Originally from Investment Treaty Arbitration and International Law - Volume 6

In late 2007, Norway released a new draft model bilateral investment treaty (“BIT”). The government explained that while the model still focused on promoting foreign investment and economic development, it also sought to better safeguard the right of states to exercise legitimate regulatory authority in their territories.1 Amongst other revisions, the model included: a preamble declaring the need to achieve investment promotion objectives “in a manner consistent with the protection of health, safety, and the environment, and the promotion of internationally recognized labour rights;” language making clear that the treaty’s expropriation protection did not impair the right of each state party to “enforce such laws as it deems necessary to control the use of property in accordance with the general interest;” and a general exceptions provision modeled on Article XX of the General Agreement on Trade and Tariffs (the “GATT”).2 After a substantial public comment period, the government abandoned the effort in 2009, reportedly because of polarized feedback which criticized the model either for not adequately protecting investors or for not adequately protecting governments’ ability to regulate in the public interest.3

The member states of the European Union (“EU”) are engaged in a similar debate as they go through the process of developing an EU international investment policy. In a 2011 report, the European Parliament explained that “investor protection for all EU investors must remain the first priority of investment agreements,” while emphasizing that “future investment agreements concluded by the EU must respect the capacity for public intervention,” and the “right of parties to the agreement to regulate, inter alia, in the areas of protection of national security, the environment, public health, workers’ and consumers’ rights, industrial policy and cultural diversity.”4 The European Parliament resolution on the development of EU international investment policy gave reasons for the increased attention to safeguarding public interest regulation: