UCLA Journal of International Law and Foreign Affairs

The 1990s saw the unprecedented emergence of corporate engagement in national water systems. Before 1990, international funding went exclusively to public entities. By 2001, ninety-three countries had “private sector involvement” in their water systems. This shift, supported by international business and trade law, created a regulatory framework that legally protected the rights of corporations involved in the water sector. The regulatory framework that protected the populations that needed access to clean water was relatively ineffectual, and would be until the human right to water was officially recognized in 2003 by the Committee on Economic, Social, and Cultural Rights. Thelogic of market efficiency, brought into international law and finance through the Washington consensus, came to dominate thinking about international water law. This project of privatization was enforced by intergovernmental organizations. The World Bank, from 1998 to 2003 and 2004 to 2008, required the conversion of public systems to private as a condition for the majority of loans it disbursed related to water projects.

Yet, privatization failed to deliver on several key metrics. First, the main funding for services was from individual service fees and public subsidies, and therefore failed to generate new sources of capital. Companies increased service fees substantially, leaving the poorest without access. The services were no more efficient that public services, and often resulted in deterioration of quality. Finally, privatization reduced accountability to the public, often to the detriment of the contracting state. Corporations did not feel that they were obligated to meet human rights standards in water delivery, and are rarely held accountable.

However, in 2017, an investment arbitration panel at the International Center for Settlement of Investment Disputes recognized, for the first time, a human rights related counterclaim from a state against an investor. In Urbaser v. Argentina, Argentina argued that the water company failed to invest in ways that were sufficient to meet minimum human rights standards. While the claim ultimately failed, it was the first time ICSID found jurisdiction over a human rights based claim against an investor.

This paper will explore the available legal avenues for holding corporations accountable when they violate minimum standards in a human right to water framework. It will especially focus on the emergence and potential of arbitration as a vehicle for accountability, and the drawbacks of this approach.