Legal Stability and Legitimate Expectations: Does International Investment Law Need a Sense of Proportion? (Joint 2nd Prize Winner of the Essay Competition 2020)

Abstract

In the aftermath of the Achmea judgment and with the European Commission’s continued efforts to curtail investor-State arbitration, EU law and international investment law may seem antithetical. However, this article considers how EU law may contribute to the development of investment law through the concept of proportionality, a general principle of EU law and various national legal systems. Tribunals have increasingly applied a proportionality analysis in their reasoning, most recently in several cases brought by renewable energy investors against Spain and Italy under the Energy Charter Treaty. These cases concern the controversial issue of when a change in the regulatory framework violates investors’ legitimate expectations and their right to fair and equitable treatment. This article argues that the proportionality standard has the potential to clarify this area of law and to promote ‘defragmentation’ between international investment law and other legal systems.