Originally from the American Review of International Arbitration

ABSTRACT

The article is an invitation to reflect on an issue that has not been brought to the attention of arbitral tribunals yet.

In countries where the legal, political, social, and cultural context is hostile towards LGBTQIA+ individuals, foreign LGBTQIA+ investors and their investments are exposed to a significant risk of being discriminated against by the host State.

While similar discriminations can affect a foreign investor’s personal life when residing in the host State, they can also result in hindering the pursuit and development of the foreign investment. As such, a host State’s discrimination against a foreign investor on the basis of sexual orientation and/or gender identity can seriously impair the foreign investor’s management, maintenance, use, enjoyment and disposal of the foreign investment.

Consequently, both the investor and the investment are subject to this discrimination. By discriminating against an LGBTQIA+ investor—and hindering, as a result, the investor from pursuing and developing the investment—the host State is in practice also discriminating against the corresponding foreign investment on the basis that it is an LGBTQIA+-owned investment.

The article will focus on identifying the legal issues that may arise if and when a foreign investor brings an FET-violation claim before an arbitral tribunal on the basis of LGBTQIA+-based discrimination. The article will also offer insights on how these issues might be addressed on the basis of existing case law, by reflecting on arguments that investors could make and counterarguments that can be resorted to by the host States.

INTRODUCTION

The central theme of this article is to assess whether foreign LGBTQIA+ investors who have been discriminated against by host States—on the basis of their sexual orientation and/or gender identity—and whose investments were consequently prejudiced and discriminated against—on the basis of the fact that they are LGBTQIA+-owned—can successfully obtain relief through international investment arbitration on the ground that such discrimination violates the fair and equitable treatment standard.

The importance of this issue can be conceptualized by drawing on the Bostock v. Clayton County decision of Supreme Court of the United States of 15 June 2020.  The author invites readers to reflect on the following set of facts, inspired by Gerald Bostock’s story.

Edward Williams (he/him/his) is a British businessman with incontestable and internationally recognized expertise in the construction industry. He is the founder and CEO of a British construction company called “UKonstruction”. On 4 August 2020, the city of Beirut was hit by an unprecedented blast which destroyed the Port of Beirut and damaged a significant part of the city. The Beirut blast was in fact the sixth largest non-nuclear explosion in human history. Devastated by the news, Williams decided to put his expertise and that of his company at the service of the reconstruction of the port of Beirut. It came to Williams’ knowledge that the Lebanese government was in fact looking for someone to “develop and operate the container terminal in Beirut port for 10 years, including plans to rebuild and expand infrastructure damaged” by the explosion. Following the bidding process, Williams and UKonstruction were awarded the concession and immediately started their operations. During the first months of work, Williams, who had moved to Beirut, received various positive performance evaluations from the Lebanese Government. Little did he know that the praises he received would shortly (and suddenly) turn into shaming.

Simply put, Williams is a man who is attracted to men. While he knew, coming to Lebanon, that the legal, political, and social context in the Middle East was generally hostile towards the LGBTQIA+ community, he learned, by word of mouth, about several secret queer haunts and queer gathering spots where LGBTQIA+ people may find a sense of community and belonging. After some hesitation, Williams mustered up the courage to visit one of these safe havens on a Friday night. On that night, and while Williams was enjoying a couple of drinks, the Lebanese police authorities conducted a no-knock raid on the bar and arrested a number of clients, including Williams, for accusations founded, inter alia, on the practice of sexual intercourse “against the order of nature” and “affront to common decency and infringement of public morality.” Shortly after government officials learned about the arrest of Williams, they decided to terminate the concession agreement between them and Williams and UKonstruction for “conduct unbecoming of its residents and investors.” The concession was later awarded to another foreign company.

Outraged by the abrupt and sudden termination of the concession, for which he has invested millions of dollars and mobilized hundreds of workers and employees, Williams turns to an international arbitration lawyer to assess his chances of obtaining relief for the prejudice he and his company suffered.