The Right of States to Regulate in International Investment Law

International Arbitration Law Library

The Right of States to Regulate in International Investment Law addresses the balance between the host state’s right to regulate and the investor’s right to obtain a fair and equitable treatment (FET) standard under international investment law. Due to the recent ongoing expansion of public interest issues worldwide, the state’s right to regulate has been recaptured as a prominent concept in international investment law. The FET’s standard provision in the text of an international investment agreement (IIA) has become a detailed clause clarifying the specific obligations of a state towards an investor under the FET standard. However, striking the right balance in these new treaty formulations has proved to be challenging. This book greatly clarifies the field by offering in-depth analysis of the application of the state’s right to regulate in relation to FET standard provisions in IIAs and to decisions by arbitral tribunals in FET cases.

What’s in this book:

Recognising that the role of tribunals is to balance the state’s public interests and the interests of an investor when interpreting and applying the FET standard, the author pursues such seminal issues and topics as the following:

• the legitimacy of the objective of the state’s measure;
• obligations and responsibilities of investors towards a host state;
• the nature and impact of a change to a national regulatory framework;
• special economic and sociopolitical circumstances in a host state; and
• due diligence and risk assessment as a condition for the protection of an investor’s legitimate expectations.

Multiple IIAs concluded by OECD Member States, as well by Russia and China, and the prominent investment law cases on the FET standard are examined in detail. The analysis pays particular attention to how investment jurisprudence in FET cases has been reflected in such new IIAs as the Comprehensive Economic and Trade Agreement (CETA) between the European Union (EU) and Canada, the EU-Vietnam FTA and the EU-Singapore FTA. These case studies demonstrate the evolution of the IIAs’ FET standard provisions and how they balance the application of the FET standard and the state’s right to regulate. Suggestions are provided for drafting formulations of the FET standard that can contribute to achieving such a balance. Case commentary and other secondary literature are referred to throughout. An annex includes texts of selected bilateral and regional investment treaties.

How this will help you:

In the clear light it sheds on the legal conditions under which states may regulate in the public interest and its contribution to the reforms that are currently taking place in the field of international investment law, this book constitutes an exemplary framework to evaluate investment decisions on the FET standard and the right to regulate. It will be extremely useful for practitioners who work on investment cases, policymakers involved in negotiating and drafting of IIAs, policy advisors of governmental and non-governmental organisations and academics in international investment law.