Introduction: The International Perspective on Human Rights vis-à-vis Bilateral Investment Treaties

A Bilateral Investment Treaty (hereinafter “BIT”) can be briefly defined as an "international agreement creating the terms and conditions for private investment by nationals and companies of one state in another state."[i] The crux of a BIT is therefore, the creation of an ecosystem that facilitates the fluid protection and promotion of investment between two countries. These objectives of protection and promotion are materialised through a series of obligations usually grounded in customary international law which are accorded to the government of the host- state. They include inter alia protection from expropriation, fair and equitable treatment, measures against discriminatory and arbitrary behaviour, security and protection measures.[ii] These substantive obligation can potentially interfere with the human right obligations the host state seeks to uphold in the interest of its citizenry. A United Nations report prepared by the High Commissioner for Human Rights indicated that the interpretation of investment treaties by tribunals could prove to be detrimental to states honoring their human right obligations.[iii]

Although it has been contended that investment law and human rights law are two streams of international law that principally strive for a unanimous, global rule of law, despite their inherent and ideological disparity.[iv] The reviewal of 2000 investment treaties found a mere 0.5% reference to human rights.[v] Thus alluding to the rare confluence of human rights obligations and international investment treaties. A state’s inadvertent contradiction to the substantive obligations of its international investment agreement caused by policies which sought to sustain the interest of its citizenry on human rights grounds, have been subject to dispute on multiple occasions.[vi] Non referral to human rights obligations and the precedence of binding substantive obligations are likely to manufacture a landscape that values the protection of investments over the purpose of the host state to endorse its sovereign human rights. Moreover, BITs providing a leeway that prioritises the protection of the interest of the investors over the interest of the public, is an existing fear among human rights lawyers.[vii]

India’s Commencing Initiative towards Human Rights in Bilateral Investment Treaties

States may therefore pre-empt and safeguard their human rights interests by setting out provisions in their respective BITs. India signed the “Investment Cooperation and Facilitation Treaty between the Federative Republic of Brazil and the Republic of India” (hereinafter “India- Brazil Treaty”) in January 2020.[viii] This is India’s 4th BIT after it released its Model BIT in 2016 and is notably the first post- 2016 BIT to significantly digress from the model provisions. A noteworthy inclusion in the India- Brazil Treaty under Article 4: Treatment of Investments is art. 4.2 which states “Nothing in this Treaty shall be construed as to prevent a Party from adopting or maintaining affirmative action measures towards vulnerable groups.”[ix] This provision is India’s first explicit reference in an international investment agreement to a human rights issue, after the 2016 Model BIT.

Black’s Law Dictionary defines “Affirmative Action” as, “An action or set of actions intended to eliminate existing and continuing discrimination, to redress lingering effects of past discrimination, and to create systems and procedures to prevent future discrimination, all by taking into account individual membership in a minority group so as to achieve minority representation in a larger group.” Affirmative action policies are grounded in international human rights obligations[x] and although not frequently they have been featured in prevailing international investment treaties[xi]. However, affirmative action policies in Malaysia have proved to be a hindrance in treaty negotiations.[xii] Policies taken by host states have also been subject to dispute in Piero Foresti et. al. v. Republic of South Africa. In 2009, Italian Investors claimed South Africa’s affirmative action policies expropriated their mineral rights.[xiii] The investors eventually requested a cessation of the claim, and the ICSID tribunal had to only deal with the issue of costs. However, the claim is still noteworthy as it contested South Africa’s affirmative action policies and also alluded to the differing interpretations of expropriation and appropriate compensation in South Africa’s bilateral investment treaties and the South African Constitution.[xiv] Owing to these, differing interpretations legitimate government regulation grounded in human rights could be deemed to constitute a form of ‘indirect’ expropriation in a bilateral investment treaty.[xv]

The inclusion of art. 4.2 in the India- Brazil treaty can therefore be interpreted as an attempt to safeguard the respective state's obligations to protect their vulnerable groups. An exclusion of such a clause could possibly create a ground for foreign investors to challenge the treatment of their investments due to the host state policies, despite the host state's bona fide motive to tend for its vulnerable groups. This could possibly lead a tribunal to outweigh the substantive treaty obligations over the state’s obligations to its citizenry. Traditionally, BITs only take into account provisions that deal strictly with the protection or engagement of investments and are therefore rather asymmetrical in nature. This inclusion by the India- Brazil Treaty is a fascinating measure towards establishing a tandem between human rights law and international investment law.

In comparison to Brazil, India has had a fairly long-standing association with affirmative action policies and is also considered to be one of the earliest practitioners of said policies. India first set out affirmative action policies through reservations for the Scheduled Castes and Scheduled Tribes in its nascent constitution.[xvi] Brazil on the other hand is a state where affirmative action is of a relatively novel nature and is predominantly confined to the education sector.[xvii] The aforesaid India- Brazil treaty provision however has been previously featured in the Cooperation and Facilitation Investment Agreement between Brazil and the United Arab Emirates, but considering India’s historically favourable stance towards affirmative action one can undoubtedly construe this provision as being in alignment with India’s prevailing interests.


As stated earlier, human rights provisions in bilateral investment treaties have been a rare confluence, however we’ve witnessed an onset of unorthodox investment treaties that also cater to human right obligations in addition to the traditional asymmetric provisions of international investment treaties.[xviii] Owing to which, India’s debut inclusion of a human rights obligation in the India- Brazil treaty is certainly an admirable measure. The 2016 Model Indian BIT was a complete overhaul from the 2003 Model Indian BIT. The 2016 Model treaty has been consistently remarked as a host state centric treaty as opposed to a treaty which tilts the scales in favor of the investor.[xix] Therefore, potential human rights provisions in future Indian BITs may play into this host centric investment landscape that has been inadvertently set up by India post the 2016 model.

Safeguarding India’s human rights obligations through specific, detailed provisions also address the fundamental problem that arises from the convergence of human rights law and international investment law that is, the contradiction between the monothematic lucrative aspirations of investment treaties versus the policies undertaken by the host state for public interest. Detailed provisions al