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.
Read more here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2158032
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