Dongria Kondhs who voted against bauxite mining in the Niyamgiri hills of Odisha.   | Photo Credit: A. Manikanta Kumar

Even as bilateral investment treaties are strengthened, domestic legislation must be implemented

Recently, Ras Al Khaimah Investment Authority (RAKIA), an Emirati investor, initiated an investment treaty arbitration (ITA) claim against India under the India-UAE Bilateral Investment Treaty (BIT), seeking compensation of $44.71 million. This claim arose after a memorandum of understanding (MoU) between Andhra Pradesh and RAKIA to supply bauxite to Anrak Aluminum Limited, in which RAKIA has 13% shareholding, was cancelled, allegedly due to the concerns of the tribal population in those areas.

Similarly, in 2014, Bear Creek Mining Corporation initiated an ITA against Peru under the investment chapter of the Canada-Peru Free Trade Agreement, claiming violation of the investment obligations due to the withdrawal of mining concessions, allegedly as a result of the protests by indigenous peoples. These cases present an opportunity to evaluate the impact of the obligations of the host states under BITs on the rights of the tribal people.

Protection under law

The United Nations Declaration on the Rights of Indigenous People (UNDRIP), adopted in 2007, for which India voted, recognises among other things indigenous peoples’ rights to self-determination, autonomy or self-governance, and their right against forcible displacement and relocation from their lands or territories without free, prior and informed consent. In addition to the UNDRIP, there is the International Labour Organisation (ILO) Convention concerning Indigenous and Tribal Peoples, 1989 which is based on the “respect for the cultures and ways of life of indigenous peoples” and recognises their “right to land and natural resources and to define their own priorities for development.” India is not a party to this, but it is a party to the ILO Convention concerning the Protection and Integration of Indigenous and Other Tribal and Semi-Tribal Populations in Independent Countries, 1957 which is outdated and closed for ratification.

At the domestic level, the Constitution provides autonomy to tribal areas in matters of governance under the Fifth and Sixth Schedules, which is further fortified by the Samatha v. State of Andhra Pradesh & Ors (1997) judgment where the Supreme Court declared that the transfer of tribal land to private parties for mining was null and void under the Fifth Schedule. The framework for protection of the rights of tribal and indigenous people is further strengthened by the Recognition of Forest Rights Act, 2006 which protects the individual and community rights of tribal people in forest areas and their right to free and prior informed consent in event of their displacement and resettlement.

Investment promotion

While the legislation for the protection of the rights of tribal people are in place, they are regularly flouted as has been highlighted by the Xaxa Committee report of 2014. Instead of ensuring that tribals are not ousted from the land to which they are historically and culturally connected, the state becomes more concerned about fulfilling contractual obligations towards the private investor. This means that constitutional and legal principles are discarded. This is evidenced by the increasing number of MoUs being signed by natural resources-endowed states with investors for facilitation of developmental projects. For instance, Chhattisgarh and Jharkhand have reportedly entered into 121 and 74 such MoUs, respectively, with various private players as of 2014. All this materially alters the role of the state vis-à-vis the tribal people as the state prefers economic expediency at the cost of the rights of tribal people.

For economic development, states invite investments not only from domestic investors but also from foreign players whose interests are not only protected under domestic laws but also under the BITs. The purpose of BITs is to give protection to foreign investors while imposing certain obligations on the host state. For instance, if a development project involving a foreign investor in tribal areas leading to acquisition of tribal land is met with protest, there may be two possible scenarios. One, the State government due to socio-legal and political pressures may yield to the demand of the tribal people to the detriment of the foreign investor, which is what has happened in the case of RAKIA. Two, assuming that the government continues with the project, the judiciary may order the cancellation of permits given to the foreign investor, which is what happened in the case of Vedanta in 2013 (Orrisa Mining Corporation Ltd v. MoEF and Ors). In both cases, foreign investors may drag India to ITA claiming violation of obligations under the BIT, such as fair and equitable treatment or indirect expropriation. This perceived threat of ITA against the state may compel the latter to refrain from implementing tribal rights in the development project area.

Conflicting interests

A recent report of the UN Special Rapporteur on the Rights of Indigenous Peoples recognises three main reasons for the serious impact that foreign investments have on the rights of indigenous people: failure to adequately address human rights issues of tribal people in BITs; the perceived threat of ITA for enforcement of investor protection; and exclusion of indigenous people from the policymaking process.

What then are the possible options available to India to tackle these issues? First, none of the 80-plus BITs signed by India contains even a single provision on the rights of tribals. Even the 2015 model Indian BIT does not contain any such provision. Thus, to avoid ITA cases by foreign investors, the government’s approach should be to include provisions relating to the protection of indigenous people in BITs. There are many examples from around the world: Canada, in many of its BITs, has several exceptions to protect the rights of indigenous people. The Trans-Pacific Partnership agreement also incorporates the rights of the Maoris from New Zealand.

Since India is going to renegotiate its existing BITs, it should create a special exception for taking regulatory measures for protecting the rights of tribal people, in which case it should have a textual basis in the BITs to derogate from investment protection obligations under BITs.

Second, the strengthening of BITs must go hand in hand with the implementation of domestic legislations for the protection of the rights of tribals, where the state does not consider tribals as impediments in the development process. Third, as far as possible, tribal people should be given representation even in investment policymaking.

Pushkar Anand and Amit Kumar Sinha are Assistant Professors at the College of Legal Studies, University of Petroleum and Energy Studies, Dehradun