Why Due Regard Is More Appropriate than Proportionality Testing in International Investment Law

Abstract

Abstract Global regulatory standards of due diligence, regulatory coherence, and due regard are emerging in public international law. Investment law has been concerned to settle upon the most appropriate regulatory coherence tests for application in the arbitration of regulatory disputes. Candidates have included proportionality, rationality, and reasonableness tests. This article argues instead for reliance on the due regard standard in conjunction with reasonableness or rationality testing. This will more appropriately reflect the nature of investment treaties as inter-State bargains. Further, responding to arguments for the adoption of proportionality on the basis of comparative public law, the article demonstrates that proportionality is not established as a general head of review in common law jurisdictions including England, Australia, Canada, New Zealand and South Africa. At the same time, the application of the due regard standard can have much in common with procedural proportionality testing as seen among these domestic legal systems and elsewhere.