Refining the Content and Role of Investment ‘Rules’ and ‘Standards’: A New Approach to International Investment Treaty-Making

Abstract

The investment treaty system is going through a phase of ‘recalibration’. The exponential growth of investment flows from developing countries, governments paying more attention to competing objectives, pressure from civil society, and the realization of the complexity of designing developmental policies have contributed to the need of a novel approach in international investment policy-making. In order to contribute to this recalibration process, the paper presents a novel (perhaps bolder) approach that policy-makers (including the European Union) should consider in developing their future international investment treaties. Using the well known dichotomy of ‘rules’ and ‘standards’, the paper argues for a refinement in the content and role of investment protection norms. More specifically, treaty-makers should, first of all, limit the role of certain investment norms by making sure that they operate as ‘rules’ and not as ‘standards’ (for example, the provision on ‘expropriation’). Secondly, treaty-makers should clarify and refine the content of investment standards (for example, the fair and equitable treatment (FET) standard) on the basis of public international law, comparative public law and ‘law and development’ methodologies.

Keywords: investment treaty system, rules v standards, expropration, fair and equitable treatment

JEL Classification: K33