Investment Protection and the Safeguard of the Essential Interests of the State: Drawing Lessons from the Pacific Alliance's Investment Treaty Framework

Abstract

The Additional Protocol to the Framework Agreement of the Pacific Alliance (PA Additional Protocol) sets forth an additional layer for the protection of foreign investment to the preexisting International Investment Agreements (IIAs) between the PA Member States, posing a number of systemic questions regarding the application and interpretation of different treaty provisions and the way how they interplay. Against this background, the chief purpose of this article is to ascertain the extent to which the PA Member States have preserved a regulatory space for the protection of their essential interests in the PA Additional Protocol and the pre-existing IIAs between them. Particular emphasis is given to variations in the scope of national security and public order exceptions vis-a-vis other investment treaty provisions, taking into account potential situations of overlapping and conflict of norms between the PA Additional Protocol and the pre-existing IIAs in place. The article concludes that the narrower scope of the national security and public order exceptions in the PA Additional Protocol is outweighed by other provisions in the treaty that carefully balance the protection of investments vis-a-vis the right to regulate in the public interest. As highlighted by the UNCTAD, the PA Additional Protocol has all the elements suggested to preserve a regulatory space for public policies of host countries and to minimize the exposure to investment arbitration in this ground; this encompasses sensitives issues that would be otherwise governed by national security and public order exceptions in pre-existing IIAs between the PA Member States.