The German Law Journal

Corporate Human Rights Obligations under Stabilization Clauses

By Jernej Letnar Cernic

Suggested Citation: Jernej Letnar Cernic, Corporate Human Rights Obligations under Stabilization Clauses, 11 German Law Journal 210-229 (2010), available at http://www.germanlawjournal.com/index.php?pageID=11&artID=1233

Lawyers, economists and social scientists alike have for a number of years agreed that foreign investment has the potential to act as a catalyst for the enjoyment of an individual’s fundamental human rights, particularly in developing countries. This article discusses and critically analyses corporate human rights obligations and the lack thereof under stabilization clauses in foreign investment contracts. The balance of this article is devoted to exploring three main issues relating to corporate human rights obligations and stabilization clauses. First, stabilization clauses in foreign investment agreements are examined in relation to corporate obligations and responsibility for fundamental human rights. In doing so the substantive and procedural dimension of stabilization clauses is analysed. Second, using the concrete examples of the Mineral Development Agreement between Mittal Steel and the Government of Liberia Mittal Steel Agreement and of the Baku-Tblisi-Ceyhan Pipeline Project as case studies, this article considers an application of stabilization clauses in foreign investment contracts in relation to the fundamental human rights obligation of states and of corporations. Third, a proposal for reform in the form of a fundamental human rights clause is introduced. To be clear, the argument here is that the fundamental human rights obligations of investors, particularly of corporations, must be included in foreign investment agreements.

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