Missing in Action: General Public Policy Exceptions in Investment Treaties

Abstract

In an effort to balance investment protection with other policy concerns states are increasingly inserting general public policy exceptions into their international investment agreements. A first wave of cases has recently interpreted and applied these exceptions putting the effectiveness of state-led treaty design reform to the test. In this article, we introduce the different types of general public policy exceptions found in investment treaties and systematically analyze the case law rendered thereunder. We find that although public policy exceptions are becoming more prominent in treaty practice, in 2016 every third newly concluded treaty contained such a clause, they are largely missing in action. Respondents fail to raise them appropriately and tribunals either ignore them or adopt interpretations that lessen their impact. As a result, the numerous and complex interpretive issues raised by these exceptions remain unresolved and their impact on investment jurisprudence remains modest at best. We conclude by recommending that responding states and tribunals should engage with general public policy exceptions more thoroughly.

Keywords: Investment Law, Investment Treaties, Exceptions, Public Policy, Balancing, Reform