Safeguarding local communities’ interest through regulatory autonomy – a feasibility analysis of NPM provisions in investment treaties

Purpose The exclusion of local communities from the formulation, implementation and dispute resolution has been a significant feature of the international investment agreements (IIAs) and the processes thereof. Given that the interests of such communities are necessarily not co-existent with the state, concerns appear with regard to the safeguard of such interests, given that they bear a disproportionate adverse effect of foreign direct investment. Towards addressing this invisibility, this research aims to explore the possibility of the strategic application of non-precluded measures (NPM). The discussion seeks to bridge the gap between investment law and local governance by drawing on the concept of public interest, and explains the deployment of NPM provisions in IIAs. Design/methodology/approach This research engages with an analytical method for traversing and parsing through primary and secondary sources. Findings The findings reveal a glaring absence of literature on the public interest arguments that could be deployed to unmask the local communities’ narratives within investment treaty arbitration (ITA). The nexus requirement – a threshold for utilizing NPM provisions – has been subjected to inconsistent arbitral delineation causing concern regarding regulatory autonomy in matters of public interest. This jurisprudential analysis reveals the tribunals’ investor-centric approach in either avoiding or using the epistemic asymmetry within international investment law to overlook regulatory autonomy in public interest towards ensuring visibility to the local community(s). The research feels that the vagueness surrounding the nexus requirement within the NPM clause could be addressed to strengthen regulatory power. It finds that states should engage with interpretive notes towards ensuring specificity for public interest criteria within NPMs. Research limitations/implications The research is unique as it aims to link the visibility of local communities within International Investment Law to the permissible regulatory space of public interest. Furthermore, it critiques the arbitral awards and the treaty language for their shortsightedness in efficiently addressing public interest concerns, and calls for improved treaty design and interpretive notes for tribunals. Practical implications This research suggests the incorporation of public interest provisions via interpretive notes for NPM provisions within IIAs. It could be viewed as a prelude for revisiting the drafting of NPM provisions to ensure that in matters of public interest of the local communities, tribunals would consider the same as an exception to treaty protection, and therefore address the same as a jurisdictional issue imposing the burden of proof upon the investor to demonstrate that the measure falls outside the NPM clause. Such a characterization would grant a greater deference to the regulatory judgement of the tribunal. The growing incorporation of public welfare NPM clauses supports the view that they are an inalienable part of the normative equilibrium of the treaty. Such improvements would help centre-stage the local community(s)’ arguments in ITA, but also help states shield from compensation actions for injury to the investor. Social implications It demonstrates sensitivity towards the cause of the local communities which otherwise shoulder the investment and its fall out on their cultural, environmental and economic interests. Originality/value To the best of the authors’ knowledge, there is no study available on exploring the linkage between local communities’ narratives and the public interest aspect of NPMs.