Scope Limitation or Affirmative Defence? The Purpose and Role of Investment Treaty Exception Clauses

Federica Paddeu and Lorand Bartels (eds), Exceptions in International Law (OUP, 2018)

Society of International Economic Law (SIEL), Fifth Biennial Global Conference

11 Pages Posted: 1 Jul 2016 Last revised: 15 Jul 2018

See all articles by Caroline Henckels

Caroline Henckels

Monash University - Faculty of Law

Date Written: October 7, 2016

Abstract

Despite their increasing popularity in recently concluded investment treaties and investment chapters in comprehensive economic agreements, the structural status of exception clauses is not well understood. Inconsistent interpretations of exception clauses by investment tribunals and annulment committees has created uncertainty about the nature of states’ treaty commitments to foreign investors and manner in which exceptions to those commitments should be dealt with in investor-state dispute settlement. This chapter addresses two related questions: (1) whether exceptions ought to be understood as limiting the scope of the substantive investment obligations such that those obligations do not apply to measures that come within the exception, or whether exceptions are affirmative defences that operate to justify what would otherwise be prohibited by the treaty; and (2) the related question of the relationship between security and public order exceptions and the defence of necessity at customary international law—in particular, whether such clauses are lex specialis manifestations of the defence between the treaty parties. The paper reaches two general conclusions as to the status of exception clauses, subject always to the text of the provision being interpreted: that exceptions should be understood as limiting the scope of the treaty obligations, rather than operating as affirmative defences, and that as such, that security exceptions are conceptually distinct from the customary defence of necessity. These conclusions have practical implications for the allocation of the burden of proof, and raise questions about the coherence between international investment law and WTO law.

Keywords: Investor-state arbitration, Non-precluded measures, Exception, Carve-out, Burden of proof, International investment law, Necessity, Argentina, Nicaragua, self-defence, reservation

Suggested Citation

Henckels, Caroline, Scope Limitation or Affirmative Defence? The Purpose and Role of Investment Treaty Exception Clauses (October 7, 2016). Federica Paddeu and Lorand Bartels (eds), Exceptions in International Law (OUP, 2018) ; Society of International Economic Law (SIEL), Fifth Biennial Global Conference. Available at SSRN: https://ssrn.com/abstract=2801950 or http://dx.doi.org/10.2139/ssrn.2801950

Caroline Henckels (Contact Author)

Monash University - Faculty of Law ( email )

Wellington Road
Clayton, Victoria 3800
Australia

Register to save articles to
your library

Register

Paper statistics

Downloads
385
Abstract Views
1,470
rank
77,418
PlumX Metrics