ABColombia is increasingly seeing the investor-State dispute settlement mechanism (ISDS) mechanisms in Investment and Trading Agreements used by multinational companies in Colombia, to chill legislation on human and environmental rights and to prevent the implementation of Constitutional Court decisions designed to uphold these rights. Multinationals causing countries to chill the formulation and implementation of legislation designed to address human and environmental rights risk further damaging countries capacities to fulfil their commitments to the Paris Agreement.
The Cerrejón mine is one of the largest open pit coal mines in the world, covering approximately 69,000 hectares of land in La Guajira in Colombia. ‘The persistent expansion of the coal mine over the past four decades has led to ruinous environmental degradation with serious human rights impacts‘.
Multinational giant Glencore, owner of the Cerrejón mine, has now turned to International Arbitration, using the the investor-state dispute settlement mechanism, in order to sue the Colombian Government because of decisions taken by the Colombian Constitutional Court to uphold the Constitutional rights of local communities and to ensure that environmental protections are adhered to.
The investor-state dispute settlement (ISDS) is an international law mechanism, which holds arbitration tribunals behind closed doors and outside of the national legal system. These are tribunals operated by organisations such as the World Bank and cases pursued and presided over by trade experts, not experts in human and environmental rights, nor independent judges. Over the years International arbitration has “prioritised the investment and property rights of foreign investors over the interests of local communities.” ISDS are a component of most International Investment Agreements (IIAs) and/or investment chapters in Free Trade Agreements (FTAs), they have significant influence on how disputes between States and investors are resolved.
IIAs can affect the landscape of business respect for human rights in diverse ways. They can constrain the legal or policy space available to states to regulate the conduct of corporate investors. IIAs also create an asymmetry between rights and obligations of corporate investors vis-à-vis states. Moreover, IIAs can have both direct and indirect impact on affected communities’ right to seek effective remedies against corporate investors.” Surya Deva, UN Working Group on Business and Human Rights
According to a recent Amicus Brief there is a pattern of cases being brought against national judicial decisions, which appears to be promoting supranational arbitration systems, like ISDS, as a parallel justice system, solely for the benefit of transnational corporations, which is a threat to judicial independence in Latin America.
Since 1992, the Wayuu and Afro-Colombian Communities have obtained at least 10 rulings from the Constitutional Court and other Colombian Courts in relation to mining activities referring to the violation of their fundamental rights by Cerrejón. These include their right to water, health, food, a healthy environment, prior consultation and consent, and decent living conditions. In addition to these violations’, the rulings refer to large consumption of, and contamination of, water by the mine, these have led to water and food scarcity and the identification of high concentrations of harmful metals in the blood of those living near the mine, which can cause diseases such as cancer.
There have also been a range of health reports and technical studies showing how Cerrejón’s mining activities have caused widespread, persistent, and extreme pollution of the air and water in the vicinity of the mine generating concerning level of respiratory conditions. Serious damage to the environment and the health of the Indigenous Peoples, led UN Special Rapporteur David Boyd and seven other rapporteurs, to call on the Colombian State to suspend some of Cerrejón’s mining operations.
In January 2021, a complaint was filed with the Organisation for Economic Co-operation and Development’s (OECD’s) corporate human rights monitoring bodies (National Contact Points- NCPs) against all three parent companies, requesting that they investigate multinational mining giants (BHP, Anglo American, and Glencore) as well as the Coal Marketing Company (CMC) and Ireland’s state-owned energy provider Electricity Supply Board (ESB), over serious human rights abuses and shocking environmental pollution at the Cerrejón coal mine in Colombia. The complaints were filed simultaneously, against BHP in Australia, ESB and CMC in Ireland, Glencore in Switzerland and Anglo American in UK.
In spite of the failure to implement the rulings of the Constitutional Court aimed at protecting the rights of the indigenous peoples in the case of the Arroyo Bruno, Glencore decided to sue the Colombian state in international arbitration, using the investor-state dispute settlement (ISDS) mechanism. The ISDS has been used by multinationals use to sue governments for billions of pounds.
It has been said that ISDS is repeatedly used as a corporate weapon against the public interest, in cases where multi-billion dollar lawsuits have bled cash-strapped nations, by corporations who have reversed victories by environmental defenders [and communities] with ‘dazzling financial rewards for investors who perpetrated human rights abuses‘.
Members of the ABColombia Parliamentary Delegation 2022 raised questions with Cerrejón about Glencore filing a case against the Colombian state before the International Centre for Settlement of Investment Disputes (ICSID)[i. The case is seeking compensation for losses associated with ruling, SU698/2017, which ordered the suspension of the mine expansion for the exploiting the coal beneath the Arroyo Bruno riverbed pending the results of environmental and other technical studies. The Arroyo Bruno, is a stream that not only provides water, but is also of cultural and spiritual importance to the communities, in this semi-arid region of Colombia.
‘… corporate actors…play the game of purporting to be responsive to local, national, and international pressures while all the while marching full steam ahead in putting their own profits ahead of serious concerns relating to human rights, environmental sustainability, and the basic health of affected communities’ Philip Alston, former UN Special Rapporteur
These international arbitration proceedings have raised major concerns as they lack transparency, victims are hardly ever admitted to the proceedings – which are held behind closed doors, and awards to companies are disproportionately high.
Governments have the power to change a system that benefits corporations at the expense of human and environmental rights. Governments like Bolivia and Ecuador have terminated many of their International Investment Treaties, and Australia, for example, excludes the investor-state dispute settlement (ISDS) process from their investment agreements, thereby preventing companies from suing states in international tribunals, which otherwise could dissuade them from introducing legislation to protect health, the environment and human rights.[ii]
The UN Working Group on the issue of Human Rights and Transnational Corporations and Other Business Enterprises, highlights that States have used international investment agreements as one of the strategies to attract foreign investment, even though there is no conclusive evidence about a positive direct correlation between such agreements and the flow of investment. Irrespective of debates about this linkage, international investment agreements can significantly limit the ability of States to regulate investors and their investment. They can also exacerbate the existing imbalance between rights and obligations of investors and undermine affected communities’ quest to hold investors accountable for human rights abuses and environmental pollution.
“…imbalances and inconsistencies deeply embedded in international investment agreements contribute to irresponsibility on the part of investors. The asymmetrical protection offered by agreements and the lack of general transparency in investor-State processes create incentives for investors to focus on the protection of their investment and pay inadequate attention to their human rights responsibilities under local laws and international standards. In some cases, investors invoke
protection under international investment agreements to thwart attempts by affected communities to hold them accountable for human rights abuses”
UK MPs and Irish TDs have to take action now as part of their responsibilities and obligations to uphold human rights and environmental protections. British and Irish Governments have international obligations to address. These range from human rights violations, climate change and biodiversity protection. Companies must be held to account for their actions by governments where they are registered or headquartered. Voluntary principles are no longer sufficient on their own, rather adherence to mandatory human rights, environmental and governance due diligence obligations for all companies is essential. Companies should be required to conduct “due diligence”, that is to identify and take steps to address risks to human rights and the environment that their activities pose across their operations and in their supply chains.
ABColombia Recommends that the UK Government
- Enact a Business, Human Rights and Environment Act which will hold companies accountable for their failure to prevent human rights and environmental abuses, wherever in the world they operate.
- To develop this binding regulation, the UK should start with a public consultation requesting evidence on how a new UK law mandating human rights and environmental due diligence, with an accompanying liability regime, could be developed.
ABColombia Recommends that the UK and Irish Governments
- Terminate where possible, and in future exclude, the investor-state dispute settlement process from UK and Irish trade and investment agreements.
- The UK and Ireland introduce new, binding laws for corporate accountability, including the establishment of mandatory human rights, environmental and governance due diligence obligations in domestic law for all companies, and support the introduction of a proposed UN Binding Treaty on Transnational Corporations and Other Business Enterprises (UN Binding Treaty).
Read more in ABColombia’s Delegation Report here
[i] Glencore International A.G. v. Republic of Colombia (ICSID Case No. ARB/21/30) and Anglo American plc v. Republic of Colombia (ICSID Case No. ARB/21/31)
[ii] Corporate Europe Observatory and the Transnational Institute, Profiting from injustice: How law firms, arbitrators and financiers are fuelling an investment arbitration boom, November 2012
[iii] https://www.rte.ie/news/business/2022/0601/1302482-esb-criticised-for-importing-coal-from-mine-in-colombia/
[iv] CERD, 2020 Concluding” Observations on Ireland