Henckels: Balancing Investment Protection and the Public Interest: The Role of the Standard of Review and the Importance of Deference in Investor-State Arbitration

Caroline Henckels (Univ. of Cambridge - Law) has posted Balancing Investment Protection and the Public Interest: The Role of the Standard of Review and the Importance of Deference in Investor-State Arbitration. Here's the abstract:

International investment tribunals have not yet developed a coherent approach to the standard of review in relation to disputes relating to the exercise of host state public power. In particular, tribunals have not generally approached the question of deference to host state authorities in a principled manner where disputes engage the competing values of investment protection and the right of host states to regulate and take other actions in the public interest. Decisions of some investment tribunals have been characterized by a stringent standard of review, substituting tribunal members’ own views for those of host state authorities in relation to issues such as the importance of the host state’s regulatory objective and the necessity or reasonableness of the challenged measure itself, resulting in host states being held liable to pay damages to foreign investors in of respect measures taken in the public interest. However, a number of tribunal decisions indicate an increasing awareness of the desirability of deference where host state authorities’ greater democratic legitimacy and proximity to their populations or authorities’ greater expertise and institutional competence renders them better placed to assess or determine the relevant matter. This emerging approach to deference echoes the jurisprudence of other international and supranational courts and tribunals performing similar functions. Investment tribunals should adopt a standard of review that reflects their role as international adjudicators of disputes concerning the exercise of public power and should, cognizant of the desirability of deference in certain circumstances, exercise restraint in their assessment of matters that are more appropriately the province of national authorities.