Abstract
Recent years have seen a considerable increase in the amount of investment cases against both developing and developed countries. In many of those cases, investors attempted to challenge a number of sensitive and political decisions of States. This trend provoked a discussion of whether it is legitimate to limit a State’s regulatory power, even if the measures taken impact on investors’ rights and legal expectations. This paper highlights the importance of finding a reasonable and just balance in the protection of a State’s sovereign power to regulate and an investor’s legitimate expectations and rights against the unreasonable, unexpected, and discriminatory decisions of States. It is argued that the possibility and necessity of finding a common dominator in national legislation and International investment law exists. The aim of this article is to identify the main rules applicable to the limits of a State’s regulatory changes impacting on investors’ rights and legitimate expectations in investment law and under national legislation. Further, the article analyses whether it is possible to find a just and reasonable balance between the investors’ legal expectations and the State’s right to regulate by comparing the main differences and similarities between national and investment law and by answering the question of whether it would be possible to harmonise State liability rules on the issue, at least at the conceptual level.
Highlights
Recent years have seen a considerable increase in the amount of investment cases against both developing and developed countries
It is argued that the possibility and necessity of finding a common dominator in national legislation and International investment law exists
EU countries together with EU institutions started to argue that the possibility for investors to challenge sensitive political decisions regarding important reforms for public purpose before private arbitral tribunals illegitimately limits the regulatory powers of the State
Summary
Recent years have seen a considerable increase in the amount of investment cases against both developing and developed countries. Under the rules of the protection of legitimate expectations provided by FET, legal doctrine has identified the following approaches: a) the first approach, based solely on the concept of ensuring a stable legal and business framework; b) the second approach – more restrictive, requiring a specific representation to have been made by the State, including contractual obligations set out in a contract or the existence of a specific commitment between the host State and the investor, or mentioned in a legal measure, before amendment, with the purpose of attracting investment; c) the third approach (presented in the paper by the United Nations Conference on Trade and Development, 2012), which makes the claim of legitimate expectations subject to a number of qualifying requirements. The answer to the question of defining the correct balance between a State’s regulatory power and an investor’s legitimate expectations is still very subtle, and mostly depends on the precise evaluation of all of the circumstances in an individual case
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