Human rights deficit in sovereign loan contracts

While human rights are indivisible and apply to all without distinction, there is a clear fragmentation in their application to sovereign loan contracts. This inconsistency in the international human rights regime is equally discernible in the field of international foreign investment law. In the realm of sovereign loan agreements, states are denied party autonomy, which is a critical and sine qua non component of the law of contract and the law of treaties. This in turn renders loan agreements, which are typically drafted as private contracts and not as treaties, superior to any conflicting treaty or customary obligations incumbent on states, including their constitutional requirements. In this manner, the private agreement overrides the human rights obligations of states and because relevant disputes are to be submitted to arbitration or other judicial forums that are only permitted to apply the provisions of the agreement (and by extension ignore treaty, customary and constitutional law), the strict counter-human rights provisions of the agreement will always prevail. This inconsistency between human rights and sovereign loan agreements is no doubt a distinct anomaly in international law and needs to be addressed at a multilateral level.