Rebalancing Investment Protection Standards

Treaty reform has largely focused on refining the various investment protection standards under IIAs to achieve a more appropriate balance between investment protection and preserving the state’s right to regulate. This article takes stock of the treaty language used to recalibrate investment protection standards and evaluates their effectiveness in preserving policy space. The article ultimately concludes that greater precision in the various investment protection standards has been effective in preserving regulatory space in some cases, notably in the case of indirect expropriation. By contrast, reform of the fair and equitable treatment may be of limited effectiveness, whereas the reforms of national treatment clauses and most favoured nation clauses have yet to be tested by arbitral treatment. While in principle the latter reforms appear to directly address the concerns raised by previous arbitral authority, it remains to be seen whether they will prove to be effective.