This is from the latest Columbia FDI Perspectives:
A network of bilateral treaties and other international investment agreements (IIAs) has constructed a predictable and enforceable international investment regime.
Since 1992, however, the protections offered by this regime have potentially been limited by the inclusion in IIAs of self-judging essential security interest (ESI) clauses. These clauses expressly allow a government to take measures—unilaterally—that “it considers necessary” to evade treaty obligations.
This Perspective presents a study of 1,861 IIAs concluded by 90 countries before early 2016. The study sought to identify the geographic and temporal spread of self-judging ESI clauses in IIAs and trends in drafting styles. It found 222 IIAs containing self-judging ESI clauses, with the United States (US) being the first to introduce them. The US, Canada and Japan remain the leading users, followed by a growing number of Asian and Latin American countries.
While the number of self-judging ESI clauses is small compared to the total number of IIAs, the proportion of IIAs with such clauses concluded in a given year has increased from negligible in 2000 to over 60% of IIAs concluded in 2015. (See charts below.) By early 2016, at least 134 countries, accounting for 99% of world outward FDI flows and stock, were bound by such clauses.
It surprises me that early investment agreements did not usually have such clauses, and it also surprises me how quickly these clauses have been adopted in recent agreements. Could the use of general exceptions clauses spread as quickly?
