Originally from Investment Arbitration Decisions

I. INTRODUCTION

The great majority of international investment treaties, bilateral or multilateral, contain some clause in which the host state guarantees the investor "full security and protection." This norm that appears to have achieved the status of boilerplate language in investment treaties is generally cited together with another fundamental substantive obligation of the host state towards investors, i.e., to grant "fair and equitable treatment."1 Relatively few awards have dealt with the content of "full protection and security" clauses and if they did, it was mainly in the context of the traditional understanding of police power protection.2 Lately, parties to investment disputes have tried to give the concept a broader meaning,3 and tribunals have reached diverging conclusions as to such a broader scope.4

Two main questions therefore arise in connection with the "full security and protection" clauses:

First, which standard applies to the protection owed by the state towards its investors in the traditional police power context, in particular what does the traditional "due diligence" standard of customary international law imply? And second, can the "full protection and security" clauses of modern investment treaties be read in a way to provide for more than the traditional police power protection?