Drawing boundaries of police powers doctrine: a balanced framework for investors and states

Abstract

Abstract The expropriation of alien property should be subject to compensation as a customary international law rule. Known as the host state’s ‘right to regulate’ or ‘police powers’, there is an ongoing debate on whether there can be non-compensable regulatory takings to uphold ‘essential’ public interests, such as public health. The existence or extent of this doctrine is still unclear, especially when the applicable investment treaty does not specifically address this principle. This article seeks to present a possible legal framework in this regard and defend the general legitimacy of the police powers doctrine even when the applicable treaty does not provide an express provision, though when applied in limited conditions. Therefore, the article defends a mitigated police powers doctrine which seeks to offer a balanced framework upholding the essential public interests and conforming to the core principles of international investment law.