Full Protection and Security

Abstract

Most investment treaties contain provisions granting full protection and security for investments. The wording of these clauses suggests that the host State is under an obligation to take active measures to protect the investment from adverse effects. The adverse effects may stem from private parties or from actions of the host State and its organs. More recently tribunals have found that provisions of this kind also guaranteed legal security enabling the investor to pursue its rights effectively. Tribunals have disagreed on whether full protection and security merely reflects the broader, fair and equitable treatment standard and customary international law or offers an independent and additional standard. Arbitral practice is generally agreed that this standard of protection merely requires due diligence and does not create absolute liability.