A/HRC/33/40
such as article IX of the Convention on the Prevention and Punishment of the Crime of
Genocide. Other treaties have optional protocols that provide for automatic referral, such as
the Optional Protocols to the Vienna Convention on Diplomatic Relations. As with article
36 of the Statute of the International Court of Justice, such consent can be withdrawn.
50.
Without the consent of the relevant State or States, tribunals lack jurisdiction.
Investor-State dispute settlement and the investment court system, their “umbrella” and
“survival clauses”, violate the norm of jurisdiction by consent. As States can refuse the
jurisdiction of the International Court of Justice, a fortiori they can decline the jurisdiction
of ad hoc arbitral tribunals of three private arbitrators, especially when they encroach on the
fundamental functions of the State.
51.
Article 62 of the Vienna Convention on the Law of Treaties states that when the
situation has significantly changed from the time when an agreement was signed (rebus sic
stantibus), the agreement can be revised or terminated. Other provisions of that Convention
allow revision or termination in cases of error (art. 48), fraud (art. 49), corruption (art. 50)
or coercion (arts. 51-52).
52.
As is clear from diplomats’ statements and academic research, when most States,
particularly developing States, entered into bilateral investment treaties and free trade
agreements, hardly anyone imagined that investor-State dispute settlement arbitrators
would challenge the ontological functions of the State in the fields of taxation, health,
labour and environmental standards, overriding national law and the judgments of domestic
tribunals. Such a surrender of sovereignty would have required absolute clarity in the texts
of the treaties and agreements, not vague terminology subject to capricious interpretation.
The presumption in customary international law is that a State cannot surrender sovereignty
by chance or inadvertence, because international ordre public cannot accept that a State
waive its responsibility to act functions. If a State does, the agreement can be considered as
contra bonos mores.
53.
In conversations with lobbyists and trade representatives, the Independent Expert
was confronted with the question of why States signed bilateral investment treaties and free
trade agreements in the first place. Perhaps the best answer was given by the Danish
political scientist Lauge Poulsen, who conducted worldwide research and asked many
government officials that question. He notes that “both qualitative and econometric
evidence strongly indicates that a bounded rationality framework is best suited to explain
the popularity of BITs in the developing world … By overestimating the benefits of BITs
and ignoring the risks, developing country governments often saw the treaties as merely
‘tokens of goodwill’”.39 Poulsen shows that developing countries expected that the treaties
would bring more foreign investment, 40 although that belief was never backed by empirical
evidence and remained mostly unfulfilled, relying to the detriment of their populations on
the positive “publicity” for those treaties and on UNCTAD advice. He observes that
Governments were largely unaware of the political and economic risks, treaty negotiations
lasted only a few hours, and sometimes not even lawyers or the experts from the justice
ministries were involved. Poulsen concludes that “the majority of developing countries …
signed up to one of the most potent international legal regimes underwriting economic
globalization without even realizing it at the time”.41 That assessment raises issues of good
faith on the part of those selling the treaties, manifests unconscionable lack of due
39
40
41
12
www.cbs.dk/files/cbs.dk/abstract.pdf.
Lauge Poulsen, Bounded Rationality and Economic Diplomacy: The Politics of Investment
Treaties in Developing Countries (Cambridge, Cambridge University Press, 2015);
www.oecd.org/trade/benefitlib/.
Lauge Poulsen, Bounded Rationality and Economic Diplomacy, p. xvi.
GE.16-11938
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