A/HRC/14/27 cultures respectful of rights at home and abroad; (d) devising innovative policies to guide companies operating in conflict-affected areas; and (e) examining the cross-cutting issue of extraterritorial jurisdiction. A. Safeguarding the ability to protect human rights 20. There is a saying that the first thing to do when you are stuck in a deep hole is to stop digging. Yet, countries unwittingly get stuck in metaphorical holes that may constrain their ability to adopt legitimate policy reforms, including for human rights. The prime examples the Special Representative has studied in depth, because their effects can be so far-reaching, are bilateral investment treaties (BITs) and host government agreements (HGAs), the contracts between governments and foreign investors for specific projects. 21. A current BIT case illustrates the problem. European investors have sued South Africa under binding international arbitration, contending that certain provisions of the Black Economic Empowerment Act amount to expropriation, for which the investors claim compensation.9 A policy review examined why the Government had agreed to such BIT provisions in the first place. It explains that, among other reasons, “the Executive had not been fully apprised of all the possible consequences of BITs”.10 The same is often true for HGAs, which can remain in force a half-century. 22. There is a compelling need to protect foreign investors from unfair and arbitrary treatment by host governments. The more than 1,000 instances of nationalization in the 1970s led to a proliferation of BITs, which now number nearly 3,000. However, in successive BIT negotiations, capital importers that lacked significant market power felt increasingly pressured to compete with one another for investments by accepting ever-more expansive provisions, constraining their policy discretion to pursue legitimate public interest objectives. 23. Several States are currently conducting BIT policy reviews. The Special Representative encourages States to ensure that new model BITs combine robust investor protections with adequate allowances for bona fide public interest measures, including human rights, applied in a non-discriminatory manner. 24. The same holds for HGAs, which include provisions (“stabilization clauses”) that can either insulate investors from new environmental and social laws or entitle them to seek compensation for compliance. Two themes emerged from several mandate consultations with HGA negotiators representing States and companies, and non-governmental organizations (NGOs). First, stabilization clauses, where they are used, should meet the twin objectives of ensuring investor protection and providing the required policy space for States to pursue bona fide human rights obligations. Second, there is an urgent need for all parties, including State and company negotiators and their legal and financial advisers, to consider the human rights implications of long-term investment projects at the contracting stage, thereby reducing subsequent problems. The Special Representative is exploring possible guidance for all parties on responsible contracting. 25. In conclusion, one important step for States in fulfilling their duty to protect against corporate-related human rights abuses is to avoid unduly and unwittingly constraining their human rights policy freedom when they pursue other policy objectives. 9 10 6 See Piero Foresti, Laura de Carli and others v. Republic of South Africa, (International Centre for Settlement of Investment Disputes Case No. ARB (AF)/07/1). South Africa, Department of Trade and Industry, “Bilateral Investment Treaty Policy Framework Review”, June 2009, p. 5. GE.10-12629