Resour Policy 34(4):214–226Google Scholar
- Letnar Cernic J (2010) Corporate human rights obligations under stabilization clauses. Ger Law J 11(2):210–229Google Scholar
- Maniruzzaman AFM (2008) The pursuit of stability in international energy investment contracts: a critical appraisal of the emerging trends. J World Energy Law Bus 1(2):121–157Google Scholar
- Nassar N (1995) Sanctity of contracts revisited: a study in the theory and practice of long-term international commercial transactions. ICSID Rev Foreign Invest Law J 6(1):362–364Google Scholar
- Ndulo M (1986) Mining legislation and mineral development in Zambia. Cornell Int Law J 19(1):1–34Google Scholar
- Omorogbe Y (1996) Law and investor protection in the Nigerian natural gas industry. J Energy Nat Res Law 14(2):179–192Google Scholar
- Oshionebo E (2010) Stabilization clauses in natural resource extraction contracts: legal, economic and social implications for developing countries. Asper Rev Int Bus Trade Law 10:1–33Google Scholar
- Posthumus B (2000) ZCCM: a tale of heartbreak and tears. Afr Bus, 34–36Google Scholar
- Rosenblum P, Maples S (2009) Contracts confidential: ending secret deals in the extractive industries. Revenue Watch Institute, New YorkGoogle Scholar
- Sheppard A, Crockett A (2011) Are stabilisation clauses a threat to sustainable development? In: Segger MC, Gehring MW, Newcombe A (eds) Sustainable development in world investment law. Kluwer Law International, Alphen aan den Rijn, pp 329–350Google Scholar
- Sikka P (2011) Accounting for human rights: the challenge of globalization and foreign investment agreements. Crit Perspect Account 22:811–827Google Scholar
- Tienhaara K (2007) Unilateral commitments to investment protection: does the promise of stability restrict environmental policy development? Yearb Int Environ Law 17(1):139–167Google Scholar
- Van Donge JK (2009) The plundering of Zambian resources by Frederick Chiluba and his friends: a case study of the interaction between national politics and the international drive towards good governance. Afr Aff 108:69–90Google Scholar
- Wälde T, N’Di G (1996) Stabilising international investment commitments: international law versus contract interpretation. Tex Int Law J 31(2):215–267Google Scholar