In part I of this series, Dr Nicolás Perrone and ILA Reporter Assistant Editor Stephanie Triefus discussed the meaning of the legal imagination. This part elaborates on the content of Dr Perrone’s book and how and why the debate around how we talk about international investment law should evolve.
ST: In your book you discuss the Philip Morris v Uruguay arbitration, which is similar to the claim brought against Australia by Philip Morris via the Australia-Hong Kong BIT. The current Australian government is not concerned about ISDS because Australia ‘won’ this arbitration, and so continues to favour ISDS in its review of its investment agreements. What does the reasoning in these awards tell us (or conceal) about how investment arbitrators conceive of the state’s right to regulate?
NP: There is a document from the Cologne Society from around 1956 or 1957 that was submitted to the World Bank, that was saying that state regulation is very dangerous, and we should be careful about it. But then when more lawyers got involved, they were more nuanced, saying that of course the state needs to regulate, regulation is totally fine – the American Bar Association was saying that certain regulations are fine, but other regulations go too far. Something that they were very interested in back then was to make it impossible for Global South governments to expropriate when a provision prohibiting nationalisation was included in concession contracts. So they wanted to interpret a contract in a way that could trump states’ right to expropriate, even if that right was part of customary international law and enshrined in the General Assembly Resolution on Permanent Sovereignty over Natural Resources. So it’s not always obvious which regulation is the one that they want to prevent or make more difficult to implement. It depends on corporate needs, existing public policy and, of course, lawyers’ creativity.