The Conflict between Human Rights and the Stabilization Clause in Foreign Investment Law

Including stabilization clause in the contracts and agreements concluded with foreign investors, is an incentive introduced by the host states to absorb the foreign investments. The stabilization clause in its triple varieties: freezing, economic equilibrium and hybrid clauses confirm that the new laws approved by the state would not influence the foreign investment and if it does, the government would compensate the loss. The main question here is that whether including the stabilization clause in foreign investment contracts will be consistent with the states' right to sovereignty in approving human rights principles and dynamic and evolving character of human rights? And if inconsistent, what are the methods to resolve this challenge. By employing descriptive and analytical approach, this inquiry shows that both theoretically and pragmatically, there is a notable challenge and conflict between stabilization clause and human rights obligations. The key ways to resolve this conflict are the direct insertion of human rights obligation in agreements and contracts of investment, the limitation of the domain of the stabilization clause influence, the progressive interpretation of human rights treaties, and promoting the transparency in negotiation and concluding levels of investment agreements and contracts.