The Right to Regulate in International Investment Law and the Law of State Responsibility: A Hohfeldian Approach

Abstract

The right of States to regulate for the public interest has been the focus of increased interest in recent years, finding formal recognition in multiple international investment agreements (IIAs). Formal recognition of the right to regulate has largely been considered as a positive development in terms of making IIAs more balanced and giving arbitral tribunals a clear interpretive guidance against restricting the State’s regulatory space. That notwithstanding, the right to regulate in international investment law remains somewhat undertheorized. Using Hohfeld’s work, the aim of the present contribution is to fill this gap by offering some thoughts, about how the right to regulate operates as a State argument during arbitral proceedings, and about the implications of invoking that right for a State’s international responsibility. I argue that it is possible to conceptualise the right to regulate in international investment law in two ways: first, in its default understanding, the right to regulate means that the State has a Hohfeldian legal power, and hence, provides the State with a prima facie justification for actions taken; second, the right to regulate is a Hohfeldian immunity, meaning that the State is either fully justified or excused for acting in a certain way. It is submitted that the two conceptualisations are distinct from each other, and that each one gives rise to different argumentative strategies and different legal considerations in terms of triggering the host State’s international responsibility. Finally, I argue that conceptualisations of the right to regulate as a strict entitlement (i.e. a Hohfeldian claim-right) should be viewed with caution.