Author: Alberto Alvarez-Jiménez*
Published: July 2007
Categories of Disputes
Sources of Arbitration Law
Description: (“BITs”) have recently dealt with the issue of ex post general regulations adopted by host States that have adversely affected foreign investors. An ex post regulation is understood here in a broad sense and comprises the following situations:
1. Host States’ enactment of new legislation for emergency reasons, which alters previous contractual relations with foreign investors.
2. Host States’ adoption of ex post regulations affecting foreign investors with whom they lack a legal relationship.
3. Host States’ ex post lack of enforcement of regulations existing at the time of the making of the investment.
4. Host States’ ex post change of the interpretation of existing regulations, adversely affecting foreign investors.
These situations all have a common feature: the existing regulation at the time that the foreign investors made their investment is not applied according to its terms. The way international arbitral tribunals have resolved the disputes could shed some light on how both States and investors could proceed before and after the adoption of any of these forms of new regulation, despite the fact that the controversies differ in terms of facts and underlying treaties.
Generally speaking, the set of international awards that will be analyzed below reveals, first, that foreign investors’ rights are preserved even in the case of grave economic crises that force States to adopt ex post regulations affecting these rights; second, that host States possess ample power to adopt ex post regulations…
*University of Ottawa. Partner, Artifice Consulting Ltd. The author wishes to thank Eliana, Leticia, and Valeria Aluna for their support.