Regulatory expropriation claims in international investment arbitrations: a bridge too far?

Asteriti, A. (2014) Regulatory expropriation claims in international investment arbitrations: a bridge too far? In: Bjorklund, A. K. (ed.) Yearbook on International Investment Law and Policy 2012-2013. Oxford University Press: Oxford, p. 451. ISBN 9780199386321

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The relationship between investment law, environmental law and sustainable development is highly complex, involving policy, economic and legal elements. In the common perception, and one that is adopted in this article, the goals of investment promotion and the protection of the environment against unrestrained development are prone to result in policy and legal conflicts and bring about shifts in economic decision-making by the main actors, investors and states. Amongst the consequences of this tension between investment and environmental goals, alarmist calls have been raised on the possibility of ‘regulatory chill,’ where states refrain from adopting environmental regulation – either in the hope to attract further investment or to avoid costly arbitrations – and ‘investment chill’, where investment flows to countries perceived to impose an excessive regulatory burden is reduced. In this context, sustainable development can be interpreted as expressing awareness at the policy level to this kind of conflicts and the need for a systemic approach to the negative environmental externalities of development.

In this article, I analyse how the investment legal regime accommodates exogenous environmental and sustainable development demands through the legal tools at its disposal, examining how tribunals respond to claims of regulatory expropriation. A comparative analysis of domestic and other sectoral international law approaches can be helpful in coming to terms with the legal issues involved. Therefore, US and European experiences in regulatory expropriation claims will be analysed, in order to ascertain if there is any value in a comparative approach from which international investment law can learn useful lessons on how to deal with similar claims.

Following the comparative analysis, I will show how some investment tribunals have either adopted the ad hoc balancing characteristic of the United States Supreme Court’s approach to regulatory taking claims, or have attempted the proportionality analysis derived from European constitutional traditions. The ‘balancing’ and ‘proportionality’ approaches to regulatory expropriation claims will be explored in detail in this contribution. The second section of the article reviews the normative content of regulatory expropriation in international law, while sections three and four provide a comparative analysis of the jurisprudence of the United States Supreme Court in Fifth Amendment cases dealing with regulatory taking claims and of the European Court of Human Rights in cases involving alleged breaches of Article 1 Protocol 1 of the Convention accompanied by a review of their respective use in investment arbitrations. These two examples are chosen because of the normative pull exercised by the US Supreme Court in the context of the NAFTA and the influence of US foreign trade and investment policy and conversely, the recent calls for the adoption of the proportionality analysis as practised by the ECHR. The analysis will be conducted in order to assess, which, if any, of these approaches is more conducive to due consideration being given to sustainable development’s objectives. Finally, section five points to new developments in investment treaty law and practice in the direction of ‘sustainable investment protection’ and the role of regulatory expropriation provisions in this context, with section six offering some concluding remarks.

Item Type:Book Sections (Other)
Glasgow Author(s) Enlighten ID:Asteriti, Dr Alessandra
Authors: Asteriti, A.
Subjects:J Political Science > JX International law
College/School:College of Social Sciences > School of Law
Publisher:Oxford University Press

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