Investment Agreements and Human Rights: The Effects of Stabilization Clauses

Abstract

The purpose of this study was 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 examined 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 used social and environmental laws (such as nondiscrimination, health and safety, labor and employment rights, and the protection of the environment and cultural heritage) as a surrogate for human rights obligations, because these domestic laws are some of the most common means of implementing international human rights obligations in regulating business activity.