Non-precluded Measures Clauses: Regime, Trends, and Practice

Handbook of International Investment Law and Policy, 2020

29 Pages Posted: 29 Oct 2020

See all articles by Mark McLaughlin

Mark McLaughlin

Singapore Management University - Yong Pung How School of Law

Date Written: February 27, 2020

Abstract

“Non-precluded measures” (NPM) clauses have become a fixture of the modern international investment regime. As an integral aspect of attempts to recalibrate the public-private balance in investment treaties, these clauses are intended as a corrective to the pro-investor interpretations of early arbitral tribunals. They expressly provide for the primacy of public policy over investment protection standards under certain conditions. This contribution seeks to identify trends in the drafting of NPM clauses and identify their common components. It will categorize the conditions that must be satisfied in order that host states can have recourse to them, as well as the role that is provided – or denied – to arbitrators in circumscribing the suitability of an impugned measure in relation to the objective being pursued. Furthermore, recent investment arbitrations have highlighted the latent interpretive ambiguities that can accompany NPM clauses. Indeed, it will be argued that while NPM clauses do raise some difficulties with respect to extending the policy space of contracting parties, they are relatively effective in ensuring that public policy is a permanent feature of arbitrators’ matrix of decision-making.

Keywords: Non-Precluded Measures, General Exceptions, Essential Security, Public Policy, International Investment Agreements

Suggested Citation

McLaughlin, Mark, Non-precluded Measures Clauses: Regime, Trends, and Practice (February 27, 2020). Handbook of International Investment Law and Policy, 2020, Available at SSRN: https://ssrn.com/abstract=3690358 or http://dx.doi.org/10.2139/ssrn.3690358

Mark McLaughlin (Contact Author)

Singapore Management University - Yong Pung How School of Law ( email )

55 Armenian Street
Singapore, 179943
Singapore

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