The Yearbook on International Investment Law & Policy discusses developments in international investment law. This is the branch of international law that governs foreign investment flows, including more than 3,000 bilateral and regional investment promotion treaties.

The proliferation of such treaties – including the investment chapter of the proposed Transatlantic Trade and Investment Partnership – has made this one of the most dynamic, and contested, areas of international law.

The latest issue of the yearbook includes an article by IIED's Lorenzo Cotula. In 'Land grabbing' and international investment law: towards a global reconfiguration of property?, Dr Cotula explores whether investment treaties protect 'land grab' deals, and what this means for the land rights of rural people. In this Q&A we discuss the chapter's highlights with the author.

What is the main argument of the article?

LC: A recent wave of agribusiness and natural resource investments has attracted significant public attention, giving rise to concerns about 'land grabbing'. In the article, I explore the role the law plays in settling these growing pressures on land. My main argument is that, if not properly thought through, international treaties to protect foreign investment could compound shortcomings of local and national governance, undermining the rights of people impacted by the investments.

Why do such cases occur? 

LC: Contexts are different, but in many low- and middle-income countries the state owns or otherwise controls much of the land. Rural people claim the land as theirs but often have weak rights under national law. The process for allocating land is often opaque – there's little accountability or transparency and limited opportunity for citizens to participate in the process.

At the local level, many customary systems concentrate decision-making power in the hands of chiefs who sometimes use their prerogatives for private gain. These contexts create the breeding ground for land allocations that are not in the public interest, which partly explains why 'land grabbing' is so heavily contested.

Where do international investment treaties come in?

LC: Investors might activate the treaties if affected people successfully mobilise against the project. For instance, if they win a court case to have a land concession rescinded, or if they persuade the government – perhaps a newly elected government that came to power with promises to reopen the deals the previous government had made – to renegotiate or even terminate the concession.

The investor might sue the government before international arbitral tribunals and claim large amounts in compensation – or it might threaten legal action to persuade the government to change its course.

Depending on the circumstances, the investor might sue the government before international arbitral tribunals and claim large amounts in compensation – or it might threaten legal action to persuade the government to change its course. 

Has this ever happened? 

LC: There are now over 700 known arbitrations based on investment treaties, challenging wide-ranging policy measures. The natural resource sector accounts for around 30 per cent of the arbitrations taken to one widely used arbitration system. Landholdings are typically considered a protected investment, and a growing number of arbitrations relate to land investments.

The recent wave of agribusiness deals is yet to result in known arbitrations, but over the past few months there have been reports of at least two arbitration threats – in Ethiopia and Cameroon.

To be clear, investors do not necessarily win these arbitrations. But one question is whether the prospect of costly proceedings and possibly large compensation pay-outs could dissuade governments from acting, and make it more difficult for land rights activists to achieve their advocacy goals.

Also, some features of investment treaties and the ways tribunals interpret them can lead to problems when applied to 'land grab' situations.

Can you give an example? 

LC: Some arbitral tribunals have denied legal protection to investments that have violated national law. But where national governance is weak, even land deals that comply with national law can dispossess rural people.

In principle, investment treaties would protect these investments. There are now international guidelines on land governance that could be used as a benchmark, but it is far from clear that arbitral tribunals will be inclined to use them.

Another case in point is when a government reassures an investor that their land deal will go ahead because the land is available and – to use the legal term – 'free of any encumbrances'. This can create what arbitral tribunals recognise as a 'legitimate expectation', which investment treaties would protect.

If the government later backtracks on this expectation, the investor may be entitled to compensation. But it's often the case that a government makes such promises before consulting the people affected. If, when ultimately consulted, they oppose the deal, it may already be too late.

So where does this analysis leave us? 

LC: There are theoretical and practical implications. On the more theoretical side, we need to recognise the important but often neglected links between local contexts, for example where customary chiefs reinterpret their custodianship of common resources as having the right to allocate land to outside investors for personal gain; national law reforms that facilitate large-scale land concessions to commercial operators; and international investment treaty making to protect the landholdings acquired by foreign investors.

We are seeing a reconfiguration of property, from local to global. 

While different, all these changes point to shifts towards more commercialised land relations – we are seeing a reconfiguration of property, from local to global.

Individual land deals are converting lands previously used for common grazing or foraging. But wider governance changes are also taking place – perhaps less tangible yet equally important.

These changes are shifting the balance between competing land claims – for example, between local land rights and commercial land concessions – and between private interests and public authority. 

These processes at different levels are also closely interconnected, because international treaties can protect landholdings acquired where local or national governance is weak. In academic circles, you'll find a specialist in international investment law, another in land rights. But in the real world these arenas can intersect.

In my article I underline why we need to look at these connections to make sense of the complexities. Overall, the findings raise probing questions about whose rights are being protected and how.

What are the practical implications? 

LC: We need action at multiple levels. Only by addressing these international dimensions will it be possible to secure land rights at the grassroots. At the same time, ongoing debates about reforming the investment treaty regime also need to consider the wider context. 

Some of the concerns raised about investment treaties are ultimately rooted in, and best addressed by, national-level action. For example, reforming investment treaties may not be the most obvious way to address shortcomings in national decision-making processes. That said, much can be done to rethink investment treaties.

What would that involve? 

LC: For a start, we need to question the prevailing model that conceptualises investment law on the basis of a binary relationship between investor and state – reflected for example in the structure of investor-state arbitration. It is clear that natural resource investments can involve or affect other actors too, including people who may lose land to business ventures, and it's important that the whole range of relations is considered.

This would require more effective coordination between investment law and human rights law, which can help protect the rights of people affected by natural resource investments.

This would require more effective coordination between investment law and human rights law, which can help protect the rights of people affected by natural resource investments. I discuss this very issue in a newly releasedbriefing note, which provides specific recommendations.

These human rights dimensions are receiving more and more attention. For example, the UN Special Rapporteur on the Rights of Indigenous Peoples has just released her latest report (PDF) on investment treaties and indigenous peoples' rights, and the Business & Human Rights Resource Centre is convening an expert meeting on human rights and investment treaties on 19 October. This event is very timely, and I'm looking forward to the discussion.

There are also implications for policy choices on whether to conclude, renegotiate, or terminate investment treaties, in what form, and through what process.

Last year we published a report that provided detailed recommendations for governments, parliaments, social movements and donors – calling for careful thinking through and greater public scrutiny of investment treaties, and providing specific pointers on treaty formulation if any treaties are concluded.

There is a strong case for people working on land rights in an investment context to become more engaged with investment treaty policy, and we are starting to see signs of this happening – for example in Cameroon, Colombia andMyanmar.

What can we do here in the United Kingdom?

LC: Historically the UK has been an important player in the development of international investment law. Right now the European Union negotiates investment treaties. But recent events have created the prospect of new investment treaty negotiations led directly by the UK government, possibly as part of wider trade negotiations. This creates a need for a new UK investment treaty policy ahead of future negotiations.

There has been debate about the UK's future trade deals. But investment treaties have received less attention. It would be a good time for the government to review its investment treaty stock, including in light of recent innovation in investment treaty making worldwide.

There is an important role here for parliament to conduct its own review, and NGOs would be well placed to step up pressure on government and get parliament to act.

Lorenzo Cotula (lorenzo.cotula@iied.org) is a principal researcher in law and sustainable development in IIED's Natural Resources research group.