CYIL Vol. 7, 2016

CYIL 7 ȍ2016Ȏ NON ǧ PRECLUDEDMEASURES IN INTERNATIONAL INVESTMENT ARBITRATION applied, the host state may take “action for the protection of its essential security interests or in circumstances of extreme emergency…” 66 The second – equally popular version of the “Modified NPM” clause allows the state to take action “ necessary to safeguard its essential security interest, or to the prevention of diseases and pests in animals or plants .” 67 Obviously, the nexus requirement between the measure taken and its objective is here stricter, because of its qualification by the adjective “necessary” , instead of the broader “for” in the first type of the NPM clause. 68 Unlike the nexus requirement, the scope of NPM clauses is easy to grasp – either they cover the whole BIT, or its selected provisions only. The limited coverage is typically found in those BITs which juxtapose adopted non- precluded measures to MFN and NT standards. In contrast, a theoretically unlimited discretion is granted to the NPM clauses, which are introduced by the expression “this treaty shall not preclude.” With respect to permissible objectives of NPM clauses, they may be divided into two categories. Security related objectives will comprise objectives such as international peace and security , or security , while public order , public health or morality have been gathered under the scope of non- security related objectives. 69 Virtually, there are two basic types of NPM clauses which have crystallized over the years from the viewpoint of the degree of deference, which is accorded to the state determination, whether it will avail itself of possibilities, granted by the NPM clause, or not. In case the parties to the BIT do not determine expressis verbis the degree of deference, the NPM clause may be classified as non-self-judging with the degree of deference being later deduced by arbitrators. Anyway, even if the clause suggests some deference to the state decision only implicitly, as Burke and Von Staden 70 suggest, “ it becomes appropriate to utilize an interpretive standard such as the margin of appreciation to give more deference to state policy determinations than would ordinarily be available .” Indeed, an arbitrary second-guessing by investment tribunals instead of applying the recommended margin of appreciation is not a particularly clever approach, lest tolerated in the long run by host states. Simultaneously, a seldom occurring self-judging NPM clause stands in opposition toward 66 Agreement Between the Government of the Republic of India and the Government of the Kingdom of Bahrain for the Promotion and Protection of Investments 2007. Article 12 Applicable Laws, Section 2. 67 Agreement between the Government of the Russian Federation and the Government of the Republic of India for the Promotion and Mutual Protection of Investments 1996, Article 3 Promotion and mutual protection of investments. 68 There are only two countries (Korea and Singapore), which concluded with India BITs with the NPM clause, closely mirroring Article XX “exception” of the GATT. 69 Anomalies, such as “ extreme emergency ” are not recommended, as they are difficult to comprehend. 70 Ibid ., p. 371.

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