CYIL Vol. 7, 2016

KATARÍNA CHOVANCOVÁ CYIL 7 ȍ2016Ȏ then comment on the Continental award, with the main object being the WTO oriented arbitral tribunal’s selective reliance on the WTO necessity testing in its entire vicissitude. At the very end, the article suggests a balanced invocation of the WTO concept of necessity and drawing on the WTO jurisprudence by investment arbitral tribunals in the future. Simultaneously, the final section draws some conclusions on the contemporary convergence of international investment and trade. 2. Non-Precluded Measures – Structure and Classification Although being firmly tied with BITs, starting with the first European modern BIT, concluded in 1959 between Germany and Pakistan, NPM clauses are more than one decade older. Actually, they paved their way into the US Friendship, Commerce and Navigation treaties, signed soon after World War II. As a part of the BIT, the NPM clause may be included in the main text of the treaty, or, which happens very rarely, in the attached protocol to the treaty. 62 Traditionally, a basic form and structure of the NPM clause always incorporates several compartmentalised elements. Firstly, there is “ the nexus ” required between the measure taken by the host state and a desirable objective, which should be attained by the measure. 63 Secondly, the scope of applicability of the clause defines its mutual intercourse with other provisions of the BIT, in which the NPM clause is included. In addition, every carefully drafted NPM clause will lay down all objectives that may be followed by the host state through adoption of the measures, which are not precluded by the BIT itself, although deviating from it when being relied on. A lack of diligence with regard to an accurate specification of the nexus and permissible objectives, while accommodating perhaps a lax approach of the BIT parties toward the NPM clause, may in the end costs them dearly. As two commentators 64 rightly pointed out, “…these terms determine whether states or investors will bear the costs of state action in exceptional circumstances.” Undoubtedly, omniscient negotiators ought to think twice before they leap when drafting their NPM provision in BIT. On the whole, the wording of NPM clauses in various BITs might seem similar, but it is never identical, depending on the needs and consensus of negotiators. To illustrate the outputs of various negotiating techniques, three practical model NPM provisions adopted in Indian BITs may serve as an illustrative example. 65 The first ordinarily applied “Model NPM” clause mirrors an NPM provision in the Model Indian BIT and incorporates only a tenuous nexus requirement, because when being

62 BURKE-WHITEW., VON STADEN A.: Investment Protection in Extraordinary Times, op. cit ., p. 325. 63 The nexus requirement does not implicate only a relationship of the measure and its objective, but indicates also an extent of review of this relationship by arbitrators in the later investment arbitration. 64 Ibid ., p. 329. 65 RANJAN, P.: Non-Precluded Measures in Indian International Investment Agreements, op. cit ., p. 34.

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