Public Health Regulation in Investor-State Arbitration: A Case Analysis

24 Pages Posted: 9 Jul 2013

See all articles by Peng Wang

Peng Wang

School of Law, Xian Jiaotong University

Date Written: July 8, 2013

Abstract

Is a State free to adopt measures to protect public interest in general, and the public health of its citizens in particular? If so, what are the limits, if any, to such regulatory powers? Are investment treaties compatible with states' obligations to protect public health? Whether or under what condition could investor-state arbitration work as a Governance Mechanism to safeguard public interests? This article addresses these questions by focusing on the clash between the regulatory autonomy of host state over public health issue and international investment governance in international investment law system.

As a relative self-contained obligations system, investment treaties specify the most fundamental rights vested to foreign investors and use relative broad terms to protect hardly-to-be-specified ex ante rights, such as Fair and Equitable Treatment and Full Protection and Security. However, even the most fundamental concepts in BIT is far from clear delimitation, such as Investment. Too overwhelming treaty stipulations encompass nearly non-exceptional property rights protection guarantee which may contradict the public policy maneuvers of host state government.

Under public health regulation disputes, international tribunal shall strike a dedicated balance between protection of investor’s rights in BIT and safeguard of public interest in host state, considering procedural requirements, namely due procedure and substantive requirements, namely necessity doctrine (including scientific basis, severity of regulatory measures and reasonableness). Economic deconstruction of marginal benefit and marginal cost of host state government’s measures will provide constructive guidance to determine whether or not host state government has violated proportionate principle.

State has the inherent sovereign power to regulate public interest related matter, while with broad treaty terms, compulsory jurisdiction of International tribunal, and relatively well recognition and enforcement of international awards, Investor-state arbitration can be perceived as a governance mechanism of public interest of host state. However, how to coordinate the two governance mechanisms and how to delegate and delimit discretion of international tribunals as a governance mechanism remain inconclusive and call for further elaborations.

Keywords: Public Health, Public Policy, Public Interest, Governance Mechanism, Investor-State Arbitration, Regulation, Proportionate principle. Clash of Governance Paradigm, Balanced Approach, Economic Analysis, Proportionate Principle, Necessity, Phillip Morris v Uruguay, Phillip Morris v Australia

Suggested Citation

Wang, Peng, Public Health Regulation in Investor-State Arbitration: A Case Analysis (July 8, 2013). Available at SSRN: https://ssrn.com/abstract=2290890 or http://dx.doi.org/10.2139/ssrn.2290890

Peng Wang (Contact Author)

School of Law, Xian Jiaotong University ( email )

28 Xianning West Road
Xi'an, Shaanxi 710049
China
029-82664484 (Phone)

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