Urbaser v. Argentina (ICSID, 2016): A Turning-Point Award on Corporate Human Rights Responsibility
“Can corporations violate human rights?”— Urbaser is the first ISDS case in which a tribunal squarely engaged with this question.
Hello everyone! When studying international investment arbitration (ISDS), the usual suspects are jurisdiction, investment, expropriation, and FET. But Urbaser v. Argentina opened an entirely different dimension. Arising out of the privatization of water services in Argentina, this dispute went beyond contracts and tariffs to ask, “Can an investor violate human rights?” and “Do investors bear duties to protect human rights?”—bringing international economic law and international human rights law into direct conversation before an arbitral tribunal. In STEP 1, we’ll cover the background you need to understand this landmark award and preview the core issues we’ll explore next.
Table of Contents
Case Overview: Privatized Water Services and the Starting Point of the Dispute
The Urbaser v. Argentina dispute began with Argentina’s privatization of water and wastewater services in the Buenos Aires metropolitan area. A Spanish consortium, Urbaser, received the concession and undertook tariff policies, facility upgrades, and investment obligations. When Argentina’s economic crisis hit, the government froze tariffs, and Urbaser struggled to meet its investment obligations and keep the project viable. The parties traded accusations: was this excessive state interference, or the investor’s failure to perform? Urbaser filed an ICSID claim alleging BIT breaches. What makes the case distinctive is that it moved beyond tariff and contract issues: the tribunal directly confronted whether a corporation can violate human rights—an issue not previously addressed in ISDS at this depth.
The Parties’ Positions: Investor Protection vs. Public-Service Obligations
Urbaser argued that the tariff freeze and unilateral restructuring of the concession effectively altered the deal—classic BIT breaches such as FET violations, unfair treatment, and indirect expropriation. Argentina countered that the investor failed to meet infrastructure-upgrade obligations, harming public health—and thus “violated human rights.” The table below contrasts the core arguments.
| Party | Key Argument |
|---|---|
| Urbaser (Investor) | Tariff freeze effectively altered the concession → FET breach, expropriation |
| Argentina (State) | Investor failed to improve water infrastructure → triggered human rights concerns for residents |
Corporate Human Rights Responsibility? The Tribunal’s Historic Turn
The tribunal’s most consequential move was to state that “corporations can bear responsibilities to respect human rights.” This was virtually unprecedented in ISDS and engaged international human rights law—particularly UN human rights covenants—attributing relevance to investors. Although the tribunal ultimately did not find that Urbaser violated human rights, it left a clear statement that companies can have human rights responsibilities—an ISDS milestone.
- Held that corporations can be “duty-bearers” under international human rights norms
- However, Urbaser’s conduct did not amount to a direct human rights violation
- Widely viewed as the first robust integration of human rights duties into ISDS reasoning
Liability Findings and the Scope of Human Rights Duties
A key takeaway is the gap between the tribunal’s historic recognition of corporate human rights responsibilities and its refusal to impose liability here. In assessing Argentina’s counterclaim, the tribunal characterized corporate responsibilities primarily as negative duties—obligations not to infringe—rather than positive obligations like those borne by states. Thus, corporate liability would require conduct amounting to an active violation. The tribunal concluded Urbaser’s acts did not reach that threshold and dismissed Argentina’s counterclaim. This line has since shaped debates on how far ISDS can go in attributing human rights responsibility to investors.
Critiques of Urbaser and Ongoing Academic Debates
Urbaser is praised for recognizing corporate human rights responsibilities, yet criticized for stopping short of concrete liability. Scholars also debate whether ISDS is the proper forum for human rights adjudication. The table summarizes major critiques.
| Critique | Explanation |
|---|---|
| Limited effectiveness of corporate human rights responsibility | Acknowledges duties but denies liability → largely symbolic impact |
| ISDS forum constraints | Arbitration is designed for investor–state disputes → limited human rights expertise |
| Ambiguity in defining corporate human rights duties | Unclear distinction from states’ positive duties causes confusion |
Practical Takeaways for Corporations, States, and Practitioners
Urbaser aligns with the era of ESG and corporate human rights due diligence. In practice, it signals policy and strategy lessons for both investors and host states. Key takeaways:
- Corporations in public-service concessions must manage human rights risks as core compliance—not peripheral CSR.
- States can frame counterclaims by invoking human rights arguments to hold investors accountable.
- Expect increasing salience of ESG and human rights in ISDS pleadings and awards.
Frequently Asked Questions (FAQ)
It is the first ISDS award to recognize that corporations can bear human rights responsibilities.
No. While recognizing the principle of corporate responsibilities, the tribunal held that Urbaser did not actively infringe human rights.
The tribunal declined to impose state-like positive duties on companies. It emphasized primarily negative duties—obligations not to infringe.
Urbaser’s alleged nonperformance did not amount to the kind of direct, active conduct constituting a human rights violation.
Yes. It underscores the need for human-rights and ESG risk management in public-service and infrastructure concessions.
Direct liability findings remain rare, but tribunals increasingly engage human rights arguments, indicating gradual expansion in relevance.
Conclusion: A New Reference Point Left by Urbaser
Urbaser v. Argentina created a rare moment in ISDS: a tribunal formally acknowledged that corporations can infringe human rights and may bear corresponding responsibilities. Although it did not impose liability here, the award helped bring ESG, corporate human rights responsibility, and the social dimensions of public services squarely into ISDS debates. Each reread of the case shows how quickly international economic law evolves beyond the traditional investor–state frame. Keep this award in mind not just as a dispute, but as a waypoint where legal regimes intersect. As ESG and public-service disputes grow, Urbaser’s significance will only increase. If you’d like comparative case studies or trend mapping after Urbaser, just say the word!
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