The notion of Corporate Social Responsibility (CSR) is gaining momentum in international investment law. States continue to include the CSR provisions in their newest international investment agreements (IIAs). In addition to typical CSR clauses directed at states to encourage investors to incorporate the internationally recognized standards on CSR (e.g. Argentina –Japan BIT (2018); the Australia-Hong Kong FTA (2019)), more IIAs incorporate provisions directly addressing investors.

In 2018, Brazil has signed three new cooperation and investment facilitation agreements with Guyana, Ethiopia and Suriname. All of them contain elaborated CSR provisions, focusing on investors’ obligations. For example, the Brazil – Ethiopia BIT (2018) provides in Article 14 that investors “shall endeavor (…) a) Contribute to the economical, social and environmental progress, aiming at achieving sustainable development; b) Respect the internationally recognized human rights of those involved in the investors’ activities”.1) Moreover, the Brazilian agreements subject foreign investor to compliance with national laws.2) The latter provision also exists in the Belarus-India BIT (2018), where in the provision on ‘investor obligations’ it is stated that “investors and their investments shall comply with all laws of a Party concerning the establishment, acquisition, management, operation and disposition of investments”.3)

With an increasing number of CSR provisions providing a diverse range of investors’ obligations, the central question is whether these types of provisions are binding and if so, how they can be enforced? Depending on the type of CSR clause, some IIAs provide a potential solution for enforcing investor’s obligations. For example, a few IIAs include clauses establishing the liability of investors in the home State of investors (e.g. the Dutch Model BIT, the Morocco-Nigeria BIT).4) Several other treaties contain clauses allowing a host state to file a counterclaim against an investor that potentially offer an opportunity for a host state to challenge the human rights and environmental violations involving a foreign investor.

This contribution, however, discusses another option for effectuating the CSR provisions namely through compliance of investors with CSR provisions, as a condition for investor’s protection under an IIA. The investor’s failure to comply with the CSR obligations can be considered at different stages of investment proceedings: at the (i) jurisdictional stage, or at the (ii) merits stage while deciding on the violation of substantive IIAs provisions, and/or at the moment of (iii) determining the amount of compensation.