The International Legal Framework for Foreign Investment Control

The provision on security interest (SI) inserted in an international investment agreement (IIA) allows the State to take regulatory measures without compensating the foreign investor whose rights are affected, provided that the specific conditions inserted in the provision or the general principles of customary international law are met. Art. XXI of the general agreement on tariffs and trade signed in 1994. (the GATT, 1994) which provides for such a SI in the context of international trade, serves as model for such SI provisions in IIAs. The way it is drafted has been interpreted along lines that are of great interest, as they open the way to a possible approach that could be adopted by arbitral tribunals assessing the same type of provision. Indeed, we are witnessing the insertion of SI and its equivalents into IIAs. Far from being homogeneous, the variety of their formulations is reflected in the complexity of their interpretation. The approach of the arbitral tribunal remains to be determined after the rejection of Art. 25 ILC and the limited scope of the nexus requirement where it is admitted. A harmonised approach to interpretation can be ensured by guidelines for the interpretation of these clauses and an institutional structure such as a multilateral investment court for their implementation.