Preserving State Regulatory Autonomy through General Exception Clauses in International Investment Agreements: Insights from Vietnam

Abstract International investment law has long been criticized for favoring investor protections over States’ regulatory autonomy. This imbalance may create a “chilling effect”, where governments hesitate to enact public interest regulations due to their fear of facing claims from foreign investors. To address this, States are increasingly incorporating general exception clauses in international investment agreements (IIAs) to safeguard their regulatory autonomy. However, the effectiveness of these clauses remains contentious, with concerns over narrow interpretations by arbitral tribunals and limited case law on their application. This article examines the use of general exception clauses in treaty practices and their interpretation in recent investor-State disputes. It further evaluates the relevance of these clauses for Vietnam, offering recommendations for drafting effective clauses to protect the regulatory sovereignty of host States.