FULL PROTECTION AND SECURITY STANDARD IN INTERNATIONAL INVESTMENT LAW

Abstract

The subject of the study is the analysis of the application of the Standard of Full Protection and Security of Foreign Investments in international arbitral practice. It is an absolute standard that is contained in almost all international investment agreements and that has been established through arbitration practice, regardless of the variety of language expressions referred to in investment agreements. The objects of protection under this Standard can be both investors and investments and it establishes a dual obligation for the states. On the one hand, there is the obligation of active action to prevent and remedy a violation or to punish perpetrators, and on the other hand, there is the obligation to refrain from any activities that may hurt foreign investment. This paper deals in particular with the three issues that are decisive for the application of the Standard in practice. The first is the issue of the relationship between this Standard and other standards of protection of foreign investments, in particular the Standard of Fair and Equitable Treatment, as well as to the minimum standard of protection enjoyed by foreign investors and their investment under international customary law. The second is the issue of standard content, whether it applies only to physical protection and security, or includes wider, legal protection and regulatory protection, security and stability. The third question relates to the degree of protection and security, i.e. whether this Standard implies the objective liability of the host country or whether it has to deal with due diligence, depending on the circumstances of each case. The paper analyses all publicly available decisions of international arbitration tribunals as well as scientific literature dealing with this Standard and points out the prevailing attitudes about these three key issues as well as their implications for the protection of foreign investments.