Proportionality and Deference in Investor-State Arbitration: Balancing Investment Protection and Regulatory Autonomy

Description

In this study, Caroline Henckels examines how investment tribunals have balanced the competing interests of host states and foreign investors in determining state liability in disputes concerning the exercise of public power. Analyzing the concepts of proportionality and deference in investment tribunals' decision-making in comparative perspective, the book proposes a new methodology for investment tribunals to adopt in regulatory disputes, which combines proportionality analysis with an institutionally sensitive approach to the standard of review. Henckels argues that adopting a modified form of proportionality analysis would provide a means for tribunals to decide cases in a more consistent and coherent manner leading to greater certainty for both states and investors, and that affording due deference to host states in the determination of liability would address the concern that the decisions of investment tribunals unjustifiably impact on the regulatory autonomy of states. Cover Half title Series Title Copyright Dedication Contents Acknowledgements Table of arbitral awards and cases Table of treaties, legislation, and UN documents List of abbreviations 1 Introduction 1.1 Investor-state arbitration in context 1.2 Treaty interpretation and the role of comparative law 1.2.1 The relevance of the rules of treaty interpretation to the question of the method and standard of review 1.2.2 The role that comparative law can play 1.3 Book methodology and structure 2 Proportionality and deference in theoretical perspective 2.1 Introduction 2.2 The structure of proportionality analysis 2.3 The desirability of proportionality analysis as a method of review 2.4 The relevance of the standard of review to adjudicating regulatory disputes 2.4.1 Method of review, standard of review and grounds of review 2.4.2 Determining the appropriate standard of review 2.5 Rationales for deference in international and supranational adjudication 2.5.1 Epistemic deference: responding to normative and empirical uncertainty 2.5.2 Regulatory autonomy and proximity 2.5.3 Relative institutional competence and expertise 2.5.4 Privileging economically developed states? 2.6 Conclusion 3 Operationalizing deference in the context of proportionality analysis: comparative approaches 3.1 Introduction 3.2 Assessing the legitimacy of a regulatory objective: a residual role for adjudicators 3.3 Suitability: the connection between a measure and its objective 3.4 Necessity: the least-restrictive means reasonably available 3.5 Proportionality stricto sensu: weighing and balancing the competing interests 3.6 Conclusion 4 Methods of review employed by investment tribunals in regulatory disputes 4.1 Introduction 4.2 The areas of international investment law that are the focus of this study 4.2.1 Fair and equitable treatment 4.2.2 Indirect expropriation 4.2.3 Non-discrimination 4.2.4 Treaty exceptions 4.3 The methods of review 4.3.1 Full proportionality analysis and the dangers of substitutionary review 4.3.2 Least-restrictive means analysis as the limit of review 4.3.3 Proportionality stricto sensu without necessity testing 4.3.4 Other methods of review 4.4 Conclusion 5 The development of an institutionally sensitive approach to proportionality analysis in investor-state arbitration 5.1 Introduction 5.2 Legitimate objective 5.2.1 Strict approaches 5.2.2 Explicitly deferential approach or endorsement of state policy 5.2.3 The relevance of international harmonization or consensus 5.2.4 Discriminatory objectives 5.3 Suitability 5.3.1 Strict approaches 5.3.2 The desirability of affording a margin for error 5.3.3 Reliance on the state’s expertise 5.3.4 The relevance of common state practice 5.3.5 Using the suitability stage to identify pretextual objectives 5.4 Necessity 5.4.1 Strict approaches 5.4.2 Reliance on the state’s institutional competence or expertise 5.4.3 Procedural approach to necessity 5.4.4 The burden of proof 5.4.5 The desirability of least-restrictive means analysis in investor-state arbitration 5.5 Proportionality stricto sensu 5.5.1 Restatement of the threshold of (dis)proportionality 5.5.2 Procedural approach to proportionality stricto sensu 5.5.3 The extent of interference with the investment 5.5.4 The desirability of proportionality stricto sensu in investor-state arbitration 5.6 Conclusion 6 Other issues affecting the method and standard of review in investor-state arbitration 6.1 Introduction 6.2 The appropriateness of proportionality analysis as a method of review 6.2.1 The limits of proportionality analysis in investor-state arbitration 6.2.2 The proper place for proportionality analysis in determining liability 6.2.3 The issue of remedies 6.3 The standard of review: other influencing factors and the desirability of a deferential approach 6.3.1 Conflating the grounds of review with the standard of review in fair and equitable treatment cases 6.3.2 Misunderstanding deference and the margin of appreciation 6.3.3 Strategic considerations affecting the standard of review 6.3.4 The desirability of deference in determining state liability 6.4 Conclusion Conclusion Bibliography Index