The Role of Investment Laws in Strengthening Corporate Social Responsibility: Ethiopia’s Investment Regime in Focus

Abstract

This article investigates the existing investment treaty practice with regard to the respect and incorporation of the social dimension (Corporate Social Responsibility, CSR) of the investments. It is identified that the concept of CSR got momentum at global level since 1960’s under different legal instruments in the form of guidelines, compacts, principles, and code of conducts. These laws are soft laws because they cannot bind the investor to abide by the standards of CSR. As a result, criticism emerged against the existing investment laws and the global community move to respect and incorporate the CSR standards to the operative body of the emerging agreements. After a long debate and challenges, International Investment Agreements (IIAs) started to respect and incorporate the CSR to their main body in different ways as the core obligation of investors and their investments in host state since 2000. IIAs are composed of various instruments which in themselves are pure investment agreements, and others are those which have investment provisions but dealing with trade or other areas of law. It is identified that there is no similarity among the emerging IIAs in a way of incorporating the CSR. Some of these IIAs impose an obligation to comply with CSR standards directly on the investor; where as the other types are imposing an indirect obligation on the investor through the instrumentality of host states. Ethiopia started to conclude BITs with other countries since 1964 and currently there are 35 BITs. Majority of these BITs have no provision which recognize CSR. Only certain BITs of the country which have concluded during 2016-2019 attempt to incorporate CSR as core obligation of investor. The investment proclamation of the country also stipulates the obligation of investors to comply with domestic laws and environmental standards. This shows that the emerging investment laws at global and Ethiopia’s levels in most cases are contributing a lot to strength and promote CSR.

Keywords: corporate social responsibility, investor, investment, business firm, investment agreements, standards, etc

DOI: 10.7176/JLPG/100-01

Publication date:August 31^st 2020