Stabilization Clauses and Human Rights: The impact of stabilization clauses in host government agreements on the state duty to protect human rights
12:00 - 13:00
The UN Secretary General’s Special Representative for Business and Human Rights (SRSG), John Ruggie, in conjunction with the International Financial Corporation (IFC), undertook a study to examine whether stabilization clauses, a widely used risk-management device in investment contracts, may affect a state’s action to implement its international human rights obligations. Specifically, this study examines whether stabilization clauses can limit the application of new social and environmental regulations to investment activities over the life of the investment, or to obtain compensation from host states for the costs of compliance with such new laws. This study found that modern stabilization clauses are sometimes drafted so as to insulate investors from having to comply with new environmental and social laws, or to provide investors with an opportunity to be compensated for compliance with such laws. In the sample of contracts gathered for this study this was more likely to be the case in the contracts from countries outside the Organisation for Economic Co-operation and Development (OECD) than in OECD country contracts. The seminar will both present this research and discuss how this work contributes to the ongoing work of the SRSG for Business and Human Rights.