The Constitutional Shield: How Colombia’s Judiciary Shapes Investment Treaties Through Joint Interpretation
By Daniel Uribe Teran
This policy brief examines an innovative judicial approach by the Colombian Constitutional Court in response to an increase in investor-state dispute settlement (ISDS) claims. The Court introduced a doctrine called ‘conditional constitutionality’ (exequibilidad condicionada), which mandates the executive to negotiate binding joint interpretative declarations prior to ratifying an International Investment Agreement (IIA). This process aims to clarify ambiguous language and ensure that IIA provisions align with constitutional principles, particularly concerning the sovereign right to regulate and the protection of human and environmental rights.
The analysis examines the “constitutional shield” doctrine established by this domestic mechanism, emphasising its legal basis in Article 31.3(a) of the Vienna Convention on the Law of Treaties. However, it highlights a significant discrepancy: the uncertain acknowledgement of these subsequent agreements within the international investment arbitration framework. The brief notes that arbitral tribunals, which often function as autonomous legal systems, may not consistently respect such domestic constitutional provisions. This creates ongoing tension between national sovereignty and arbitral independence. The policy brief concludes by addressing the limitations of relying solely on domestic solutions and calls for systemic reforms at the international level, such as within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III.
Advancing Responsible Foreign Investment through a Legally Binding Instrument on Transnational Corporations and Other Business Enterprises
By Daniel Uribe Terán
Foreign Direct Investment (FDI) presents a complex dynamic, offering potential economic growth while posing significant risks of human rights abuses and environmental degradation. This policy brief considers that current voluntary frameworks, such as Economic, Social, and Governance (ESG) and voluntary due diligence standards, are insufficient to protect human rights, as they primarily focus on mitigating investor financial risk rather than preventing actual harm. Furthermore, the international investment regime, particularly the Investor-State Dispute Settlement (ISDS) mechanism, systemically undermines States’ sovereign right to regulate in the public interest. ISDS cases often penalise governments for enacting environmental, labour, and human rights protections, creating a “regulatory chill” that prioritises corporate profits over social welfare. The proposed Legally Binding Instrument (LBI) on business and human rights is presented as a necessary response to establish mandatory, enforceable obligations for corporations. This includes robust Human Rights Due Diligence (HRDD) and legal liability mechanisms, thereby rebalancing the system to ensure corporate accountability and align investment with sustainable development goals.
Inputs to Inform the Thematic Report of the Special Rapporteur on the Promotion and Protection of Human Rights in the Context of Climate Change to the Human Rights Council 59th session
South Centre
February 2025
The South Centre calls for a Just Transition away from fossil fuels, centering the rights of marginalized communities & the principle of common but differentiated responsibilities.
Inputs to the Expert Mechanism on the Right to Development Study on Climate Justice, Sustainability, and the Right to Development
February 2025
The South Centre inputs to the Expert Mechanism on the Right to Development Study on Climate Justice, Sustainability, and the Right to Development makes a call for upholding Common but Differentiated Responsibilities and Respective Capabilities (CBDRRC) in ensuring a just transition, protecting the human rights of the most affected populations and reforming Investor-State Dispute Settlement (ISDS) mechanisms that threaten climate action.
Contract-based Arbitration: Lessons Learned from Bolivia’s Extractives Industries
By Daniel Uribe Teran
Bolivia has undergone a significant shift in its approach to investment dispute resolution, moving away from reliance on Bilateral Investment Treaties (BITs) and international arbitration towards domestic mechanisms and contract-based arbitration. This shift, driven by a desire to assert greater state sovereignty over natural resources, seeks to align dispute resolution with national development priorities while reducing the costs associated with international arbitration. The recent Shell Bolivia Corporation v. YPF Bolivia case highlights the complexities inherent in contract-based arbitration within the extractive sector, emphasizing the need for meticulous contract drafting and a clear definition of arbitrable disputes within the framework of Bolivian law.
This article analyses Bolivia’s transition from reliance on international investment treaties and arbitration to a domestic, contract-centred approach for resolving disputes in its extractive industries. The article examines how the legal framework adopted by Bolivia highlights the role of contract-based arbitration in addressing disputes related to investment, production, technology transfer, environmental and social impacts, labour relations, and contract interpretation. The article draws lessons from other developing countries’ experience, recommending that Bolivia further strengthen its investment framework by adopting clear protection standards, prioritizing fair administrative procedures, and emphasizing domestic remedies. This approach seeks to balance attracting responsible investment with protecting state sovereignty and promoting sustainable development in Bolivia’s extractive industries.
South Centre inputs to the Secretary-General’s synthesis report on opportunities, best practices, actionable solutions, challenges and barriers relevant to a just transition and the full realisation of human rights for all people
December 2024
A just transition requires urgent action! The South Centre calls for increased climate finance, reform of Investor-State Dispute Settlement (ISDS), and upholding Common but Differentiated Responsibilities and Respective Capabilities (CBDRRC) to ensure a sustainable and equitable future for all.
Ensuring A Balanced Approach in UNCITRAL Working Group III
co-organized by Gobierno de Colombia, Diplomatische Akademie Wien, Universidad Externado de Colombia, and the South Centre
Views from the Global South on the Multilateral Investment Court and Procedural and Cross-cutting Issues in Investor-State Dispute Settlement (ISDS) Reform.
24 September 2024
Diplomastiche Akademie Wien,
Festsaal, Favoritenstrasse 15a,
1040 Vienna, Austria
FIRST DISCUSSIONS ON DAMAGES IN THE INVESTOR-STATE DISPUTE SETTLEMENT SYSTEM AT UNCITRAL WORKING GROUP III
By José Manuel Alvarez Zárate
This paper summarises the history of initial discussions within UNCITRAL Working Group III (WG.III) on the reform of investor-state dispute settlement (ISDS) regarding the lack of correctness, consistency and predictability of compensation awards. It covers the period up to 2022, beginning with the initial concerns expressed by some countries of the Global South regarding the methodologies used to assess damages and the Draft on Damage Assessment and Compensation prepared by the UNCITRAL Secretariat, which served as the basis for subsequent discussions among the members of WG.III. It then describes the comments made by some states and observers on this draft and the discussions that ensued, including the discussion of damages as part of the issues of ISDS reform. A second paper on this topic will describe the period from September 2022 to the publication by the Secretariat of the second draft of procedural and cross-cutting issues on July 8, 2024.
The purpose of this paper is to provide Global South States with a track record of the main concerns expressed by States on various aspects of damages during the discussions in UNCITRAL WG.III, which have often been lost at some point during the long process of discussions on ISDS reform.
Ensuring a Balanced Approach for the Global South in UNCITRAL Working Group III
By José Manuel Alvarez Zarate
This paper examines the ongoing efforts of the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) to reform the Investor-State Dispute Settlement (ISDS) system. It argues that the current approach prioritises the concerns of developed countries over those of the Global South. The document highlights the disproportionate focus on the Permanent Multilateral Investment Court (MIC) and related issues, while neglecting procedural and cross-cutting concerns crucial for developing nations. The paper proposes concrete actions to rebalance the discussions, including prioritising procedural reforms and ensuring equitable representation in the MIC’s structure and appointment process. It emphasises the need for transparency, depoliticisation, and genuine consideration of the Global South’s concerns to achieve a genuinely legitimate and balanced ISDS reform.
Discussions on Draft Provisions on Damages in the Investor-State Dispute Settlement System in UNCITRAL Working Group III
By José Manuel Alvarez Zárate
This paper summarizes the discussions within the United Nations Commission on International Trade Law (UNCITRAL) Working Group III (WG III) on the reform of investor-state dispute settlement (ISDS) regarding the two draft provisions on damages prepared by the UNCITRAL Secretariat as part of the two drafts on procedural and cross-cutting issues. It covers the period from September 2022 to July 8, 2024. It describes the draft provisions on damages and related provisions on procedural and cross-cutting issues of document A/CN.9/WG.III/WP.231, dated 26 July 2023, as well as the comments made on it by some members of WG III and observers. It also describes the changes to the above document contained in the second draft on the procedural and cross-cutting issues, dated July 8, 2024, contained in document A/CN.9/WG.III/WP.244.
The purpose of this paper is to provide an overview of the comments made by some States on the draft provisions on damages, the substantive changes made by the Secretariat to the first draft, mostly based on the comments made by some States, and the exclusion of important aspects highlighted by some Global South States in their interventions. In the light of this review, countries of the Global South may consider commenting on document A/CN.9/WG.III/WP.244 to ensure that their concerns are effectively taken into account.
Painting the Grass Green: A Climate Change Carve-Out in Investment Agreements
By Daniel Uribe
During the Twenty-Eighth Session of the Conference of the Parties (COP-28) of the United Nations Framework Convention on Climate Change (UNFCCC), States recognised the critical need to accelerate efforts to mitigate climate change and called on Parties to take action to transition away from fossil fuels in energy systems, to achieve net zero emissions by 2050. However, implementing such a transition finds obstacles in investor-state dispute settlement (ISDS) mechanisms, which can undermine regulatory actions necessary for climate policies, leading to a ‘regulatory chill’. As a response to these challenges, the Organisation for Economic Co-operation and Development’s (OECD) Future of Investment Treaties program has proposed a model carve-out provision to exclude fossil fuel sectors from ISDS protection with procedural safeguards, but its effectiveness may be limited. A holistic reform of investment agreements and additional measures, such as withdrawal from international investment agreements, are necessary to safeguard regulatory space and promote sustainable investment and a just transition.
