Applying the Full Protection and Security Standard of International Investment Law to Digital Assets
Journal of World Investment and Trade, Vol. 12. No. 2, pp. 225-243, 2011
30 Pages Posted: 8 Sep 2010 Last revised: 5 Apr 2015
Date Written: September 6, 2010
This article considers the possibility that digital assets of foreign investors such as websites and computer systems could be protected by the full protection and security (‘FPS’) standard common to many bilateral investment treaties. Such assets can properly be described as investments and the flexible nature of the FPS standard observed in recent arbitration practice could be extended to cover civil disturbances such as 'cyber attacks' against companies. The article considers host state liability with respect to the prevention of harm to digital assets as well as failure to enforce laws that prohibit it. The lack of governmental control over websites suggests that it would be difficult to ascribe state liability under an FPS clause, except possibly in situations of large scale internet infrastructure collapse. A duty to prosecute attacks against digital assets, while common to many jurisdictions and seen in international instruments, is inappropriate as an investment treaty claim because of difficulties in compensation. The FPS standard further appears to incorporate a degree of contextual proportionality linked to the host state’s resources and this may prevent successful claims against Developing States where many cyber attacks occur.
Keywords: foreign direct investment, cyber attacks, cyber crimes, bilateral investment treaties, arbitration, internet security
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