Investor-State Dispute Settlement and Indigenous Rights in Conflicts

An Analysis from the Social Licence to Operate Approach

Abstract

Investor-State Dispute Settlement mechanisms (ISDS) have sparked significant discussion, particularly regarding the impact of foreign investment on non-disputant stakeholders, such as Indigenous communities. This discourse emphasises the necessity for inclusive approaches that incorporate the perspectives of vulnerable communities. While states bear responsibilities upon ratifying international treaties, foreign investors do not hold the same level of accountability, as they lack international legal personality. This gap has led to the development of international frameworks aimed at promoting responsible business practices, corporate social responsibility, and sustainable business strategies.  These voluntary standards are designed to protect the environment and uphold social, cultural, and human rights values, positioning the local community, including Indigenous people's rights, at the forefront of these discussions due to their vulnerability to the adverse effects of business activities. The notion of a "social licence to operate" (SLO) has gained importance in ensuring that corporations fulfil their ethical and social responsibilities, particularly in areas inhabited by Indigenous communities.  This study in question examines ISDS cases through the lens of international law, focusing on the requirement to adhere to SLO at the initial stage of a project. It also explores the consequences for foreign investors and host states if they fail to comply. Findings suggest that compliance with SLO ensures a positive relationship with the local community in general and particularly with Indigenous communities. The discussion emphasizes the importance of maintaining a social licence to operate in the modern business environment, not only for operational sustainability but also as a fundamental component of corporate social responsibility.  The study employs doctrinal and qualitative methodologies, drawing on both primary and secondary sources, with SLO serving as the theoretical approach to the research.