Ex post general regulation and investment protection in recent international arbitration

Abstract

Some international arbitration tribunals under various bilateral investment treaties (BITs) have recently dealt with the issue of ex post general regulations adopted by host States, which have adversely affected foreign investors. An ex post regulation is understood here in a broad sense and comprises the following situations: (i) host States’ enactment of new legislation for emergency reasons, which alters previous contractual relations with foreign investors; (ii) host States’ adoption of ex post regulations affecting foreign investors with whom they lack a legal relationship; (iii) host States’ ex post lack of enforcement of regulations existing at the time of the making of the investment; (iv) host States’ ex post change of the interpretation of existing regulations, adversely affecting foreign investors.

These situations all have a common feature: the regulation existing at the time that the foreign investors made their investment is not applied according to its terms. The article illustrates how arbitration tribunals have ruled in each of the above-mentioned circumstances and the lessons that both host States and foreign investors can learn from the awards.