417 / 536
403
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.