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Practising VirtueInside International Arbitration$
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David D. Caron, Stephan W. Schill, Abby Cohen Smutny, and Epaminontas E. Triantafilou

Print publication date: 2015

Print ISBN-13: 9780198739807

Published to Oxford Scholarship Online: January 2016

DOI: 10.1093/acprof:oso/9780198739807.001.0001

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The Enforceability of Legislative Stabilization Clauses

The Enforceability of Legislative Stabilization Clauses

Chapter:
(p.318) 19 The Enforceability of Legislative Stabilization Clauses
Source:
Practising Virtue
Author(s):

Joseph E Neuhaus

Publisher:
Oxford University Press
DOI:10.1093/acprof:oso/9780198739807.003.0020

This chapter deals with the enforceability of legislative stabilization clauses through international arbitration. Typically, these clauses are undertakings by governments in their national legislation not to alter benefits accorded to foreign investors for a specific period of time. It compares legislative stabilization clauses with contractual stabilization provisions and concludes that the reasons for the enforceability of the latter support the enforceability of the former. It identifies four justifications in support of this analogy: the vested rights justification (ie a stabilization promise creates a vested right that is entitled to protection as a matter of international law); the sanctity of contracts justification (ie agreements must be honoured); the reliance justification (ie a stabilization clause creates a reliance interest on the part of the investor); and the public policy (ie public policy, based on the reasoning that a state must be able to bind itself in order to realize its aims).

Keywords:   legislative stabilization clause, international arbitration, foreign investors, national law, contractual stabilization

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