THE EROSION OF STATES’ RIGHT TO REGULATE IN ISDS

Аннотация

Arbitral awards of ISDS cases have greatly contributed to the emergence of the “regulatory chill” through broad and investor-protection-oriented interpretation of investment treaty provisions. Therefore, it is essential to examine cases concerning the public-interest actions of the states, which shed light on the lessons to be learnt for drafting “balancing provisions”. One of these cases is Bear Creek Mining v. Peru. It involves a dispute arising out of circumstances, where the investor seeks damages from the host state for having revoked a permit in response to protests by a local population against the investment operations. This article analyzes how arbitral award of Bear Creek Mining case has contributed to the “regulatory chill” and proposes certain mechanisms aimed at eliminating the “chilling effect” of the treaty provisions. KEYWORDS States’ right to regulate, investment arbitration, FTAs, interpretation of treaty clauses.