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AUTONOMY TO SET THE LEVEL OF REGULATORY PROTECTION IN INTERNATIONAL INVESTMENT LAW

Published online by Cambridge University Press:  07 July 2021

Joshua Paine
Joshua Paine*
Affiliation:
Lecturer in Law, University of Bristol, joshua.paine@bristol.ac.uk.
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Abstract

This article argues that State autonomy in setting the level of protection for permissible regulatory aims can be better operationalised in the investment treaty regime. The article draws on comparative insights from WTO law, where it is established that WTO members have the right to determine the level of protection for permissible regulatory aims, although significant disciplines are placed on the means used to achieve those aims. It is then argued that investment treaties are, properly interpreted, consistent with the idea that States retain autonomy to determine the level of protection for permissible regulatory aims. Finally, the article proposes removing from the fair and equitable treatment and indirect expropriation standards proportionality balancing stricto sensu, as this undermines State autonomy in setting the level of protection. Overall, this article argues for a partial reorientation of investment law, in which non-discriminatory measures that pursue a permissible regulatory aim, including at a particular level, should not amount to a breach of a treaty where a State uses the means that involve the least possible restriction of the competing interests protected by relevant investment treaty obligations.

Keywords

public international lawinvestment treatiesinvestor-State arbitrationregulatory autonomyfair and equitable treatmentindirect expropriationexpropriation annexproportionality analysis
Type
Articles
Information
International & Comparative Law Quarterly , Volume 70 , Issue 3 , July 2021 , pp. 697 - 736
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press for the British Institute of International and Comparative Law

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Footnotes

For comments on prior drafts, I thank Caroline Foster, Clair Gammage, Caroline Henckels, Elizabeth Sheargold, two anonymous reviewers and the editors. The usual disclaimer applies.

References

1 A Mitchell, E Sheargold and T Voon, Regulatory Autonomy in International Economic Law: The Evolution of Australian Policy on Trade and Investment (Edward Elgar 2017) 2, 6; B Natens, Regulatory Autonomy and International Trade in Services: The EU Under GATS and RTAs (Edward Elgar 2016) 2–6.

2 Panel Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/R, adopted 17 December 2007, para 7.108. Consider also Appellate Body Report, European Communities – Measures Affecting Asbestos and Asbestos-Containing Products, WT/DS135/AB/R, adopted 5 April 2001, para 168; Appellate Body Report, Korea – Import Bans, and Testing and Certification Requirements for Radionuclides, WT/DS495/AB/R, adopted 26 April 2019, paras 5.25–6.

3 See eg Appellate Body Report, Brazil – Measures Affecting Imports of Retreaded Tyres, WT/DS332/AB/R, adopted 17 December 2007, paras 140, 210; Panel Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005, para 6.461, affirmed in Appellate Body Reports, European Communities – Measures Prohibiting the Importation and Marketing of Seal Products, WT/DS400/AB/R, WT/DS401/AB/R, adopted 18 June 2014, para 5.200; Panel Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/R, adopted 19 January 2010, para 7.819.

4 Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/AB/R, adopted 20 April 2005, para 308; Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 156.

5 CJEU Opinion 1/17 (2019) EU:C:2019:341, paras 148–61. Riffel suggests that from an EU law perspective, the Opinion elevates the EU's autonomy in determining the level of protection to a constitutional requirement in order for the EU to be able to accede to an international agreement: Riffel, C, ‘The CETA Opinion of the European Court of Justice and Its Implications—Not That Selfish After All’ (2019) 22 JIEL 503CrossRefGoogle Scholar, 519–21. Fanou highlights that this aspect of Opinion 1/17 lays the basis for respondents to challenge the enforcement of investor-State awards within the EU, in cases concerning an EU-level measure or the implementation of EU law by Member States, on the basis that the interpretation contained in the award undermines the EU's autonomy in setting the level of protection for public interests. Importantly, this reasoning may apply to the extra-EU investment treaties of EU Member States, as well as to a future multilateral investment court: Fanou, M, ‘The CETA ICS and the Autonomy of the EU Legal Order in Opinion 1/17 – A Compass for the Future’ (2020) 22 CYELS 106, 127–31Google Scholar. Contrast C Titi, ‘Opinion 1/17 and the Future of Investment Dispute Settlement: Implications for the Design of a Multilateral Investment Court’ in L Sachs, L Johnson and J Coleman (eds), Yearbook on International Investment Law & Policy 2019 (Oxford University Press 2021) 533–5.

6 See also Leonelli, GC, ‘CETA and the External Autonomy of the EU Legal Order: Risk Regulation as a Test’ (2020) 47 LIEI 43, 52–4Google Scholar, 61–8 (suggesting that CETA's investor-State tribunals may in practice affect the EU's ability to set the level of protection, eg in the context of precautionary measures without a clear scientific basis).

7 Du, M Ming, ‘Autonomy in Setting Appropriate Level of Protection under the WTO Law: Rhetoric or Reality?’ (2010) 13 JIEL 1077, 1079Google Scholar.

8 ibid.

9 ibid.

10 ibid.

11 Generally, this article uses the term ‘investment treaties’ as a shorthand to refer to both Bilateral Investment Treaties (BITs) and investment chapters in wider Free Trade Agreements (FTAs), although where necessary the two are differentiated.

12 See eg Weiler, JHH, ‘Brazil – Measures Affecting Imports of Retreaded Tyres (DS322)’ (2009) 8 WorldTR 137Google Scholar, 139–40; Nagy, CI, ‘Clash of Trade and National Public Interest in WTO Law: The Illusion of “Weighing and Balancing” and the Theory of Reservation’ (2020) 23 JIEL 143CrossRefGoogle Scholar, 148–9; Kurtz, J, ‘Adjudging the Exceptional at International Investment Law: Security, Public Order and Financial Crisis’ (2010) 59 ICLQ 325CrossRefGoogle Scholar, 368–9.

13 Harmonisation can be defined ‘as the process of making different regulations, principles, domestic laws and government policies substantially or effectively the same or similar’: G Mayeda, ‘Developing Disharmony? The SPS and TBT Agreements and the Impact of Harmonization on Developing Countries’ (2004) 7 JIEL 737, 740. See generally DW Leebron, ‘Lying Down with Procrustes: An Analysis of Harmonization Claims’ in JN Bhagwati and RE Hudec (eds), Fair Trade & Harmonization: Prerequisites for Free Trade? Vol 1: Economic Analysis (MIT Press 1996) 43–8. Some degree of harmonisation does not necessarily prevent States from being permitted to adopt a higher level of protection, subject to being able to justify the need for it, as both the WTO's TBT and SPS Agreements demonstrate: T Cottier and B Imeli, ‘Harmonization’ in T Cottier and K Nadakavukaren Schefer (eds), Elgar Encyclopedia of International Economic Law (Edward Elgar 2017) 59–60. Conceptually, autonomy in setting the level of protection is consistent with a ‘host country control’ model of economic integration, whereby States retain the ability to set the standards that will apply to economic activity on their territory, subject to compliance with agreed international disciplines: J Snell, ‘The Internal Market and the Philosophies of Market Integration’ in C Barnard and S Peers (eds), European Union Law (3rd edn, Oxford University Press 2020) 335–8. See also AO Sykes, ‘The (Limited) Role of Regulatory Harmonization in International Goods and Services Markets’ (1999) 2 JIEL 49, 61–5 (discussing a model of ‘policed decentralization’ whereby States have ‘the freedom to pursue different goals or different levels of regulatory stringency’, subject to certain disciplines, such as non-discrimination and use of the least restrictive means).

14 On the point that the WTO Agreements have been interpreted to permit regulatory diversity, see eg PC Mavroidis, The Regulation of International Trade, vol 1 (MIT Press 2016) 420. R Howse, J Langille and K Sykes, ‘Pluralism in Practice: Moral Legislation and the Law of the WTO after Seal Products’ (2015) 48 GWILR 81, 89–91. On the rationale for permitting regulatory diversity, subject to certain constraints (eg non-discrimination and use of the least trade restrictive means), see eg AO Sykes, ‘The (Limited) Role of Regulatory Harmonization in International Goods and Services Markets’ (n 13); M Trebilcock and R Howse, ‘Trade Liberalization and Regulatory Diversity: Reconciling Competitive Markets with Competitive Politics’ (1998) 6 EJLE 5, 28, 31–2.

15 Consider eg Philip Morris Brands SÀRL v Uruguay, ICSID Case No ARB/10/7, Award (8 July 2016) (plain packaging regulations for tobacco products given public health concerns); Methanex Corporation v USA, UNCITRAL, Final Award (3 August 2005) pt II, ch D, paras 2–22 (ban on the sale and use of a gasoline additive given environmental and public health concerns).

16 Consider eg Chemtura Corporation (formerly Crompton Corporation) v Canada, UNCITRAL, Award (2 August 2010) paras 6–49 (dispute over regulatory process involving ban on claimant's pesticide products); David R Aven et al v Costa Rica, ICSID Case No UNCT/15/3, Award (18 September 2018) paras 415–587 (dispute concerning application of Costa Rica's environmental laws to the claimants’ project).

17 CP Bown and JP Trachtman, ‘Brazil – Measures Affecting Imports of Retreaded Tyres: A Balancing Act’ (2009) 8 WorldTR 85, 124. B McGrady, ‘Necessity Exceptions in WTO Law: Retreaded Tyres, Regulatory Purpose and Cumulative Regulatory Measures’ (2009) 12 JIEL 153, 157.

18 See below text at (nn 34–5, 37, 58).

19 SPS Agreement Annex A, para 5.

20 ibid.

21 J Atik, ‘On the Efficiency of Health Measures and the “Appropriate Level of Protection”’ in G van Calster and D Prévost (eds), Research Handbook on Environment, Health and the WTO (Edward Elgar 2013) 117–18.

22 DH Regan, ‘The Meaning of “Necessary” in GATT Article XX and GATS Article XIV: The Myth of Cost–Benefit Balancing’ (2007) 6 WorldTR 347, 359–60, fn 17; Bown and Trachtman (n 17) 124, 129.

23 Atik (n 21) 122; Weiler (n 12) 144.

24 Panel Report, United States – Measures Affecting the Production and Sale of Clove Cigarettes, WT/DS406/R, adopted 24 April 2012, para 7.375.

25 See eg J Kurtz, The WTO and International Investment Law: Converging Systems (Cambridge University Press 2016) 280–2; AD Mitchell and C Henckels, ‘Variations on a Theme: Comparing the Concept of “Necessity” in International Investment Law and WTO Law’ (2013) 14 ChicagoJIntlL 93, 162–4; S Cho and J Kurtz, ‘Convergence and Divergence in International Economic Law and Politics’ (2018) 29 EJIL 169, 197.

26 Cho and Kurtz (n 25) 170–1, 197.

27 The term appears in the preamble to the TBT Agreement: see below text (n 48). The term does not appear in GATT or GATS but has been drawn on in interpreting those agreements: Panel Report, US – Clove Cigarettes (n 24) para 7.370.

28 Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 210.

29 Mavroidis (n 14) 436–7.

30 Appellate Body Report, Colombia – Measures Relating to the Importation of Textiles, Apparel and Footwear, WT/DS461/AB/R, adopted 22 June 2016, para 5.70; Appellate Body Reports, EC – Seal Products (n 3) para 5.169; Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 156; Appellate Body Report, US – Gambling (n 4) paras 305–6.

31 Appellate Body Report, Colombia – Textiles (n 30) para 5.70; Appellate Body Report, US – Gambling (n 4) para 307; Appellate Body Reports, Korea – Measures Affecting Imports of Fresh, Chilled and Frozen Beef, WT/DS161/AB/R, WT/DS169/AB/R, adopted 10 January 2001, para 166.

32 See eg Mitchell and Henckels (n 25) 128–30, 135, 149–50; M Du, ‘The Necessity Test in World Trade Law: What Now?’ (2016) 15 ChineseJIL 817, 825–7, 835; P Van den Bossche, ‘Looking for Proportionality in WTO Law’ (2008) 35 LIEI 283, 289–93; Regan (n 22) 348–60. Contrast F Fontanelli, ‘Necessity Killed the GATT: Art XX GATT and the Misleading Rhetoric About “Weighing and Balancing”’ (2012) 4 EJLS 39, 58, 65–6, 68; AO Sykes, ‘The Least Restrictive Means’ (2003) 70 UChiLRev 403, 415–16.

33 Additionally, a proposed alternative measure will not qualify as ‘reasonably available’ ‘where the responding Member is not capable of taking it, or where the alternative imposes an undue burden on that Member, such as prohibitive costs or substantial technical difficulties’: Appellate Body Report, US – Gambling (n 4) para 308, affirmed in Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 156, and Appellate Body Report, China – Measures Affecting Trading Rights and Distribution Services for Certain Publications and Audiovisual Entertainment Products, WT/DS363/AB/R, adopted 19 January 2010, para 318.

34 Appellate Body Reports, EC – Seal Products (n 3) para 5.200, citing Panel Report, United States – Gambling (n 3) para 6.461; Panel Report, China – Publications and Audiovisual Products (n 3) para 7.819.

35 Appellate Body Report, EC – Asbestos (n 3) para 168; Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 140.

36 eg Appellate Body Report, EC – Asbestos (n 3) para 174.

37 Appellate Body Report, Korea – Beef (n 31) para 176, drawing on GATT Panel Report, United States – Section 337 of the Tariff Act 1930, L/6439 - 36S/345, adopted 7 November 1989, para 5.26.

38 Appellate Body Report, US – Gambling (n 4) para 304; G Marceau and JP Trachtman, ‘A Map of the World Trade Organization Law of Domestic Regulation of Goods: The Technical Barriers to Trade Agreement, the Sanitary and Phytosanitary Measures Agreement, and the General Agreement on Tariffs and Trade’ (2014) 48 JWT 351, 386; McGrady (n 17) 156.

39 Appellate Body Report, Korea – Beef (n 31) para 178 (finding in relation to the goal of eliminating fraud concerning the origin of beef sold in the retail market, Korea had not intended to ‘totally eliminate’ such fraud as opposed to ‘reduce [it] considerably’). Du (n 7) 1098.

40 See eg Appellate Body Report, Brazil – Retreaded Tyres (n 3) paras 140, 144–5, 210.

41 eg Panel Report, China – Publications and Audiovisual Products (n 3) paras 7.888, 7.894, 7.898–9; Appellate Body Report, Dominican Republic – Measures Affecting the Importation and Internal Sale of Cigarettes, WT/DS302/AB/R, adopted 19 May 2005, paras 71–2; Appellate Body Report, Brazil – Retreaded Tyres (n 3) para 156. See also Appellate Body Report, China – Publications and Audiovisual Products (n 33) para 252.

42 AD Mitchell and J Munro, ‘No Retreat: An Emerging Principle of Non-Regression from Environmental Protections in International Investment Law’ (2019) 50 GeoJIntlL 625, 660–2 (flagging a similar problem in relation to environmental non-regression clauses in investment treaties); McGrady (n 17) 157–60.

43 Appellate Body Report, US – Gambling (n 4) para 304.

44 FJ Garcia, ‘The Salmon Case: Evolution of Balancing Mechanisms for Non-Trade Values in WTO’ in GA Bermann and PC Mavroidis (eds), Trade and Human Health and Safety (Cambridge University Press 2006) 149–50 (discussing this risk).

45 See eg Panel Reports, Australia – Certain Measures Concerning Trademarks, Geographical Indications and Other Plain Packaging Requirements Applicable to Tobacco Products and Packaging, WT/DS435/R, WT/DS441/R, WT/DS458/R, WT/DS467/R, paras 7.514–17; Appellate Body Report, Australia – Measures Affecting the Importation of Apples from New Zealand, WT/DS367/AB/R, adopted 17 December 2010, para 384.

46 In addition to the case law discussed below, consider the obiter remark in Panel Report, European Communities – Trade Description of Sardines, WT/DS231/R, adopted 23 October 2002, para 7.120 (‘Article 2.2 and this preambular text affirm that it is up to the Members to decide which policy objectives they wish to pursue and the levels at which they wish to pursue them’).

47 TBT Agreement art 2.2. Appellate Body Report, United States – Measures Concerning the Importation, Marketing and Sale of Tuna and Tuna Products, WT/DS381/AB/R, adopted 13 June 2012, para 313. An earlier draft of Article 2.2 included a footnote stating that ‘This provision is intended to ensure proportionality between regulations and the risks non-fulfilment of legitimate objectives would create’, but this was not included in the final agreement: GATT Doc MTN.TNC/W/FA (20 December 1991) at G.3. Arguably, this supports the view that the provision does not permit proportionality balancing stricto sensu: J Neumann and E Türk, ‘Necessity Revisited: Proportionality in World Trade Organization Law After Korea—Beef, EC—Asbestos and EC—Sardines’ (2003) 37 JWT 199, 221.

48 TBT Agreement Preamble.

49 See eg Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements, WT/DS384/AB/R, WT/DS386/AB/R, adopted 23 July 2012, paras 371, 395; Appellate Body Report, US – Tuna II (n 47) para 314.

50 Appellate Body Reports, US – COOL (n 49) para 372.

51 ibid paras 370, 372, 444–5.

52 Mitchell and Henckels (n 25) 99; C Henckels, Proportionality and Deference in Investor-State Arbitration: Balancing Investment Protection and Regulatory Autonomy (Cambridge University Press 2015) 127–8.

53 Mitchell and Henckels (n 25) 151.

54 Appellate Body Report, US – Tuna II (n 47) paras 318, 320–2.

55 See Panel Report, US – Clove Cigarettes (n 24) para 7.370.

56 Appellate Body Reports, US – COOL (n 49) para 390, affirmed in Panel Reports, Australia – Tobacco Plain Packaging (n 45) para 7.196.

57 Appellate Body Report, US – Tuna II (n 47) para 317.

58 ibid para 316.

59 Appellate Body Reports, United States – Certain Country of Origin Labelling (COOL) Requirements – Recourse to Article 21.5 of the DSU by Canada and Mexico, WT/DS384/AB/RW, WT/DS386/AB/RW, adopted 29 May 2015, para 5.201 and fn 632 (emphasis in original).

60 See above text at (n 43).

61 US – COOL (Article 21.5) (n 59) para 5.201 (emphasis in original).

62 ibid paras 5.264–6. However, the AB has accepted that ‘the nature of the risks and the gravity of the consequences arising from the non-fulfilment of the technical regulation's objective’, can inform the margin of appreciation enjoyed by a panel in assessing whether a proposed alternative measure would achieve an equivalent degree of contribution to the relevant objective: ibid paras 5.215, 5.217–18, 5.254, 5.269. See also Appellate Body Report, US – Tuna II (n 47) paras 321–2. These statements appear to suggest that where the risks of non-fulfilment of the relevant objective are grave, it will be more difficult to establish that a proposed alternative would make an equivalent degree of contribution. For a similar interpretation see Mitchell and Henckels (n 25) 144. Contrast C Downes, ‘Worth Shopping Around? Defending Regulatory Autonomy under the SPS and TBT Agreements’ (2015) 14 WTR 553, 567–72 (suggesting this aspect of Article 2.2 may provide a basis for proportionality balancing stricto sensu); A Desmedt, ‘Proportionality in WTO Law’ (2001) 4 JIEL 441, 459–60 (similar).

63 US – COOL (Article 21.5) (n 59) paras 5.277, 5.279.

64 Atik (n 21) 116.

65 SPS Agreement Annex A, para 5.

66 eg ibid Preamble, arts 3.3, 4.1, 5.6.

67 Atik (n 21) 118.

68 SPS Agreement art 5.6. Another key discipline on SPS measures is that they must be based on a risk assessment that takes account of available scientific evidence: SPS Agreement arts 5.1–5.2. Potentially, this requirement can also curtail a member's ability to pursue a particular level of protection. Note that SPS measures that conform to international standards are presumed to be consistent with the SPS Agreement and the GATT: SPS Agreement art 3.2.

69 SPS Agreement art 5.6, fn 3.

70 Du (n 32) 845.

71 ibid. J Scott, The WTO Agreement on Sanitary and Phytosanitary Measures: A Commentary (Oxford University Press 2009) 159–61.

72 Appellate Body Report, Australia – Measures Affecting Importation of Salmon, WT/DS18/AB/R, adopted 6 November 1998, para 199 (emphasis in original).

73 ibid para 200 (emphasis in original).

74 Y Rovnov, ‘Appropriate Level of Protection: The Most Misconceived Notion of WTO Law’ (2021) 31 EJIL 1343, 1344.

75 Appellate Body Report, Australia – Salmon (n 72) paras 205–7.

76 Appellate Body Report, India – Measures Concerning the Importation of Certain Agricultural Products, WT/DS430/AB/R, adopted 19 June 2015, para 5.221.

77 ibid.

78 Appellate Body Report, Australia – Salmon (n 72) para 207.

79 See Appellate Body Report, Australia – Apples (n 45) paras 364–6.

80 See Appellate Body Report, Australia – Salmon (n 72) paras 200–4; Appellate Body Report, Australia – Apples (n 45) para 344.

81 Rovnov (n 74) 1360–5.

82 H Schebesta and D Sinopoli, ‘The Potency of the SPS Agreement's Excessivity Test: The Impact of Article 5.6 on Trade Liberalization and the Regulatory Power of WTO Members to Take Sanitary and Phytosanitary Measures’ (2018) 21 JIEL 123, 135–7.

83 See also L Gruszczynski, Regulating Health and Environmental Risks under WTO Law: A Critical Analysis of the SPS Agreement (Oxford University Press 2010) 249–50 (noting the unsatisfactory results that emerge from the SPS Agreement using a benchmark, the ALOP, that is separate from the level of protection reflected in the impugned measure).

84 See above text at (n 42).

85 CE Foster, Global Regulatory Standards in Environmental and Health Disputes: Regulatory Coherence, Due Regard and Due Diligence (forthcoming, Oxford University Press 2021) 150–1, 172–3 (suggesting WTO necessity jurisprudence reflects the principles of effectiveness and contextual interpretation); I Van Damme, Treaty Interpretation by the WTO Appellate Body (Oxford University Press 2009) 298–9 (suggesting the AB's necessity jurisprudence reflects systemic values that govern all WTO treaty language, including preserving sufficient policy space for members).

86 See above text at (nn 52–3).

87 See also J Arato, K Claussen and JB Heath, ‘The Perils of Pandemic Exceptionalism’ (2020) 114 AJIL 627, 635 (advocating incorporating flexibilities within primary obligations).

88 See also Mitchell and Henckels (n 25) 146–7, 151, 153–7 (identifying lessons that investment tribunals can draw from WTO necessity jurisprudence).

89 TBT Agreement art 2.2 and SPS Agreement art 5.6 explicitly refer to trade restrictiveness. In the context of GATT art XX and GATS art XIV, the case law has developed the benchmark of utilising the least trade-restrictive means reasonably available. Earlier case law at times referred to the idea of the ‘least degree of inconsistency’ with other treaty obligations: see eg Mitchell and Henckels (n 21) 131–2. As they note, later case law has indicated that the focus in assessing trade-restrictiveness is on ‘the factual impact of the measure on the underlying values that the infringed obligation is designed to protect’: ibid. See Appellate Body Report, China – Publications and Audiovisual Products (n 33) para 306.

90 ie the chapeau to GATT art XX/GATS art XIV, TBT Agreement art 2.1, SPS Agreement art 2.3.

91 eg P Van den Bossche and W Zdouc, The Law and Policy of the World Trade Organization: Texts, Cases and Materials (4th edn, Cambridge University Press 2017) 545–6.

92 In applying a least-restrictive means test there is a question of whether the focus should be on the effect of an impugned measure on an individual complainant investor, or on the degree to which the measure restricts the competing values protected by applicable legal norms, viewed in a wider perspective. See eg EM Leonhardsen, ‘Looking for Legitimacy: Exploring Proportionality Analysis in Investment Treaty Arbitration’ (2012) 3 JIDS 95, 114, drawing on DH Regan, ‘The Supreme Court and State Protectionism: Making Sense of the Dormant Commerce Clause’ (1986) 84 MichLRev 1091, 1101–7. As Caroline Foster has argued, if one takes the view that investment treaties ultimately remain inter-State bargains, despite the procedural rights conferred on investors, then the focus should be on the impact of a measure on the interest of investment protection, as enshrined in applicable treaty provisions, rather than the burden falling on an individual complainant: Foster (n 85) 259–61.

93 Kurtz (n 25) 169–71.

94 NAFTA (1992) art 1114(1).

95 From many, eg Mexico–Chile FTA (1998) art 9–15(1); Singapore–United States FTA (2003) art 15.10; Korea–Peru FTA (2010) art 9.9; Morocco–Nigeria BIT (2016) art 13(4).

96 eg Indonesia–Australia CEPA (2019) art 14.16; CETA art 8.9(1); United States–Mexico–Canada Agreement (USMCA) (2018) art 14.16.

97 eg L Johnson, L Sachs and N Lobel, ‘Aligning International Investment Agreements with the Sustainable Development Goals’ (2019) 58 ColumJTransnatlL 58, 101; C Martini, ‘Balancing Investors’ Rights with Environmental Protection in International Investment Arbitration: An Assessment of Recent Trends in Investment Treaty Drafting’ (2017) 50 The International Lawyer 529, 568.

98 See JW Salacuse, The Law of Investment Treaties (2nd edn, Oxford University Press 2015) 385 (suggesting that ‘The phrase “otherwise consistent with the Treaty” would seem to mean that the measures in question would be consistent but for the fact that they were taken to assure that investments will be conducted in an environmentally sensitive manner’).

99 Mitchell, Sheargold and Voon (n 1) 159. Consider also art 8.1 of the Agreement on Trade-Related Aspects of Intellectual Property Rights, which requires that the relevant measures are ‘consistent with the provisions of this Agreement’, and has been held to provide interpretative context that informs the construction of other provisions of the Agreement: Panel Reports, Australia – Tobacco Plain Packaging (n 45) paras 7.2401–8.

100 Aven v Costa Rica (n 16) paras 412–13, 743; Adel A Hamadi Al Tamimi v Sultanate of Oman, ICSID Case No ARB/11/33, Award (3 November 2015) paras 387–90, 445–6, 458; Infinito Gold Ltd v Costa Rica, ICSID Case No ARB/14/5, Award (3 June 2021) paras 772–81. In SD Myers, Arbitrator Schwartz rejected the argument that due to the ‘otherwise consistent’ qualification, art 1114 of NAFTA was merely ‘empty rhetoric’; rather the provision served to remind interpreters of NAFTA's investment chapter that ‘the parties take both the environment and open trade very seriously and that means should be found to reconcile these two objectives’: SD Myers, Inc v Canada, UNCITRAL, Separate Opinion of Dr Bryan Schwartz (12 November 2000) para 118. Art 1114 of NAFTA was also considered in passing in Metalclad Corp v Mexico, ICSID Case No ARB(AF)/97/1, Award (30 August 2000) para 98.

101 CETA art 8.9(1); EU–Vietnam Investment Protection Agreement (IPA) (2019) art 2.2(1); EU–Singapore IPA (2018) art 2.2(1); EU–Mexico Global Agreement (2020) ch 17, art 1; Rwanda–UAE BIT (2017) art 9(1); Colombia–UAE BIT (2017) art 10(1); Argentina–UAE BIT (2018) art 11; Brazil–UAE BIT (2019) art 17(1); Ethiopia–UAE BIT (2016) art 18(1); Colombia Model BIT (2017) ‘Chapeau on Investment and Regulatory Measures’; BLEU Model BIT (2019) art 1(2); Canada Model FIPA (2021) art 3; Slovak Republic Model BIT (2019) art 4(1). The following agreements add the nexus ‘necessary’: Argentina–Qatar BIT (2016) art 10; Netherlands Model BIT (2019) art 2(2); Hungary–Cabo Verde BIT (2019) art 3(1); Hungary–Belarus BIT (2019) art 3(1); Hungary–Kyrgyzstan BIT (2020) art 3(1). Some of Colombia's investment treaties require that ‘such measures are proportional to the objectives sought’: eg Colombia–Turkey BIT (2014) art 11(1); Colombia–UK BIT (2010) art VIII.

102 C Titi, ‘The Right to Regulate’ in MM Mbengue and S Schacherer (eds), Foreign Investment Under the Comprehensive Economic and Trade Agreement (CETA) (Springer 2019) 170–1 (suggesting the relevant provision in CETA ‘serves as an interpretive statement … it does not appear to provide a concrete actionable right’); Johnson, Sachs and Lobel (n 97) 101 (suggesting the effect of provisions without the ‘otherwise consistent’ qualifier remain ambiguous).

103 eg Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP) (2018) Preamble; CETA Preamble; USMCA Preamble; Netherlands Model BIT (2019) Preamble; BLEU Model BIT (2019) Preamble.

104 eg CPTPP Preamble; USMCA Preamble; EU–Singapore IPA (2018) Preamble.

105 eg Japan–Korea–China Trilateral Investment Agreement (2012) Preamble; Switzerland–Egypt BIT (2010) Preamble; US–Jordan BIT (1997) Preamble. For additional typology of preambular language see eg Martini (n 97) 560–3.

106 S Schacherer, ‘The CETA Investment Chapter and Sustainable Development: Interpretative Issues’ in MM Mbengue and S Schacherer (eds), Foreign Investment Under the Comprehensive Economic and Trade Agreement (CETA) (Springer 2019) 227 (making a similar point in relation to the joint interpretative instrument concluded when signing CETA).

107 Titi (n 102) 169. Martini (n 97) 563–7.

108 eg EU–China CAI section IV(2) art 1 and section IV(3) art 1; Ethiopia–UAE BIT (2016) art 12(1); CPTPP art 20.3(2); Slovakia–UAE BIT (2016) art 12(2); Iran–Slovakia BIT (2016) art 10(2). A similar provision appears in the EU's text proposal within the ongoing negotiations to modernise the Energy Charter Treaty, entitled ‘Sustainable Development – Right to Regulate and Levels of Protection’ <https://trade.ec.europa.eu/doclib/docs/2020/may/tradoc_158754.pdf>.

109 eg North American Agreement on Environmental Cooperation (1993) art 3; DR–CAFTA (2004) art 17.1; Singapore–US FTA (2004) art 18.1; Jordan–US FTA (2000) art 5(2).

110 eg EU–South Korea FTA (2011) art 13.3; CETA arts 23.2, 24.3.

111 eg UAE–BLEU BIT (2004) art 5(1); BLEU–Mauritius BIT (2005) art 5(1); BLEU–Qatar BIT (2007) art 5(1).

112 Typically, the relevant provision specifies that it is subject to consultations between the Parties, but it is not explicitly removed from investor-State or State–State dispute settlement: eg UAE–BLEU BIT (2004) arts 5(3), 12–13. In some agreements, any obligations arising from the provision are explicitly removed from the treaty's dispute settlement mechanisms: eg BLEU–Colombia BIT (2009) art VII(5).

113 T Gazzini, ‘Bilateral Investment Treaties and Sustainable Development’ (2014) 15 JWIT 929, 952.

114 BLEU Model BIT (2019) art 15(1). The provision is excluded from the investor-State dispute settlement mechanism under the model treaty, but would be relevant as interpretative context, and could be subject to inter-State dispute settlement: arts 19(1), 23(1)–23(3).

115 For discussion of the typical structure of exceptions and defences see eg C Henckels, ‘Should Investment Treaties Contain Public Policy Exceptions?’ (2018) 59 BCLRev 2825, 2827–9.

116 BLEU Model BIT (2019) art 15(6).

117 For suggestions on this point see F Ortino, ‘Taming the Chaos in Investment Treaty Protection’ (2020) Columbia FDI Perspectives No 294. Titi (n 5) 535.

118 W Kidane, ‘Sustainable Development Obligations and Access to Treaty Remedies in Contemporary Investment Treaties and Models’ in JE Kalicki and M Abdel Raouf (eds), Evolution and Adaptation: The Future of International Arbitration (Kluwer Law International 2019) 297, 303.

119 G Marín Durán, ‘Sustainable Development Chapters in EU Free Trade Agreements: Emerging Compliance Issues’ (2020) 57 CMLRev 1031, 1036–40 (suggesting the various categories of obligations, discussed in this paragraph, can be interpreted as imposing distinct limitations on the sovereign right to regulate in environmental or labour matters).

120 eg EU–China CAI section IV(2) art 2(2), section IV(3) art 2(2); CETA arts 23.4(1), 24.5(1); BLEU Model BIT (2019) art 15(3); Netherlands Model BIT (2019) art 6(4).

121 Some argue that there is a difference, in terms of the mandatory nature of the obligation, between those treaties where the parties merely recognise it is inappropriate to lower their levels of protection to encourage trade or investment, and those treaties where the parties agree not to do so: eg B Melo Araujo, ‘Labour Provisions in EU and US Mega-Regional Trade Agreements: Rhetoric and Reality’ (2018) 67 ICLQ 233, 249. For examples of the latter type of provision see eg CARIFORUM-EU EPA (2008) arts 188(1)(a) and 193(a); UK-EFTA FTA (2021) art 13.4(1).

122 Mitchell and Munro (n 42) 688–90.

123 eg CETA art 24.3 (obligation to ‘seek to ensure’), CPTPP art 20.3(3) (‘strive to ensure’); Iran–Slovakia BIT art 10(2) (obligation to ensure ‘appropriate levels of environmental protection’); Japan–India CEPA art 8.1 (‘adequate levels of environmental protection’).

124 eg Netherlands Model BIT (2019) art 6(2); BLEU Model BIT (2019) art 15(2); DR–CAFTA art 17.1.

125 See eg EU–China CAI section IV(2) art 1 and section IV(3) art 1; CETA arts 23.2, 24.3.

126 M Bronckers and G Gruni, ‘Retooling the Sustainability Standards in EU Free Trade Agreements’ (2021) 24 JIEL 25, 32; Panel of Experts Constituted under Article 13.15 of the EU–Korea Free Trade Agreement, Report of the Panel of Experts (20 January 2021) paras 80–4 (finding that an obligation to respect fundamental principles concerning labour rights merely qualified the Parties’ right to regulate and to set their own levels of protection and did not require harmonisation of labour standards).

127 See eg A Keene, ‘The Incorporation and Interpretation of WTO-Style Environmental Exceptions in International Investment Agreements’ (2017) 18 JWIT 62, 65, 69 (finding in a sample of all publicly available investment treaties concluded between 2010–15, 45 per cent of agreements included a WTO-style general exceptions provision).

128 On this question see C Henckels, ‘Permission to Act: The Legal Character of General and Security Exceptions in International Trade and Investment Law’ (2020) 69 ICLQ 557.

129 AD Mitchell, J Munro and T Voon, ‘Importing WTO General Exceptions into International Investment Agreements: Proportionality, Myths and Risks’ in L Sachs, L Johnson and J Coleman (eds) Yearbook on International Investment Law and Policy 2017 (Oxford University Press 2019) 329–31 (‘the defining feature of the necessity test in WTO law is substantial deference to the respondent's chosen “level of protection”’).

130 Keene (n 127) 78 (‘Negotiators may well have adopted these exceptions, at least in part, on the assumption that their interpretation was predictable based on the WTO Appellate Body's [AB] established jurisprudence on general exceptions’). Consider also UAE–Israel BIT (2020), which includes a general exceptions provision largely modelled on art XX GATT and art XIV GATS and provides that, where reference to the WTO Agreement arises in a dispute, an investor-State tribunal constituted under the treaty must consider WTO jurisprudence concerning ‘substantially equivalent rights or obligations’: arts 14(2), 24(3).

131 A Newcombe, ‘General Exceptions in International Investment Agreements’ in M-C Cordonier Segger, MW Gehring and A Newcombe (eds), Sustainable Development in World Investment Law (Kluwer Law International 2011) 363–4.

132 SD Myers, Inc v Canada, UNCITRAL, Partial Award (13 November 2000) paras 220–1.

133 ibid para 255.

134 ibid (Sep Op Schwartz) para 115.

135 William Ralph Clayton v Canada, PCA Case No 2009-04, Award on Jurisdiction and Liability (17 March 2015) paras 450–2, 591, 594, 600–4, 696–7, 724–5. Compare: Dissenting Opinion of Professor Donald McRae.

136 ibid paras 595–6, 598, 737–8. NAFTA Preamble.

137 Muszynianka spółka z ograniczoną odpowiedzialnością v Slovak Republic, PCA Case No 2017-08, Award (7 October 2020) para 546. Compare: Partial Dissenting Opinion of Professor Robert G Volterra.

138 ibid para 550.

139 ibid para 553.

140 ibid paras 557–8 (citations omitted).

141 As Ortino notes, traditionally investment treaties characterised investment protection as a means to economic growth or prosperity: F Ortino, ‘Investment Treaties, Sustainable Development and Reasonableness Review: A Case Against Strict Proportionality Balancing’ (2017) 30 LJIL 71, 76–8.

142 eg Military and Paramilitary Activities in and against Nicaragua (Nicaragua v United States of America) (Merits) [1986] ICJ Rep 14, paras 258, 263; SD Myers, Inc v Canada (n 132) para 263; Appellate Body Report, China – Publications and Audiovisual Products (n 33) para 222.

143 Invesmart, BV v Czech Republic, UNCITRAL, Award (26 June 2009) para 498.

144 eg Philip Morris v Uruguay (n 15) paras 295–301.

145 Ortino, ‘Sustainable Development’ (n 141) 81–3. See also Titi (n 5) 535.

146 See Ortino, ‘Sustainable Development’ (n 141) 86–91.

147 ibid 88–9. F Ortino, The Origin and Evolution of Investment Treaty Standards: Stability, Value, and Reasonableness (Oxford University Press 2019) 104, 173; Henckels, Proportionality (n 52) 25–6, 164, 168; Kurtz (n 12) 368–9. Some have raised more fundamental objections to any form of balancing test that requires adjudicators to determine whether a State genuinely pursued a legitimate objective, or to evaluate the effectiveness of a State's measures: see J Bonnitcha and E Aisbett, ‘Against Balancing: Revisiting the Use/Regulation Distinction to Reform Liability and Compensation under Investment Treaties’ (2021) 42 MichJIntlL 231, 268–72. In response, this author would highlight that, while such determinations are challenging, the analysis of WTO jurisprudence in Part III suggests that international adjudicators are capable of answering such questions and a deferential standard of review is frequently applied. Furthermore, the alternative approach to liability under investment treaties advanced by Bonnitcha and Aisbett conflates (albeit deliberately) the issues of breach of obligation and reparation for breach: see especially 234, 254–60.

148 Occidental Petroleum Corporation v Ecuador, ICSID Case No ARB/06/11, Award (5 October 2012) paras 404–52; Electrabel SA v Republic of Hungary, ICSID Case No ARB/07/19, Award (20 November 2015) para 179. See also EDF (services) Ltd v Romania, ICSID Case No ARB/05/13, Award (8 October 2009) para 293; Total SA v Argentina, ICSID Case No ARB/04/1, Decision on Liability (27 December 2010) paras 123, 162, 309(h), 429; Philip Morris v Uruguay (n 15) paras 409–10, 419–20.

149 Hydro Energy 1 SÀRL v Spain, ICSID Case No ARB/15/42, Award (9 March 2020) paras 568, 573–4; Cavalum SGPS, SA v Spain, ICSID Case No ARB/15/34, Decision on Jurisdiction, Liability and Directions on Quantum (31 August 2020) paras 411, 414–15; Watkins Holding SÀRL v Spain, ICSID Case No ARB/15/44, Award (21 January 2020) paras 601–3; Muszynianka v Slovak Republic (n 137) paras 566–76; Naturgy Energy Group, SA v Colombia, ICSID Case No UNCT/18/1, Award (12 March 2021) paras 449–51, 492–5. Some of these remarks have concerned the obligation not to impair investments through unreasonable measures, however tribunals have emphasised that the requirement of proportionality is part of both the non-impairment and FET standards: eg Hydro Energy v Spain, paras 567–8, 573; Cavalum v Spain, paras 410–11, 414. Other tribunals have referred to proportionality but appeared to apply it as a least-restrictive means test, eg an obligation to have the minimum negative effect on the competing interests protected by the State's investment treaty obligations in order to achieve a permissible regulatory aim: eg RREEF Infrastructure (GP) Limited v Spain, ICSID Case No ARB/13/30, Decision on Responsibility and on the Principles of Quantum (30 November 2018) paras 460, 463, 465.

150 OperaFund Eco-Invest SICAV PLC v Spain, ICSID Case No ARB/15/36, Award (6 September 2019) para 555. See also Stadtwerke München GmbH v Spain, ICSID Case No ARB/15/1, Award (2 December 2019) paras 323–5, 354 (initially responding to the claimants’ argument that Spain's measures were disproportionate by noting that the term ‘proportionate’ did not appear in the treaty provision to be applied, nor had the claimants offered ‘an operational means of’ applying the concept. Nevertheless, the Tribunal went on to find that Spain's measures were proportionate to their aim, taking account of the impact on the claimants).

151 eg OperaFund v Spain (n 150) para 555.

152 Blusun SA v Italy, ICSID Case No ARB/14/3, Award (27 December 2016) paras 318, 319(5), 372; SolEs Badajoz GmbH v Spain, ICSID Case No ARB/15/38, Award (31 July 2019) paras 316–18, 462; RWE Innogy GmbH v Spain, ICSID Case No ARB/14/34, Decision on Jurisdiction, Liability, and Certain Issues of Quantum (30 December 2019) paras 570–1, 589, 598–600, 649; PV Investors v Spain, PCA Case No 2012-14, Final Award (28 February 2020) paras 582–3, 624; BayWare Renewable Energy GmbH v Spain, ICSID Case No ARB/15/16, Decision on Jurisdiction, Liability and Directions on Quantum (2 December 2019) paras 460–3; Eurus Energy Holdings Corporation v Spain, ICSID Case No ARB/16/4, Decision on Jurisdiction and Liability (17 March 2021) paras 335–8; Eiser Infrastructure Ltd v Spain, ICSID Case No ARB/13/36, Award (4 May 2017) para 370, approving Charanne BV v Spain, SCC Case No 062/2012, Award (21 January 2016) paras 514, 517. See also RREEF v Spain (n 149) paras 475, 547.

153 Others have also noted that a requirement to avoid (manifest) disproportionality is a significantly less intrusive test for adjudicators to apply: eg Foster (n 85) 267. Henckels, Proportionality (n 52) 161, 168.

154 Brazil and India have both followed this approach in their recent investment treaties. See eg Brazil–India BIT (2020) art 4.1; Belarus–India BIT (2018) art 3.1. Some of Brazil's recent treaties also clarify that ‘For greater certainty, the standards of “fair and equitable treatment” … are not covered by this Agreement and shall not be used as interpretative standards in investment dispute settlement procedures’: eg Brazil–UAE BIT (2019) art 4(3).

155 CETA art 8.10(2); EU–Vietnam IPA (2019) art 2.5(2); EU–Singapore IPA (2018) art 2.4(2); EU–Mexico Global Agreement (2020) ch 17, art 15(2); Rwanda–UAE BIT art 4(2); UAE–Israel BIT art 2(3).

156 This could be inspired by the footnote to art 5.6 of the SPS Agreement, quoted above at (n 69). There is a question of whether any assessment of less restrictive means should be made with a focus on the impact of a measure on an individual claimant investor, or on the interests protected by the FET standard viewed in a wider perspective: see above (n 92).

157 eg Philip Morris v Uruguay (n 15) paras 305–6; Marfin Investment Group Holdings SA v Cyprus, ICSID Case No ARB/13/27, Award (26 July 2018) paras 826–30; El Paso Energy International Co v Argentina, ICSID Case No ARB/03/15, Award (31 October 2011) paras 241, 243; Azurix Corp v Argentina, ICSID Case No ARB/01/12, Award (14 July 2006) paras 310–12; Continental Casualty Co v Argentina, ICSID Case No ARB/03/9, Award (5 September 2008) para 276; Deutsche Bank AG v Sri Lanka, ICSID Case No ARB/09/2, Award (31 October 2012) para 522; Mohamed Abdel Raouf Bahgat v Egypt, PCA Case No 2012-07, Award (23 December 2019) paras 224, 226, 230–2; Les Laboratoires Servier, SAS v Poland, UNCITRAL, Final Award (14 February 2012) paras 569–70.

158 PL Holdings SÀRL v Poland, SCC Arbitration No V 2014/163, Partial Award (28 June 2017) paras 354–91. Another stark example is Olympic Entertainment Group AS v Ukraine, PCA Case No 2019-18, Award (15 April 2021) paras 87–90. Essentially, while finding that Ukraine's measure was a bona fide regulatory measure, the Tribunal held that it was not proportionate and therefore not a valid exercise of police powers: paras 95–101.

159 Técnicas Medioambientales Tecmed, SA v Mexico, ICSID Case No ARB(AF)/00/2, Award (29 May 2003) para 122.

160 ibid paras 132–3, 144, 147–9. The Tribunal emphasised that despite some breaches of the operating permit, there was no evidence that these violations had endangered the environment or public health: paras 124, 144, 148–9.

161 Ortino, Origin (n 147) 159.

162 United States–Korea FTA Annex 11-B(3)(b) (emphasis added) (2007, unchanged in 2018 amendments). From many similar examples see eg India–Korea CEPA (2009) Annex 10-A(3)(b); Japan–Korea–China Trilateral Investment Agreement (2012) Protocol, para 2(c); China–Korea FTA (2015) Annex 12-B(3)(b); Korea–Vietnam FTA (2015) Annex 9-B(c)(ii); Central America–Korea FTA (2018) Annex 9-C(4)(b).

163 United States–Korea FTA Annex, 11-B(3)(a) (emphasis added). For the same language see eg India–Korea CEPA Annex 10-A(3)(a)(iii); Korea–Myanmar BIT (2014) Annex, para 3(a)(iii).

164 eg Central America–Korea FTA Annex 9-C, para 4(a)(iii), fn 16; Korea–Peru FTA (2010) Annex 9B(c)(i)(C); Korea–Turkey Investment Agreement (2015) Annex B(c)(i)(C); Korea–Colombia FTA (2013) Annex 8-B(3)(a)(iii). Compare: Japan–Korea–China Trilateral Investment Agreement Protocol, para 2(b)(iii) (‘character and objectives of the [government] action’ includes ‘whether such action is proportionate to its objectives’); Korea–Indonesia CEPA (2020) Annex 7-B(3)(a)(iii) (character of the government action includes ‘whether the action is disproportionate to the public purpose’).

165 On the potential pitfalls of focusing on the effects of a measure on a particular claimant investor see above (n 92).

166 ASEAN Comprehensive Investment Agreement (2009) Annex 2(3)(c); ASEAN–Australia–New Zealand FTA (2009) Annex on Expropriation and Compensation, para 3(c); Hong Kong–ASEAN Agreement on Investment (2018) Annex 2(3)(c).

167 Indonesia–Australia CEPA Annex 14-B(3)(c); Australia–Malaysia FTA (2012) Annex on Expropriation, para 3(c).

168 China–Tanzania BIT (2013) art 6(2)(d); China–Turkey BIT (2015) art 5(2)(d); China–Korea FTA Annex 12-B(3)(a)(iii); Japan–Korea–China Trilateral Investment Agreement Protocol, para 2(b)(iii).

169 Japan–Morocco BIT (2020) Annex, para 4; Hungary–Cabo Verde BIT (2019) art 6(4)(c); Hungary–Belarus BIT (2019) art 6(2)(c); UK–Colombia BIT (2010) art VI(2)(c). Note that a requirement to avoid disproportionality is arguably less intrusive, in terms of regulatory autonomy, than a positive requirement that State measures are proportionate to their aim: see above text at (n 153).

170 CETA Annex 8-A(3) (emphasis added); EU–Singapore IPA Annex 1(2). Similar: EU–Vietnam IPA Annex 4(3); EU–Mexico Global Agreement (2020) ch 17, Annex on Expropriation.

171 Other parts of the Annex confirm this interpretation: CETA Annex 8-A(2)(a)(c).

172 Ortino, F, ‘Defining Indirect Expropriation: The Transatlantic Trade and Investment Partnership Approach and the (Elusive) Search for “Greater Certainty”’ (2016) 43 LIEI 351Google Scholar, 360–3.

173 Contrast Stone Sweet and Grisel's argument that retaining the possibility of proportionality balancing stricto sensu is desirable because it ensures that a State does not destroy an investment ‘in the name of securing a relatively trivial measure of a social good’: A Stone Sweet and F Grisel, The Evolution of International Arbitration: Judicialization, Governance, Legitimacy (Oxford University Press 2017) 249–50.

174 See above (n 156). A few Chinese BITs invite a deferential necessity test within the inquiry into whether a measure constitutes an indirect expropriation, as they refer, in explaining the type of measures that are not covered by the police powers clarification, to ‘rare circumstances, such as where the measures adopted substantially exceed the measures necessary for maintaining reasonable public welfare’: China–Tanzania BIT art 6(3); China–Uzbekistan BIT (2011) art 6(3); China–Turkey BIT art 5(3).

175 eg Canada–Colombia FTA (2008) Annex 811(2)(b); Canada–China FIPA (2012) Annex B.10(3). See below (n 177) regarding the changes to this wording in Canada's new 2021 Model FIPA.

176 Eco Oro Minerals Corp v Republic of Colombia, ICSID Case No ARB/16/41, Non-Disputing Party Submission of Canada (27 February 2020) para 11, referring to Canada–Colombia FTA Annex 811(2)(b).

177 eg ASEAN–Australia–New Zealand FTA (2009) Annex on Expropriation and Compensation, para 4; Hong Kong–ASEAN Agreement on Investment (2018) Annex 2(4); Indonesia–Australia CEPA Annex 14-B(4); Regional Comprehensive Economic Partnership (2020) Annex 10B(4). A similar approach is adopted by Canada's 2021 Model FIPA, which provides ‘A non-discriminatory measure of a Party that is adopted and maintained in good faith to protect legitimate public welfare objectives, such as health, safety and the environment, does not constitute indirect expropriation, even if it has an effect equivalent to direct expropriation’: art 9(3).

178 eg J Bonnitcha, Substantive Protection under Investment Treaties: A Legal and Economic Analysis (Cambridge University Press 2014) 304–8; Arato, Claussen and Heath (n 87). Contrast Henckels, Proportionality (n 52) 155–9.

179 See above text at (n 33).

180 Bonnitcha favours this approach to the part of the FET standard that concerns the substantive justification for State measures: Bonnitcha (n 178) 310–14. He discusses some of the arbitral interpretations that have adopted such an approach: 216–20. A similar approach is adopted by the treaty provisions clarifying the indirect expropriation standard discussed above, text at (n 177). For suggestions in the trade context on moving away from a necessity test see eg T Meyer, ‘A Political Theory of Legal Exceptions’ (2021) Vanderbilt Law Research Paper No 21-18, at 63 and 66–7 <https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3817719>.

181 A Arcuri and F Violi, ‘Public Interest and International Investment Law: A Critical Perspective on Three Mainstream Narratives’ in J Chaisse, L Choukroune and S Jusoh (eds), Handbook of International Investment Law and Policy (Springer 2021) 21–3. Consider also the objections developed in Davitti, D, ‘Proportionality and Human Rights Protection in International Investment Arbitration: What's Left Hanging in the Balance?’ (2020) 89 NordJIntlL 343Google Scholar. Note, however, that the view that investment treaties do not confer direct rights on investors (stressed by Davitti at 349–51) does not undermine the case for employing some form of balancing technique. Rather, balancing techniques are frequently used in an inter-State context (for example, the WTO necessity jurisprudence considered in Part III). However, what would be being balanced is not the claimant investor's individual interest, but the treaty-protected interest of the home State concerning treatment of investments of its nationals. See further above (n 92).

182 Similarly: Kulick, A, ‘Reassertion of Control: An Introduction’ in Kulick, A (ed), Reassertion of Control over the Investment Treaty Regime (Cambridge University Press 2016) 14Google Scholar.