Importing WTO General Exceptions into International Investment Agreements: Proportionality, Myths and Risks
Forthcoming, Yearbook of International Investment Law and Policy 2016-2017 (Oxford University Press, 2018)
50 Pages Posted: 12 Dec 2017 Last revised: 2 Mar 2018
Date Written: December 9, 2017
General exceptions are increasingly ‘imported’ from the World Trade Organization’s General Agreement on Tariffs and Trade 1994 (Article XX) and General Agreement on Trade in Services (Article XIV) into the different context of international investment agreements. Such importation is effected through various forms of language and structures in different treaties, with the general intention of enhancing the ability of host States to regulate in the public interest, as exemplified in several recent treaties, including a number signed in 2016. However, this approach does not appear to have been accompanied by rigorous analysis of the different forms of policy flexibility presented in core investment disciplines on the one hand (expropriation, fair and equitable treatment, and non-discrimination) and WTO-style general exceptions on the other. In practice, investment norms have already evolved to encompass policy space, albeit sometimes subject to a stringent proportionality test. Understanding the impact of general exceptions on the interpretation of existing investment obligations requires close investigation of those developments as well as WTO jurisprudence and the law of treaties in public international law. While the WTO general exceptions offer greater deference to regulatory sovereignty than is usually recognised, their inclusion in investment treaties risks undermining host States’ policy objectives in unintended ways unless carefully delineated and situated in the treaty alongside relevant clarifications.
Keywords: exceptions, international law, interpretation, investment, proportionality, trade, WTO
JEL Classification: K33
Suggested Citation: Suggested Citation