Abstract
The discussion on responsible investment is not a recent one, insofar as a human rights approach to investment has always been at the center of interest to both academics and practitioners. Having in mind that responsible investment needs to be conflict-free and support good governance, it is of a particular interest to examine if and how the UN Principles of Responsible Investment of 2006 and the OECD Guidelines of 2011 may function in cases in which investing activities take place in occupied or otherwise disputed territories. Accordingly, the current chapter will focus on the influence of responsible investment principles in the context of negotiation of international investment agreements and the eventual implications from non-compliance with such principles. With various investment activities taking place in Western Sahara, this case is characteristic of the challenges posed by the implementation of responsible investment principles in disputed territories. Hence Western Sahara will serve as case study in this chapter.
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- 1.
Convention (IV) respecting the Laws and Customs of War on Land and its annex: Regulations concerning the Laws and Customs of War on Land. The Hague, 18 October 1907.
- 2.
Since transformative governance requires effective administration of State affairs by the governing authority, either led by the United Nations or not, there are strong disagreements as to the extent of changes that can be brought about by the said authority in cases of occupation. Among the extensive literature, see Brabandere (2009).
- 3.
The case of Irak during the “transformation” period of 2003–2004 is often cited as a characteristic example of a territory under foreign administration including the management of economic affairs.
- 4.
Stahn and Kleffner (2008).
- 5.
ILA Study Group on Socially Responsible Investment, Working Session, Report Washington DC 2014, http://www.ila-hq.org/index.php/study-groups.
- 6.
The Moroccan State has already concluded economic agreements with a number of foreign multinational companies in the oil or the mining sector, as the territory of Western Sahara is rich in phosphate rocks and minerals. Such agreements include both trade and investment dealings, notwithstanding the fact that they are not all regulated by the respective rules of international investment law. Nevertheless, for the purposes of the present study, I shall deal with all economic agreements irrespective of their classification as investment agreements.
- 7.
- 8.
Articles 42–56 of the Annex to the IV Convention Respecting the Laws and Customs of War on Land, Regulations, Section III.
- 9.
Articles 46–47, 55 of the Annex to the IV Convention Respecting the Laws and Customs of War on Land, Regulations, Section III.
- 10.
Convention(IV) relative to the Protection of Civilian Persons in Time of War, Articles 33, 53 respectively, https://www.icrc.org/en/war-and-law/treaties-customary-law/geneva-conventions.
- 11.
The traditional reading of occupation originates from the much-quoted Articles 42 of The Hague Regulations as the “exclusive standard for determining the existence of an occupation”. See Ferraro (2012), p. 137. Although the application of art. 42 is not disputed for purposes of complying with the fundamental IHL principles the degree of effective control exercised over the territory in question depends upon the particular circumstances of each case. Ferraro (2012), p. 143.
- 12.
In the much-quoted case of Congo v Uganda (ICJ Reports 2005), where the ICJ dealt with the issue of belligerent occupation, it has been examined and later ascertained that a determination of facts was necessary in order to determine Uganda as occupying power in the Congolese territory of Ituri (para. 58.).
- 13.
Substitution of authority may prove to be a complex issue when the occupying power maintains control over State affairs together with the local authorities. It has been argued that the “vertical sharing of authority” is possible only to the extent that the occupant himself allows that allocation of duties to function. Nevertheless, such situation does not have an adverse effect upon the factual assessment of occupation and the respective duties of the occupying power. See Dormann et al. (2017), p. 118; Ferraro (2012), p. 149.
- 14.
However, in the context of an occupation as the one in the Armed Activities case the ICJ held that the principle of permanent sovereignty over natural resources is not applicable. Instead, the provisions of The Hague and Geneva Conventions on the prohibition of looting and pillage are to be applied. Op.cit., n. 12, paras 244 et seq.
- 15.
Fitzmaurice and Szuniewicz (2003).
- 16.
Among the extensive literature on the subject see the fundamental work of Cassese (1995).
- 17.
Art. 1, para. 4 of the First Additional Protocol to the Geneva Conventions refers to “conflicts in which peoples are fighting against colonial domination and alien occupation […] in the exercise of their right to self-determination […]” Therefore, in cases of fighting against alien occupation, the respective international law provisions regarding the right to self-determination have to be applied together with the relevant IHL provisions in order to ensure the unity of international law, although the ICJ ruled to the contrary in the Armed Activities case. Op.cit., n. 12. The pro-unity interpretation was also emphasized by the majority of State delegations during the preparatory works for the adoption of the First Additional Protocol Commentary of 1987, para. 97, https://ihl-databases.icrc.org/ihl/INTRO/470. See also the comment by Aeyal Gross in http://opiniojuris.org/2017/08/31/symposium-on-occupation-law.
- 18.
CCPR, 21st session (1984), General Comment 12, para. 5.
- 19.
CCPR, 21st session (1984), General Comment 12, para. 6.
- 20.
CCPR, 21st session (1984), General Comment 12, para. 6. The specific obligations as described by the General Comment are applicable to the case of Western Sahara. See Sect. 3 of the study.
- 21.
In practice, the positive obligations of the States as just described may run counter to the “obligation of non-interference” to the economic affairs by the occupying power, as it will be further commented in the case of Western Sahara.
- 22.
van Walt van Praag (2000).
- 23.
The concept of prolonged occupation is not included in The Hague Regulations or in the Geneva Conventions as such, notwithstanding art. 6, para. 3 IV GC 1949; it was created by doctrine in order to reflect the protracted duration of an occupation. See I. Scobbie, Prolonged Occupation and Article 6(3) of the IV GC: Why the International Court got it wrong substantively and procedurally in https://www.ejiltalk.org. Nevertheless, the time element does not have adverse repercussions as to the application of IHL rules. For an in-depth analysis, see Koutroulis (2012), p. 168 et seq.
- 24.
Although Roberts (1985) “What is a military occupation?” introduced the temporal criterion of 1-year duration after the close of the military operations, there is no agreement when the occupying power withdraws from the occupied territory and hands over the physical control to the occupied population since the transitional phase may be gradual and often disputed between the occupant and the occupied.
- 25.
But instead the CCPR General Comment 12 refers clearly to the obligation of the States parties to the International Covenant to promote the realization of the right to self-determination. CCPR, 21st session (1984), General Comment 12, para. 5.
- 26.
The Supreme Court of Israel in a number of decisions regarding the Occupied Palestinian Territories dealt with the issue where it ruled that the occupying power has the duty to undertake some positive action for the development of the occupied territory and the “sustainability of economic relations between the two authorities.” (Emphasis added). See in particular the judgment of 26-12-2011, Yesh Din—Volunteers for Human Rights et al. v Commanders of the IDF Forces in the West Bank et. al., HCJ 2164/09, in http://www.yesh-din.org and ICRC, How does law protect in war? Israel, High Court of Justice, Quarrying in an occupied territory, in https://casebook.icrc.org.
- 27.
In its landmark ruling on the construction of a wall in the OPTs, the ICJ categorically stated that the protection awarded by the human rights conventions is valid so much in times of peace as in times of an armed conflict (Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Adv.Op., ICJ Reports 2004, para. 106). In addition, the European Court of Human Rights has proceeded to examine and further apply IHL rules in parallel to the provisions of the European Convention of Human Rights at times of an armed conflict, Sicilianos (2017).
- 28.
The UNPRI include six Principles for Responsible Investment “a voluntary and aspirational set of investment principles that offer a menu of possible actions for incorporating ESG issues into investment practice” in https://www.unpri.org.
- 29.
The OECD Guidelines are recommendations addressed to multinational companies by the governments of adhering countries in http://mneguidelines.oecd.org/guidelines/. The update version of 2011 provided for the “binding commitment [of States] to implement” the Guidelines and if possible to introduce them in their national laws thus enhancing their effectiveness. See Cernic (2012) in https://www.asil.org/insights and Robinson (2014).
- 30.
For the main differences between the two texts, see OECD, The UN Principles for Responsible Investment and the OECD Guidelines for Multinational Enterprises: Complementarities and Distinctive Contributions, 2007 in https://www.oecd.org/investment/mne/38783873.pdf.
- 31.
OECD (2011), p. 32.
- 32.
In that sense, see OECD Due Diligence Guidance for Meaningful Stakeholder engagement in the Extractive Sector, which refers to mining, oil and gas enterprises, OECD Publishing, 2017.
- 33.
Robinson (2014), pp. 72–74.
- 34.
UNCTAD (2015).
- 35.
UNCTAD (2015), p. 157 et seq.
- 36.
https://www.unpri.org. University of Cambridge Institute for Sustainability Leadership (2014).
- 37.
PRI Reporting Framework 2018: Overview and Guidance, December 2017.
- 38.
A most characteristic example is that of the Latvia-Georgia BIT where territory is defined as the land, sea and air space “recognized by the international community within the State borders of Georgia […]”, (Article 1, para. 4(b), for purposes of including the South Ossetia and Abkhazia autonomous regions. The case of the US BITs is equally interesting since there is no standard definition of territory. On the contrary, US policy defines the territorial scope of a BIT on a case-by-case basis “in accordance with international law”. See the US-Argentina BIT, art. I, para. 1(f).
- 39.
The principle has been affirmed by the ICJ in the much-quoted case of the Monetary Gold removed from Rome in 1943 (Prel.Quest.), ICJ Reports 1954.
- 40.
According to Judge Crawford (Diss.Op.) in the case of Marshall Islands v UK (Prel.Obj.), ICJ Reports 2016, para. 32.
- 41.
However, as the question of sovereignty remains of a cardinal importance the effective control test over the disputed territory by the host State or the non-State actor could be applicable. Op.cit., pp. 4–5.
- 42.
ILA Study Group on Socially Responsible Investment, Working Session, Report Washington DC 2014, http://www.ila-hq.org/index.php/study-groups.
- 43.
World Bank (2003).
- 44.
See the classical analysis by Schrijver (1997). For recent developments, Hofbauer (2009) https://skemman.is/bitstream/1946/4602/1/Jane_Hofbauer.pdf; De Jong (2015), pp. 36–43; Pereira and Gough (2013). The ICJ jurisprudence is equally significant from the case concerning East Timor (ICJ Reports 1995, p. 90 et seq.) until the Armed Activities case, Congo v Uganda (ICJ Reports 2005), paras 222 et seq.
- 45.
Art. 73 (Chapter XI) reads: “Members of the United Nations which have or assume responsibilities for the administration of territories whose peoples have not yet attained a full measure of self-government recognize the principle that the interests of the inhabitants of these territories are paramount, and accept as a sacred trust the obligation to promote to the utmost, […], the well-being of the inhabitants of these territories, and to this end: […] d) to promote constructive measures of development […]” (emphasis added).
- 46.
The “case-law” of the NCPs could also offer proper guidance as they are most familiar with the particularities of each case. Op.cit., n. 29.
- 47.
Brazil is another significant case to adopt SRI principles in concluding investment agreements. For a most comprehensive assessment of the recent developments, see Zhu (2017).
- 48.
The progressive development of CSR rules is independent of the enforcement gap often envisaged when incorporating CSR rules in BITs. On the binding nature of soft law, see Shelton (2009).
- 49.
A notable exception is the Canadian BIT concluded with Burkina Faso which does not prohibit claims based on the respective provision of CSR under this BIT. However, the BIT signed in 2015 has not entered into force yet. Investmentpolicyhub.unctad.org/IIA.
- 50.
Case ARB/87/3, Award dated 27 June 1990 in Investmentpolicyhub.unctad.org/ISDS.
- 51.
Tzeng (2017).
- 52.
Western Sahara is included in the list of the General Assembly as a Non-Self Governing Territory, http://www.un.org/en/decolonization/pdf/Western-Sahara2017.pdf. For a brief but concise description of the mediation efforts undertaken by the UN in Western Sahara, see A. Theofilopoulou, The United Nations and Western Sahara: A never-ending affair, Special Report 166, July 2006 in http://www.usip.org. For the latest developments, see the Report of the UN Secretary General, UN Doc. S/2017/307.
- 53.
According to the ICJ, State independence is not the only aspect of self-determination. Free association or integration with an independent State is a possible solution (Western Sahara, Adv. Op., ICJ Reports 1975, para. 57). The situation becomes more complicated as all attempts to hold a referendum on the exercise of the right to self-determination by the Sahrawis have failed, notwithstanding the presence of MINURSO, the UNSC peace-keeping operation initially established to monitor the process. New York City Bar, The Legal Issues Involved in the Western Sahara Dispute: The Principle of Self-Determination and the Legal Claims of Morocco, June 2012 in https://www2.nycbar.org/pdf/report/uploads/20072264-WesternSaharaDispute%2D%2DSelfDeterminationMoroccosLegalClaims.pdf.
- 54.
Although there is a cease fire agreement in place as of 1991. Ch. Chinkin, Laws of Occupation in Conference on Multilateralism and International Law with Western Sahara as a Case Study, Pretoria, South Africa, 4-5/12/2008, pp. 196–221.
- 55.
UN Doc. A/RES/34/37, paras 5–6.
- 56.
Letter addressed to the President of the Security Council (UN Doc. S/2002/161). It is interesting to note that the former UNSG Ban Ki-Moon during his visit to WS in March 2016 used the word “occupation” in order to describe the annexation of the territory by Morocco, which triggered a strong reaction by the Moroccan administration.
- 57.
The US-Morocco FTA with Chapter Ten: “Investment” entered into force in 2006, https://ustr.gov/sites/default/files/uploads/agreements/fta/morocco/asset_upload_file651_3838.pdf.
- 58.
Nevertheless at present there are no claims brought by foreign investors under the investment chapter of the US-Morocco FTA. However, the US Congress has recently adopted legislation with respect to Bilateral Economic Assistance funding in order to encourage investment activities by US companies in the region of Western Sahara (https://fas.org/sgp/crs/row/R44391.pdf). For an overall assessment of the investment climate between US and Morocco, https://www.state.gov/documents/organization/241882.pdf.
- 59.
In assessing the validity of the Liberalization Agreement (Case 104-16) and the Fisheries Agreement (Case C-266-16) the CJEU followed the same line of reasoning as it ruled in favour of the validity of the treaties, albeit it restricted their territorial application not to include Western Sahara, since the said treaties were considered res inter alios acta.
- 60.
“The Council recommends the exclusion of the companies Kosmos Energy Ltd and Cairn Energy Plc from the Government Pension Fund Global (GPFG) due to an unacceptable risk of the companies contributing to serious violations of fundamental ethical norms through their hydrocarbon exploration offshore Western Sahara”, https://www.nbim.no/en/transparency/news-list/2016/decision-on-exclusion-of-companies-from-the-government-pension-fund-global.
- 61.
Corell clarified that the object of his mandate was to conclude upon the legality of the exploration and exploitation activities carried out in pursuance of the concessions. Moreover, he clarified that the agreements with Kosmos and Glencore related to oil exploration and exploitation are “at variance with Corporate Social Responsibility”, Corell (2015).
- 62.
Saharawi Arab Democratic Republic and Another v Owner and Charterers of the MV “NM Cherry Blossom” and Others (15/6/2017) in http://www.saflii.org/za/cases/ZAECPEHC/2017/31.html. The said judgment was an interim one pending a vindicatory action with respect to the cargo carried by the NM Cherry Blossom.
- 63.
Although it was not openly stated, the South African High Court applied the same justification as in the “indispensable parties” doctrine. However, it did not rule upon the justiciability of the main dispute since it was “not clear at this stage precisely what issue the trial court may be called upon to adjudicate”, so there was no need to proceed to its determination.
- 64.
Saharawi Arab Democratic Republic and Another v Owner and Charterers of the MV “NM Cherry Blossom” and Others (15/6/2017) in http://www.saflii.org/za/cases/ZAECPEHC/2017/31.html.
- 65.
Press Release of 13/7/2017 in https://phosphateshippingtruth.com/wp-content/uploads/2017/07/Press-Release-13-July-2017-EN.pdf.
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Micha, E. (2019). Responsible Investment in Occupied Territories: Beyond the UN & OECD Principles. In: Fach Gómez, K., Gourgourinis, A., Titi, C. (eds) International Investment Law and the Law of Armed Conflict. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-10746-8_20
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