Labour Provisions and Dispute Settlement in International Investment Agreements – An Enquiry into the Politicization of the Settlement of ‘Labour Disputes’

The promotion of sustainable development in international investment law translates into two treaty strategies, which, despite having a common ‘teleological denominator,’ are characterized by two different rationales. The first strategy is well-known and extensively discussed in the literature. It aims at reinforcing the right of host states to regulate for the benefit of public interests. The second treaty strategy is largely unexplored in the literature and constitutes what appears to be a landmark (r)evolution in the field of international investment law. This strategy actually sets limits on states’ regulatory power with the view to thereby fostering sustainable development. This article focuses on this second treaty strategy in relation to the way in which a number of international investment agreements (IIAs) have begun to treat host state labour conditions. In light of the analysis of the relevant substantive and procedural provisions, it is contended that the move away from the method of dispute settlement traditionally resorted to in IIAs (i.e. arbitration) for the purposes of disputes regarding labour conditions is the result of the unprecedented limitation that IIAs’ substantive labour provisions place on states’ regulatory power. This limitation, which is discussed in this article, effectively leads to a politicization of the settlement of ‘labour disputes,’ a concept quite distinct from the legalized settlement of disputes between investors and states afforded through arbitration.