The Full Security and Protection Due Diligence Obligation

69 Pages Posted: 28 Jun 2017

Date Written: December 30, 2016

Abstract

The purpose of this paper is to explore the nature of the FSP due diligence obligation as it relates to the prevention of foreign investors from physical threats and injuries. First, it seeks to gain an understanding as to how a State’s compliance with its FSP due diligence obligation is measured; that is, whether there is a minimum standard of vigilance required of a host State. This research also considers the extent to which an FSP due diligence obligation can be relied on by an investor to claim that a State has an obligation not to act in a manner that could occasion injurious third party actions (such as terrorists’ attack) that might foreseeably injure foreign investors. This research is divided into five sections. The next section contains a general overview of a due diligence obligation in international law. The essence of this section is to provide the general context within which the subsequent analysis of an FSP due diligence obligation is undertaken. We find that there are three basic elements of a due diligence obligation: “foreseeability of the harm”, “the necessary preventive measure” and the reasonableness of the State conduct in the circumstance. While Foreseeability of a harm depends on the existing public knowledge of its causes, the probability of the causes occurring and the circumstances under which each cause will likely occur, the nature of the preventive measures to be taken would depend on the specific provision of the applicable international obligation. This leads us to investigate how investor-state tribunals have found breach of, or compliance with, a due diligence in the context of the FSP obligation. In furtherance of this objective, we undertake a jurisprudential analysis of relevant investor-state arbitrations. The analysis is contained in section 3 which is divided into two subsections; while the first subsection deals with instances where a host State was found to have acted in breach of the obligation, the later subsection considers cases where the host State was found to have acted with due diligence. In conclusion, it is found that existing investor-state cases do not provide any hint as to the nature of the obligation. Instead, the assessment of whether the State acted diligently is strictly judged on merit of each case, while tribunals would be guided by what they think a reasonable State would have done in the circumstance.

Similarly, we find no hint from the analysis of investor-state cases as to what extent an investor could rely on an FSP obligation to claim that the State has an obligation not to act so as to encourage injurious actions by third parties (such as terrorists). As a result, this research turns to domestic law for guidance. Given the similarity between the domestic law concept of negligence and due diligence, this research proceeds to take guidance from the common law principle of negligence. Section 4 provides the legal basis for this analogy which is explored in section 5. We argue in section 4 that Article 38 of the ICJ Statute provides the legal basis to consider domestic law in interpreting a treaty standard, while we consider under section 5 some cases where courts had found a defendant liable in negligence for taking actions that created conditions for which third parties harm the victims. This research concludes by summarizing its findings.

Keywords: International Investment law, full security and protection obligation, International Investment Agreements, negligence

Suggested Citation

Anozie, Nnaemeka, The Full Security and Protection Due Diligence Obligation (December 30, 2016). Available at SSRN: https://ssrn.com/abstract=2990872 or http://dx.doi.org/10.2139/ssrn.2990872

Nnaemeka Anozie (Contact Author)

Independent ( email )

No Address Available

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