Balancing Investment Protection and the Public Interest: The Role of the Standard of Review and the Importance of Deference in Investor-State Arbitration
University of Cambridge
December 21, 2012
4 Journal of International Dispute Settlement (2013) (Forthcoming)
International investment tribunals have not yet developed a coherent approach to the standard of review in relation to disputes involving the exercise of public power by host states. In particular, tribunals have generally not approached the question of deference to host state authorities in a principled manner. Some tribunals have employed strict standards of review, resulting in state liability in respect of measures adopted to promote public welfare. However, an increasing number of tribunal decisions show a measure of deference to host states. They have done so on the basis of two key factors: in recognition of the desirability of regulatory autonomy and host state authorities’ proximity to their populations, and by taking account of authorities’ greater institutional competence and expertise. This emerging approach to deference echoes the jurisprudence of other international and supranational courts and tribunals performing similar functions. Future investment tribunals should, cognizant of the desirability of deference in certain circumstances, exercise restraint in their assessment of matters that are more appropriately the province of national authorities. Such an approach would achieve a more balanced relationship between the protection of foreign investment and host state regulatory autonomy.
Number of Pages in PDF File: 19
Keywords: Investor-state arbitration, deference, standards of review, international investment law, balancing, investment treaties, judicial review, regulatory autonomy
JEL Classification: K33, K39, K23Accepted Paper Series
Date posted: December 22, 2012 ; Last revised: December 31, 2012
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