The Balance between the Public Interest and Investor Protection

This paper’s aim is to provide information relating to the balance between
investor protection and the public interest in international investment law and
United Kingdom law. From the discussion, five main issues were raised: the
notion of public interest, the state’s right to regulate, the role of the principles
of international investment law and United Kingdom law in balancing investor
protection with the state’sright to protect public interests, and the mechanisms
of balancing state rights and investor protection.
Without a doubt, states have the right to regulate their social, political
and economic affairs. The mandate to govern emanates from many legal
justifications, including the sovereignty of a state, the contract theory and a
government’s obligations to protect its citizens. However, a state’s support
of binding international investment treaties ensures that its regulations are
consistent with its obligation under the treaty; therefore, the right to regulate
does not justify the violation of investors’ rights. At the center of the right
to regulate is the obligation to prevent the breach of legitimate expectations,
which form the basis of investment decisions. This brings us to the principles
of international investment law, including fair and equitable treatment, a stable
and predictable legal framework, due process and proper dispute resolution
mechanisms. It is arguable that the international investment principles are
crafted with the investor in mind and are not sufficient to address the dayto-day dynamics relating to public interests. An essential aspect of a trade
agreement is the creation of a dispute resolution mechanism capable of
resolving issues arising from conflicts between foreign investments and
public interest. Foreign investors’ interests are safeguarded by the right to
access neutral and effective dispute resolution mechanisms that are capable of
enforcing their rights as provided by relevant treaties. While the same applies
to citizens in the host country, the public interest is given more prominence by
the state’s right to regulate.