General Public Policy Exceptions in Investment Treaties: Interpretive Challenges and Strategies

The proliferation of international investment agreements (‘IIAs’), the widespread invocation of claims under these IIAs by private investors, and the subsequent issuance of arbitral awards that tended to favour investors have led many to believe that IIAs have unduly curtailed the regulatory flexibility of states. While the earlier generation of investment treaties were designed to incentivize foreign investment and prioritize the rights of the investors, newer-generation IIAs have begun to incorporate general public policy exception clauses (PPE clauses) intended to preserve states’ ability to regulate in the public interest while maintaining meaningful investor protection. This article focuses on the challenges associated with interpreting these clauses by examining recent treaty awards and ultimately proposes an analytical framework for interpretation of these clauses which can more effectively balance states’ regulatory autonomy and investor rights.