2. Creating and responding to vulnerabilities

The prevailing liberal paradigm assigns the state a minimalistic role. The primary objective of this non-interventionist state is to safeguard the rights, autonomy, and property of people and ensure the highest possible levels of liberty, without interfering in their lives or the functioning of markets. This restrained state must protect individual autonomy, meaning that it should refrain from engaging in actions that might be seen as limiting freedom or redistributing wealth or power and facilitate private competition within a meritocracy, ensuring that individual initiative and ability are suitably rewarded when given the freedom to thrive.Footnote ¹⁸

Fineman has a different view on state responsibility. To start with, even though vulnerability is universal, according to Fineman, ‘resilience is what provides an individual with the means and ability to recover from harm, setbacks, and the misfortunes that affect her or his life’ and how much resilience an individual has is ‘largely dependent on the quality and quantity of resources or assets that he or she has at their disposal or command’.Footnote ¹⁹ The concept of resilience is at the core of vulnerability theory since it directs our focus towards society and social structures.Footnote ²⁰ Society cannot completely eliminate vulnerability, but it may intervene, compensate, and reduce it, while also developing resilience to avert misfortune and capitalize on possibilities. Resilience is cultivated via institutions and relationships that confer assets for privilege and power, and which are partly shaped and supported by legal frameworks.Footnote ²¹ Nevertheless, if societal institutions fail to adequately and fairly address our collective vulnerability, are unequally accessible, and distribute power and privilege unfairly, then these failures are a result of institutional failings rather than individual shortcomings.Footnote ²²

Through the establishment of societal institutions, states have the primary responsibility concerning the conferral of different assets that are necessary to build resilience. Many of the institutions that provide the resources that enable human resilience can only be legally established via state mechanisms.Footnote ²³ As the ultimate source of authority, creator of laws and capable of using coercive power, states are the ones that bring intimate and economic institutions into legal existence, nationally or internationally.Footnote ²⁴ In a similar vein, states create the legal and political framework for markets and all of its elements, including businesses, trade agreements, contracts, property, and money itself.Footnote ²⁵ Likewise, states, through laws, legitimize and grant status to various entities, including corporations, schools, workplaces and families, bestowing upon them advantages and legal safeguards, and state procedures establish their very meaning and content.Footnote ²⁶ Viewing law as central to the (re)production of society, vulnerability theory acknowledges that law and some sort of governing powers are unavoidable, and it also recognizes the state as a distinct mechanism for establishing a just society.Footnote ²⁷

This view on state responsibility to build resilience is akin to the understanding of the constitutive role of law, and, thereby, of the state, in LPE. Accordingly, if the state is to establish a just society, it is crucial to understand that the state as lawmaker and enforcer is also part of the root causes of injustices.Footnote ²⁸ Law does not only govern aspects of economic life, such as capital, labor, and money, and political life, such as power and rights, but also constructs them by constituting the actors involved, organizing them within systems, and establishing the conditions for their interactions.Footnote ²⁹ Correspondingly, the law has a pivotal role in establishing and perpetuating structural disparities in both the state and the market.Footnote ³⁰ Understanding law as co-constitutive of injustice is central to the LPE approach. Vulnerability theory and LPE are then complementary perspectives that draw attention to how rules protecting specific individuals or groups may either empower or disempower other individuals or groups.

According to Fineman, resilience can be built only by a responsive state, one ‘that is grounded in vulnerability theory, addresses the range of dependencies inherent over the life course, and is attentive to all stages of development and forms of need of the vulnerable subject’.Footnote ³¹ The responsive state must guarantee that access to societal institutions allocating social goods is universally available and that the opportunities provided by these institutions are distributed evenly, without unfairly privileging certain individuals or groups. Magnifying the role of state, such a reconceptualization would mean that the responsive state should create a just equality regime that guarantees everyone’s access and opportunity in compliance with the realities of the human subject, be vigilant to maintain conferral of assets based on public values such as equality and justice, and to justify imbalanced circumstances whenever it has to grant institutional privileges.Footnote ³²

Applying these insights to the international investment regime context helps to uncover and to analyze to what extent, if at all, states were, and still are, responsive to the vulnerabilities of various stakeholders in their laws and policies on international investment and would require the development of context-specific analytical criteria. In order to analyze state responsiveness, which is a matter of degree rather than a binary assessment, at least three distinct criteria can be identified. First, a responsive state would acknowledge the human rights dimension of foreign investments in its laws and policies at national and international planes and promote mutual connections between international investment and human rights regimes, which would imply the recognition of rights and the vulnerabilities of not only foreign, investors, but also of investment-affected individuals. Secondly, inclusiveness towards other stakeholders at various phases of policy making, foreign investments, and investment disputes is an important measure of state responsiveness. Increasing levels of inclusiveness to engage and hear their perceptions would enable these stakeholders to bring attention to their vulnerabilities, which have previously been disregarded in the context of foreign investment. Lastly, readiness of states to revise and adapt their legal and policy frameworks on foreign investments is an important criterion for responsiveness. While societal institutions may be established by unresponsive states to unfairly promote only certain interests and ignore vulnerabilities of others, they may also become unresponsive in time due to internal and external threats.Footnote ³³ This would necessitate monitoring, assessing, and adapting institutions as needed. In this light, states’ participation in international initiatives aimed at reducing the influence of transnational corporations, including foreign investors, and taking steps at the domestic level to similar ends can provide insights into their willingness to evaluate and modify their laws and policies governing foreign investments.

LPE approaches and the vulnerability theory bring us beyond the framework of international human rights law and the state duty to protect and fulfil human rights to assess state responsiveness in relation to its laws and policies on foreign investments. Taking together LPE approaches, with their focus on power structures, and vulnerability theory, with its focus on vulnerable subjectivities, help us reconceptualize responsibility of states broader than the regular state duty to protect under human rights law. In the human rights law framework, state responsibility is questioned when it fails to prevent human rights violations. However, from the combined outlook of LPE/vulnerability theory, state responsibility is a broader concept related to the establishment of legal, political, and economic conditions that caused the violations in the first place. For instance, tax regulation and tax breaks – albeit not a traditional human rights issue – may be a cause of structural and economic inequalities, allowing certain societal groups to accumulate wealth and capital while disproportionately diverting resources from others. The universal vulnerable subject envisioned by vulnerability theory is conceptually different from the liberal legal subject underpinning the dominant rights-based and social contract models.Footnote ³⁴ The theory, while started as a ‘stealthily disguised human rights discourse’, in time, evolved as ’an independent universal approach to justice, one that focuses on exploring the nature of the human, rather than the rights, part of the human rights trope’.Footnote ³⁵ Eventually, it can expose ‘the unsustainable consequence of framing rights contingent upon capital’ and ‘weave ethics of care into the fabric of IIL’.Footnote ³⁶ In a complementary fashion, LPE draws attention to the ‘root causes’ of injustice and emphasizes the need for materially empowering vulnerable subjects. Unlike a mainstream human rights-based perspective, this shift in approach can lead to the uncovering of the underlying reasons for international investment regime’s shortcomings and challenge the belief that foreign investors have inherent rights to protections while simultaneously being immune from accountability towards the individuals and communities affected by their investments.

3. NAPs and foreign investment regulation

NAPs on BHR can be characterized as soft-law instruments where states set out their policies to realize UNGPs. The UN Working Group on BHR defines NAPs as ‘evolving policy strategies developed by states to prevent and protect against human rights abuses by business enterprises in conformity with the UNGPs’.Footnote ³⁷ NAPs may be considered as a soft law ‘new governance’ toolFootnote ³⁸ and the first example of a model national public policy instrument used to boost states’ commitment and political will to enact legally binding national standards.Footnote ³⁹

Though they are domestic policy documents, they can be tools for the enhanced compliance with international law.Footnote ⁴⁰ In 2008, Prof. Ruggie, the then special representative of the Secretary-General on human rights and transnational corporations and other business enterprises, stressed that states should take all the legal and administrative options possible to prevent business-related human rights abusesFootnote ⁴¹ and these may well include domestic public policies such as adoption of NAPs. They are regarded as one of the most important tools for the implementation of the UNGPs by a former member of the UN Working Group on BHR.Footnote ⁴² As such, NAPs facilitate a convergent approach among states and can be viewed as ‘the main and most comprehensive strategy undertaken thus far for the purpose of implementing’ the UNGPs.Footnote ⁴³ As the most consistent means of comparing national governments’ track record concerning the adherence to the UNGPs, they have been promoted also by the European Commission and other international bodies.Footnote ⁴⁴ Despite many criticisms,Footnote ⁴⁵ NAPs have been considered a key indicator to measure states’ progress or delay of the level of development of a BHR public policy.Footnote ⁴⁶

NAPs are drafted by state organs, and they are mostly considered as corresponding to Pillars 1 and 3 of the UNGPs, i.e. state duty to protect, and access to remedy.Footnote ⁴⁷ Nevertheless, a NAP on BHR inherently concerns also business responsibility to respect human rights. Even if an NAP deals only with the state duty to protect in an explicit manner, this duty indirectly translates into the introduction of responsibilities upon businesses. Every NAP process should be considered as an affirmation of the UNGPs’ main presumption that protection and enjoyment of human rights are relevant also to the business sector and demonstrates a political commitment to align domestic laws, policies, and practices with this presumption.Footnote ⁴⁸ The NAPs are the primary means by which states are expected to fulfil their duty to protect and to provide access to remedy under the UNGPs. But they also constitute a framework for the business implementation of the UNGPs through state commitments to a ‘smart policy mix, a polycentric approach that includes everything from laws and regulations to guidance, messaging, and education and training’, as prescribed by the UNGPs.Footnote ⁴⁹ The UN Working Group, acknowledging the important role businesses can have in the development and implementation of NAPs, mentioned two important ways in which NAPs can help foster business respect for human rights: (i) clarification of states’ expectations and requirements from businesses vis-à-vis human rights and (ii) improving the means of cooperation between states and businesses in implementing the policies outlined in their NAPs.Footnote ⁵⁰ NAPs also allow states to signal businesses, which includes foreign investors as well, the directions of the future developments concerning their BHR policies and what they should expect.Footnote ⁵¹ Hence, it is fair to assert that ensuring business respect for human rights under the Pillar 2 is one of the major objectives of NAPs and, in the context of investment law, this can entail policies regarding the balancing of public and private interests.

UNGPs, since their endorsement, have become a cornerstone of the BHR domain. These principles set the tone by establishing ‘an authoritative global standard on the respective roles of businesses and governments in helping ensure that companies respect human rights in their own operations’ and playing ‘a key role in the development of similar standards by other international and regional organizations, leading to global convergence around the standards they set out’.Footnote ⁵² In this domain, foreign investments have been regarded as a means by which transnational corporations can influence the enjoyment of human rights ever since the first resolution of the Commission on Human Rights (replaced by the Human Rights Council in 2006), which requested the UN Secretary-General to appoint a special representative on the issue of BHR.Footnote ⁵³ Throughout his mandate which culminated in the UNGPs, identifying investment agreements as a means by which states tie their own hands, Prof. Ruggie was aware that extremely broad investment agreements impair states’ ability to fulfil their duty to protect human rights.Footnote ⁵⁴ In several of his reports, he criticized certain features of the IIL regime such as the substantially ambiguous or extremely limited number of human rights references in investment agreements,Footnote ⁵⁵ the confidential and ad hoc nature of the dispute settlement proceedings, which can lead to unpredictability and legitimacy concerns about the IIL regime,Footnote ⁵⁶ or the use of extensive stabilisation clauses in the contracts, which ‘can either insulate investors from new environmental and social laws or entitle them to seek compensation for compliance’Footnote ⁵⁷ and thereby hamper the capacity of host states to attain their legitimate policy objectives. Many recommendations have been made to address these criticisms, including improving states’ ability to negotiate investment agreements to safeguard their regulatory freedom, ensuring the composition of arbitral tribunals with at least one arbitrator who has expertise on human rights, rewriting stabilisation clauses, and guaranteeing more transparency in arbitral proceedings.Footnote ⁵⁸ He also developed a guidebook with various recommendations to assist in the integration of human rights risk management into investment project contract talks between host state organs and foreign investors.Footnote ⁵⁹

The most obvious link between his work and the IIL regime can be found in the UNGPs, namely in Principle 9, which asserts that ‘states should maintain adequate domestic policy space to meet their human rights obligations when pursuing business-related policy objectives … through investment treaties or contracts’.Footnote ⁶⁰ In the commentary, it is stated that

These explanations evidence that, despite the separation of the two legal regimes, investment law has since long been understood as determinative of the capacity of states to realize human rights.

As further articulated below, policies related to foreign investment relations within NAPs could offer numerous benefits for an effective change in the IIL regime. Additionally, they can function also as a place where states can, in theory, demonstrate considerable levels of responsiveness in their laws and policies on international investments through the vulnerability lens. To start with, NAPs are official documents, meaning that they are normally drafted by different state organs. In different states, various ministries and official bodies were involved in the drafting, implementation and monitoring processes of NAPs.Footnote ⁶² This indicates that, in line with the emphasis of the vulnerability theory on state responsibility, the greatest share of the responsibility in relation to different NAP processes lies with the (responsive) state.

In investment regime context, the UN Working Group itself recognizes that NAPs could be a place to draft investment policies regarding the inclusion of human rights clauses in investment agreements and human rights impact assessment of such agreements.Footnote ⁶³ States typically carry out their investment relations in governmental functional silos, meaning that officials responsible for conducting these relations often have limited experience in human rights-related issues. Including foreign investment policies in NAPs could erode these functional silos and foster meaningful interaction between IIL and BHR.Footnote ⁶⁴ In relation to the Principle 9, the Working Group recommends that, among others, conducting human rights impact assessments prior to signing bilateral or multilateral investment treaties, including specific human rights clauses in bilateral or multilateral investment treaties, supporting initiatives to improve the transparency of ISDS, monitoring human rights impacts of investment awards.Footnote ⁶⁵ Hence, if a state aims for the best practices and guidance concerning its investment policies in its NAP and go through these processes, it can acknowledge human rights impacts of foreign investments, be inclusive towards other stakeholders adversely affected by foreign investments and be proactive in adapting its NAP in light of changing circumstances, and consequently, demonstrate a considerable degree of responsiveness.

Despite this potential in relation to investment policies, NAPs have often been criticized for leaving this potential unfulfilled. Studying NAP commitments on investment agreements on the basis of their ‘seriousness’ in operationalizing Principle 9 of the UNGPs, Surya Deva found that whereas most NAPs include some kind of commitment concerning human rights impacts of investment agreements, political will for more incisive commitments and concrete steps to achieve those are often absent.Footnote ⁶⁶ A striking example is that no NAP establishes commitments to include provisions in investment agreements concerning the second pillar of the UNGPs. Building on this work and expanding its scope, in the next section we conduct a comprehensive analysis of all the publicly available NAPs,Footnote ⁶⁷ teasing out a number of additional criteria and dimensions that offer more granularity on the type and level of (dis-)connection between IIL and BHR in NAPs.

4. Comparing provisions on foreign investments in NAPs

4.2 Results

In total, there are currently 39 NAPs adopted by 30 different states.Footnote ⁷⁵ According to the World Bank’s classification of countries,Footnote ⁷⁶ 23 are high-income countries, 4 are upper-middle income, 2 are lower-middle income and one is a low-income country (see Table 1). According to the country classification of the 2022 UN World Economic Situation and Prospects report,Footnote ⁷⁷ while 22 of these 30 countries were developed, 8 are developing countries. 19 of the 30 countries are from Europe, 5 are from Asia, 3 are from Latin America and the Caribbean, 2 are from Africa and 1 is from North America. In the following, we report the results of our comparative analysis for each criterion. In Section 5 an overall analysis is offered.

Table 1. NAPs across region and economic and development status

4.2.1 Existence of a policy on foreign investment

Out of the 39 NAPs, an overwhelming majority contain policies or statements concerning foreign investment relations in the context of BHR (Table 2). Only three NAPs (Chile 2021, Luxembourg 2020, South Korea 2018) do not have any mention of foreign investment policies. This demonstrates that there is at least a general understanding among the states with NAPs on BHR that foreign investment and BHR are not two entirely separate policy domains.

Table 2. NAPs with policies on foreign investment?

Most NAPs contain planned foreign investment policy actions, but some only contain general statements on foreign investments (Table 3). In five NAPs, there is nothing about prospective foreign investment policies. In these NAPs, either there are only some statements about foreign investments or there are descriptions of some actions already taken. However, the majority of the NAPs, 31 of them to be exact, do describe planned actions on foreign investments. Yet, there are considerable differences among these planned actions in terms of the level of commitment and specificity. To illustrate, the Swedish NAP provides that the state ‘will act to ensure that the EU includes references to CSR, including the UN Guiding Principles for Business and Human Rights, in the sustainability chapters of its bilateral and regional trade agreements, investment agreements and partnership and cooperation agreements’.Footnote ⁷⁸ Such provision is relatively concrete vis-à-vis the more general one in the Japanese NAP, according to which the state plans to ‘[c]ontinue to make efforts towards concluding EPAs and investment agreements that benefit not only industry but also a wide range of people, including worker’.Footnote ⁷⁹ Although both of these policies do not go much beyond than expressing generic commitments, there is at least a higher level of specificity in the NAP of Sweden by referring to EU-level actions to include references to UNGPs in sustainability chapters of the agreements.

Table 3. Prospective policy on foreign investments?

4.2.2 Explicit reference to investment law sources

In 24 NAPs, explicit references to IIAs, ISDS or investment contracts and their revision for further alignment with human rights standards can be found in the statements and policies on foreign investments. The remaining 12 NAPs do not refer to these sources of the IIL regime (Table 4). For instance, the Kenyan Government commits to reviewing ‘current trade and investment promotion agreements and bring them into compliance with the Constitution and international human rights standards to ensure that they are not used to facilitate illicit financial flows and tax evasion by businesses’.Footnote ⁸⁰

Table 4. Are there any references to IIAs/ISDS/Investment contracts?

In this context, only ten NAPs refer to the UNGP 9, while the remaining 26 NAPs do not refer to the Principle (Table 5). In its second NAP, the Italian Government, for the realization of the UNGP 9, commits to ‘[s]trengthen support, at international and European level, for the promotion and inclusion of social and environmental sustainability clauses in international and trade and investment treaties’.Footnote ⁸¹

Table 5. Are there any references to UNGP9?

4.2.3 Vulnerability issues

When looking at an inclusive range of vulnerability issues (Table 6), we observe that the number of direct references to human rights included in policies related to foreign investments is the highest, as 35 NAPs include such references. This is followed by the number of NAPs referring to environment, sustainable development, CSR, labour rights, transparency, indigenous rights, compliance with domestic laws, states’ right to regulate, anti-corruption, payment of taxes, corporate governance and asymmetrical structure of the ISDS. As a general observation, this graph demonstrates that, while it is generally acknowledged that foreign investments may influence a variety of human rights, other issues not strictly associated with the protection of HRs, such as corporate governance, taxation or indigenous rights have a less prominent role in investment policies in NAPs.

Table 6. Vulnerability issues included in the policies on foreign investments

4.2.4 UNGPs pillars

To clarify under which pillar of the UNGPs these policies are found, in 31 out of the 36 NAPs, these policies are found only under Pillar 1 of UNGPs on the state duty to protect human rights (Table 7). In three NAPs, they are found only under the Pillar 2 on corporate responsibility to respect. While one NAP contains policies for foreign investments under Pillars 1 and 3, such policies can be found under every pillar in only one NAP. To illustrate, as an exemplary policy found in the NAPs, Thai NAP states that, in relation to Pillar 2 of the UNGPs, ‘[t]o be transparent, state enterprises and the business sector, both for domestic investment and cross border investment, must disclose information about their projects to the public, … both before, during and after the project implementation’.Footnote ⁸² Nevertheless, this is an isolated instance where investors are directly addressed by the policy. In most cases, it is the governments, various ministries, or state organs which are targeted in these policies on foreign investments and burdened with certain tasks, whereas foreign investors are literally left out and not deemed among the responsible actors. In an overwhelming majority of these NAPs, foreign investment policies are found only as corresponding to Pillar 1 on state duty to protect. These policies may concern, among others, advocating for the inclusion of human rights-related provisions in regional and bilateral investment agreements, supporting human rights impact assessments during trade and investment agreement negotiations, and when monitoring their implementation or establishing guidelines for and creating awareness among investors.

Table 7. Under which pillars of the UNGPs can these policies be found?

4.2.5 Addressees of the policies

As a corollary of the nearly exclusive focus on the first pillar, in almost all NAPs, the policies concern either (federal) governments alone or together with some other ministries such as foreign affairs, trade, economy, industry, finance, and employment. In many NAPs, there are also statements and policies on foreign investment targeting various regulatory bodies and departments. Only in a few NAPs, there are provisions mentioning foreign investors and business enterprises specifically, and expectations from them are made relatively more clearly. This is yet another indicator in NAPs of the recognition of the almost sole responsibility of public actors such as governments, ministries and state organs in matters relating to foreign investments and human rights.

4.2.6 References to human rights law sources

Concerning the international legal sources mentioned in these policies (Table 8), it must first be noted that ten NAPs do not reference any source of international human rights law. By far, the foreign investment policies found in the NAPs either refer only to soft law sources and voluntary guidelines or principles or to international conventions but in a highly ambiguous manner. For instance, in its NAP, Czechia commits to ‘take into account not only economic interests, but also the issues of sustainable development and human rights protection by referencing respect for human rights and for the principles of corporate social responsibility, and/or the principles of sustainable development’ in investment agreement negotiations.Footnote ⁸³ Yet, there is no further clarification on what is understood of human rights or what these principles denote. Among the soft law sources mentioned in the NAPs are OECD Guidelines for MNEs, Sustainable Development Goals (SDGs), UN Global Compact, OECD Declaration on Investment and MNEs, and UN Principles on Responsible Investment and Responsible Contracts. In very few NAPs, more specific international legal sources are mentioned. For instance, as an action taken in relation to foreign investments, Slovenian NAP states that, referring to the EU Directive 2014/95, the obligation of non-financial reporting for large corporations was introduced.Footnote ⁸⁴ In the French NAP, as an action concerning the country’s trade and investment agreements, the government commits to ‘[m]onitor compliance with the recommendations issued by the Committee on Economic, Social and Cultural Rights in its opinion of 24 June 2016’ in its concluding observations on the periodic report of the country.Footnote ⁸⁵

Table 8. Some references to international legal sources

4.2.7 Degree of normativity and policy coherence

While the results of the analysis based on the above criteria show a mixed picture concerning the scope and normativity of the foreign investment policies in NAPs, an assessment of the policies based on the last criterion on the substance and language employed by the NAPs helps to further clarify some of the results. On the one hand, there may be policies in some NAPs which go beyond not engaging with the issues of foreign investment in the context of BHR at all or just expressing extremely limited and ambiguous commitments to bring human rights considerations into the realm of foreign investments. To illustrate, several NAPs distinguish between sustainable and unsustainable investments and mention policies supporting or incentivizing the former. For example, the previous Colombian NAP stresses that one of government’s priorities is the announcement and implementation of not just any investment, but ‘socially responsible investment contributing to the regional development; minimizing the adverse environmental and community effects, under the efficacy and transparency principles’.Footnote ⁸⁶ Similarly in the Pakistani NAP, one of the proposed actions concerning the UNGP 9 is to ‘give preference to businesses that demonstrate actions taken to meet their human rights obligations’.Footnote ⁸⁷ Furthermore, a certain number of NAPs also mention human rights impact assessment and/or human rights due diligence in their foreign investment policies. In the Belgian NAP, it is stated that

[t]he Brussels Region will ensure that a Human Rights Impact Assessment (HRIA) has been carried out before each ratification of investment and trade agreements and has not detected any major negative impact on the respect, protection and the realization of human rights in third countries.Footnote ⁸⁸

On the other hand, there are, however, other, much more numerous indicators pointing to the opposite direction. To start with, while a large number of NAPs stress the importance of reviewing the existing investment policies or adopting new ones in conformity with human rights law, the nature of the commitments is not expressed in concrete and strict terms. For instance, in its NAP, the Spanish Government states that it

will promote the inclusion of references to the respect of human rights in agreements on trade, investment or other related business activities signed by Spain that affect the scope of the Guiding Principles. Likewise, the Government will promote the inclusion of such references in the agreements entered into by the European Union with third-party States.Footnote ⁸⁹

However, no detail is provided in the NAP as to, for example, how the Government will realize this action, how these references will be formulated or what kinds of activities it will take at the EU level. Based on the wording alone, it is difficult to imagine concrete actions the Spanish Government has planned to realize the policy.

Several NAPs contain general aspirational statements with no specific corresponding commitments to realize those statements. To illustrate, even though the Peruvian NAP asserts the implementation of measures to gradually close the coherence gaps in the country’s public policies in relation to the international framework for, among others, sustainable investment as the main objective of the development of the NAP, there are no actions stated in the plan to achieve this objective.Footnote ⁹⁰

While some NAPs indicate a specific foreign investment-related problem and a corresponding action indicating that country-specific considerations have been made in the NAP process, such problems are often formulated in ambiguous terms, or they are just referred to but not elaborated upon. In the recent Dutch NAP, a planned action in relation to trade and investment agreements is ‘to strive to ensure that negotiations maintain the generous character of a new Generalised Scheme of Preferences (GSP) and strengthen the GSP provisions with a social, labour and climate focus’.Footnote ⁹¹ While, it is good that such a reference is made to a very specific instrument, there is no elaboration on how to realize the policy.

A considerable number of NAPs contain mostly generic and highly ambiguous human rights commitments in their policies on foreign investments. In general, such policies constitute the majority of the policies on foreign investments found in the NAPs. For instance, in relation to UNGP 9, Italy commits to ‘endeavour at the international, bilateral and multilateral level to identify effective solutions to enhance the protection of human rights’.Footnote ⁹² Similarly, it is stated in the Norwegian NAP that the government commits to ‘[s]eek to ensure that provisions on respect for human rights, including fundamental workers’ rights, and the environment are included in bilateral free trade and investment agreements’ without any further elaboration.Footnote ⁹³

Lastly, the coherence in foreign investment policies across governmental bodies does not appear frequently in the NAPs. As mentioned earlier, policy coherence in BHR issues is one of the fundamental objectives of the NAPs. Yet, such commitments for enhanced policy coherence concerning matters of foreign investments and human rights between different state bodies are limited in number and clarity. Among the several NAPs touching upon the issue, the Swiss NAPs articulate consistency between international economic agreements and human rights protection as a measure concerning the UNGP 9 and state that ‘[i]n the interests of policy coherence, Switzerland also advocates the inclusion of consistency clauses when negotiating investment protection agreements’.Footnote ⁹⁴

5. The (not yet fully unleashed) potential of NAPs

Viewed through the lens of vulnerability theory and LPE, an examination of states’ responsiveness, as evidenced in their NAPs, can provide valuable insights into the role states play in either reshaping or perpetuating existing power dynamics that favour foreign investors over other stakeholders impacted by foreign investments. The analysis of this responsiveness does not yield a straightforward depiction. While numerous states articulating NAPs do exhibit some level of responsiveness in line with the vulnerability theory, the aforementioned and fundamental power imbalances remain somewhat unaddressed.

Normatively speaking, a state to be responsive should at least acknowledge the relationship between human rights and foreign investment and recognize that foreign investments can potentially endanger the enjoyment of human rights severely in their host countries. Looking at how this acknowledgement manifests itself in the NAPs, there is some, yet limited, recognition of the nexus between human rights and international investments in the foreign investment policies articulated therein. On the one hand, the majority of NAPs do contain policies and planned actions on foreign investment regulation, thus acknowledging the importance of IIAs, investment disputes, and contracts in BHR context. Various aspects of human rights are mentioned through references to a range of human rights-related issues. For some more advanced NAPs, this is visible, for instance, in policies emphasizing and advocating for human rights impact assessments and the execution of human rights due diligence in the context of foreign investments. Similarly, policies distinguishing between sustainable and unsustainable investments suggest that foreign investments may not inherently contribute to sustainable development and can, in fact, have adverse effects, thereby acknowledging the potential impact of foreign investments on human rights. On the other hand, most of these references are often very broadly and vaguely formulated. Additionally, the vast majority of foreign investment policies relate to Pillar 1 of the UNGPs and do not touch upon Pillar 2 explicitly. In this sense, with the exception of certain NAPs that prescribe policies on HRDD or HRIA,Footnote ⁹⁵ there is a glaring absence of policies across all NAPs mandating human rights obligations on foreign investors. NAPs tend to stress the role of states for the protection of human rights from adverse impacts of foreign investments yet absolve foreign investors of any responsibility. Thus, stopping short of taking what is possibly the most obvious action to take in a BHR/IIL vulnerability framework: impose investors’ obligations. In the context of state duties, the shallow references to various international human rights law sources are often not helpful to concretize these policies. References to predominantly non-binding international legal sources within these policies imply a lack of consideration for the coherence between state obligations regarding human rights and policies governing foreign investments in the NAPs. As such, in most cases, the way these policies are formulated makes it rather impossible to imagine concrete ways in which NAPs can effectively introduce human rights considerations into regulation of foreign investments. In fact, while acknowledging the potential for harmful impact, NAPs do not go further in exposing what actually enables the harm, and extremely rarely, if ever, touch upon more structural aspects of investment regime such as its asymmetrical structure or taxation concerning foreign investments. This rather peripheral engagement with the relationship between foreign investment and human rights seemingly refuses to challenge the very construct embedding investment operations. The regulatory framework already mentioned above allows investors to wield features of both structural and institutional powers that remain unquestioned. Scholars have already highlighted how MNEs are increasingly assuming roles akin to ‘law-makers’,Footnote ⁹⁶ reshaping public policies, and establishing legal enclaves where the influence of territorial states is minimized. In that sense, NAPs foreign investment policies demonstrate limited elaboration and rather formally insist on state duties, which are in fact purposefully shrunk in the legal configuration. Few exceptional NAPs aside,Footnote ⁹⁷ it is difficult to envisage how these current policies can fully realize their potential. Thus, while some results could indicate an increased understanding that foreign investments should constitute a part of states’ BHR policies, materialization of this understanding in NAPs is limited and tends to remain under-articulated.

A responsive state should also value inclusiveness in its investment laws and policies, meaning that it ensures a higher degree of transparency and actively engages with various stakeholders in devising and revising its laws and policies on foreign investments. This should be matched by opening up avenues for access to remedy for peoples whose rights have been violated by foreign investments. In this sense, it should be noted that the majority of the NAPs were drafted after stakeholder engagement processes.Footnote ⁹⁸ How and to what extent, if at all, inputs by different stakeholders touched upon foreign investment matters, were taken into consideration or included in the NAPs remains mostly unknown and difficult to determine. In fact, this type of processes might lend themselves to practices of multistakeholderism and corporate hijacking of the public interest in policy making. Nevertheless, there were, at least officially, some procedures to consult with various stakeholders in most states with NAPs. Yet, when it comes to policies on ensuring access to remedy of affected populations in cases of human rights violations in the context of foreign investments, it is striking that these almost never feature in the NAPs. This, once again, removes one of the most actionable options to reverse the power imbalance of the investment relation. Overwhelmingly, NAPs foreign investment policies touch upon Pillar 1 of the UNGPs on the state duty to protect. Yet, policies under Pillar 3 are extremely rare, thus indicating an exclusionary approach towards investment-affected people. This is exacerbated by the fact that most NAPs do not prescribe effective monitoring and follow-up mechanisms on the progress in the realization of the policies contained therein.

Last, a responsive state should demonstrate a notable level of readiness to revise and adapt its legal and policy frameworks on foreign investments to alter those legal, political, social, and economic circumstances that can, if ignored, lead to harms to the enjoyment of human rights and aggravate vulnerabilities of certain groups of people and existing inequalities. Regarding the preparedness of states to modify their legal and policy frameworks, particularly among high-income states, a discernible inclination to adopt NAPs and incorporate foreign investment policies therein is evident. Notably, capital-exporting nations that wield substantial influence as major sources of global foreign investments,Footnote ⁹⁹ such as the United States, EU Member States, and Japan, have demonstrated a proactive stance by drafting NAPs that do encompass policies pertaining to foreign investment. It is worth emphasizing that several developed states embarked on the formulation of their NAPs shortly after the endorsement by the UNGPs and Prof. Ruggie, with some even releasing multiple iterations after revising and updating their initial plans. Regardless of the underlying motivations, the decision of these pivotal actors in the foreign investment arena to adopt NAPs and include the formulation of policies addressing foreign investment, can be construed as positive indicators showcasing certain states’ willingness to adapt their legal and policy framework. Yet, a closer look at the quality of these commitments – as indicated above – has shown an obvious absence of concrete and actionable policy options, relegating most states’ readiness to actually revise and adapt their legal/policy framework to relatively general and open statements of intent. It may be true that few NAPs, such as the ones by Taiwan and Thailand, stand out and exhibit a considerable level of state responsiveness under the vulnerability theory. However, they are very limited in number and especially the NAPs of developed capital-exporting countries often demonstrate a rather bounded level of responsiveness when it comes to policies on foreign investment, if one goes beyond the mere inclusion of such policies and general references to human rights.

The preceding analysis suggests the difficulty in arriving at final and generalizable conclusions regarding the overall responsiveness of states in the context of NAPs. Nevertheless, the absence of substantive recognition of the interplay between foreign investment and human rights, in terms for example of investors’ obligations, coupled with restricted inclusiveness, significantly hampers the ability of these instruments from fostering the resilience of individuals adversely impacted by foreign investments. As such, NAPs struggle to mount a credible challenge to the prevailing power structures that excessively shield the interests of foreign investors.

Yet, this does not seem to be an inherent feature of NAPs. In fact, these tools do seem to have the potential to reflect high levels of state responsiveness concerning foreign investment policies. As soft-law governance instruments, NAPs can provide states with a relatively easier means to recalibrate the material imbalances of powers created by legal institutions and revert the ‘self-imposed impotence of the state’. Albeit spurious, examples of how such potential might translate into practice do exist. For instance, numerous EU Member State NAPs include policies aimed at assuring or promoting new regional investment and free trade agreements that are more in line with sustainable development and international human rights norms.Footnote ¹⁰⁰ While it is difficult to establish whether there is a direct causal relationship, these action points have materialized in the model BIT clauses published by the European Commission in 2023, which consolidate many references to human rights, sustainable development, responsible business conduct and the UNGPs, though not without criticism.Footnote ¹⁰¹ Similarly, the revised Swiss NAP identifies references to CSR in IIAs as an indicator for improving consistency between Swiss trade and investment agreements and respect for human rights.Footnote ¹⁰² In line with this, in its last concluded BIT with Indonesia in 2022, unlike its previous BITs, there is a separate provision on CSR.Footnote ¹⁰³ The NAP of Thailand has followed a similar trend. It committed, among others, to promote investments complying with domestic laws and regulations aimed at protecting public interests such as basic human rights, environment and public health.Footnote ¹⁰⁴ Along this line, Thailand drafted a taxonomy system to support sustainable investment in compliance with its climate policy and international obligations concerning climate change mitigation objectives.Footnote ¹⁰⁵ While this certainly cannot lead to generalizable conclusions on the implementation of NAPs, it is fair to assert that there are instances where policies on foreign investments in NAPs have harnessed their potential and materialized into actions.

Short of actual implementation, NAPs reflecting high levels of state responsiveness concerning foreign investment policies can also have important discursive effects, normalizing a reality where BHR and IIL pertain to the same sphere possibly contributing to broader structural changes in the regime. As instruments implementing UNGPs, responsive NAPs would articulate the understanding of states that the two realms are in fact one and should be addressed coherently and systematically. The idea of interconnectedness is already strongly visible and much more explicit at the level of trade agreements, where the connection with the realization of the UNGPs is made explicit and – at least from informal conversations with some policy makers – it is consciously sought in the drafting process, with multiple ministries or departments cooperating. A similar dynamic may very well emerge for investment agreements.

The discourse focused on the need to alter the power dynamics engrained in the investment regime is already in motion, and some changes, albeit incremental, are evident. For years, there have been calls to strengthen the connections between the international investment regime and human rights; to increase transparency and involve local communities; and to reform the ISDS system and older generation investment agreements. Slowly, we start to see more human rights references both in treaties and awards;Footnote ¹⁰⁶ change of institutional rules to allow third-party participation;Footnote ¹⁰⁷ termination of some old investment agreements and an ongoing process of ISDS reform at different fora.Footnote ¹⁰⁸ Discourse needs to shift further in order for the well-established investment system to undergo a fundamental transformation. There is no one magic bullet to cause a tectonic shift in the investment regulation landscape towards more state responsibility and responsiveness. While NAPs alone cannot achieve much, they could constitute one of the multiple, complementary sites for discursive change and contribute to a structural shift toward substantive degrees of state responsiveness within the investment regime. In fact, this is also the expectation emerged during informal talks with government officials involved in the drafting process of their respective countries. NAPs are portrayed as an authoritative document to refer to, both to legitimize the state in taking certain (binding) actions and for civil society to use it as a basis to push for further change. As such, NAPs and its revision processes are perceived by the same officials as a way for certain topics to stay on the agenda and keep pressure on the state.