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Between Fair and Equitable Treatment and Stabilization Clause:

Between Fair and Equitable Treatment and Stabilization... I. INTRODUCTION One of the most challenging questions in contemporary international investment law relates to the balance between the competing needs of allowing a reasonable policy space for host states, and enabling foreign investors to plan their operations in advance. These significant objectives highlight the ever-present tension between flexibility and predictability in international investment relations. On the one hand, foreign investors (like most economic operators) must calculate their steps in advance, and unexpected regulatory changes2 undertaken by the host state may frustrate their expectations regarding economic returns. Frequent and significant regulatory changes may significantly reduce (or obliterate) the expected profits of foreign investors and deter further investments. On the other hand, governments, as regulators, should be permitted to respond to changing circumstances in their domestic and external environments, inter alia by regulatory measures. Imposing excessive limitations on host states' freedom of action may significantly undermine their capacity to fulfill their fundamental commitment to promoting the general welfare of their inhabitants. Host states' legislative powers highlight the asymmetric relations between foreign investors and sovereign states: host states are generally authorized to enact regulatory measures (where such are not prohibited by international law), including such measures applicable to foreign investments http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Journal of World Investment and Trade Brill

Between Fair and Equitable Treatment and Stabilization Clause:

Journal of World Investment and Trade , Volume 12 (6): 800 – Jan 1, 2011

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Publisher
Brill
Copyright
Copyright © Koninklijke Brill NV, Leiden, The Netherlands
ISSN
1660-7112
eISSN
2211-9000
DOI
10.1163/221190011X00300
Publisher site
See Article on Publisher Site

Abstract

I. INTRODUCTION One of the most challenging questions in contemporary international investment law relates to the balance between the competing needs of allowing a reasonable policy space for host states, and enabling foreign investors to plan their operations in advance. These significant objectives highlight the ever-present tension between flexibility and predictability in international investment relations. On the one hand, foreign investors (like most economic operators) must calculate their steps in advance, and unexpected regulatory changes2 undertaken by the host state may frustrate their expectations regarding economic returns. Frequent and significant regulatory changes may significantly reduce (or obliterate) the expected profits of foreign investors and deter further investments. On the other hand, governments, as regulators, should be permitted to respond to changing circumstances in their domestic and external environments, inter alia by regulatory measures. Imposing excessive limitations on host states' freedom of action may significantly undermine their capacity to fulfill their fundamental commitment to promoting the general welfare of their inhabitants. Host states' legislative powers highlight the asymmetric relations between foreign investors and sovereign states: host states are generally authorized to enact regulatory measures (where such are not prohibited by international law), including such measures applicable to foreign investments

Journal

Journal of World Investment and TradeBrill

Published: Jan 1, 2011

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