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Explanation:

The use by host States of counterclaims-while having a long pedigree in interstate litigation has since a couple of years gradually made its appearance in investment treaty arbitration. While such counterclaims have more often than not been unsuccessful, recent cases show that tribunals are increasingly spending more time discussing the merits of counterclaims. Also, recent cases have shown that counterclaims may provide an avenue for host States to bring human rights violations by the foreign investor under the jurisdiction of an arbitral tribunal, an evolution that has not only been visible in the practice of investment tribu nals, but also in certain investment treaties which now explicitly provide for the possibility for States to bring counterclaims. In this article, I explore the legal framework for the use of counterclaims by host States for violations by the inves tor of human rights obligations. I first summarize the current state of affairs in relation to the human rights obligations of foreign investors. I then discuss the use and practice of counterelaims in investment treaty arbitration in general, and then analyse the possibility to use host State counterclaims to bring a human rights-based claim against foreign investors.

New generation treaties

10. The future success of a human rights counterclaim could be bound to human rights obligations imposed to the foreign investor. New generation treaties contain substantive provisions related to human rights obligations for corporations. For example, some of these provisions contain direct human rights obligations on foreign 22 investors, while others intend to consider human rights compliance of the foreign investor when deciding the amount of 23 compensation.

Theoretical background

2. International human rights law and international investment law are different areas of international law, but the interaction of these different areas of law is increasing.

3. Historically, investment treaties made no reference to human rights, even though at the time of their making, guarantees for the respect of human rights already existed in other international legal instruments. 1 These instruments do not contain direct human rights obligations for corporations. However, certain non-binding instruments are slowly providing for human rights obligations.