The precarity of the police powers doctrine in investment arbitration: Rockhopper v Italy

Abstract

Abstract This article analyses the reasoning of the ICSID tribunal in Rockhopper v Italy with respect to the police powers doctrine. It contends that, in upholding the investors’ claim that the Italian government had unlawfully expropriated their investment in an oil and gas field off the Italian coast by passing a law banning hydrocarbon exploitation and refusing their application for a production permit on that basis, the Tribunal approached the police powers doctrine in an insufficiently clear and rigorous way. First, the Tribunal’s reasons were scant and lacked any articulation of the content of the doctrine or engagement with the extensive body of relevant arbitral jurisprudence and scholarship, making it difficult to comprehend how the doctrine was understood and why it was rejected. Secondly, the Tribunal’s assessment of the validity of Italy’s regulatory purpose, being the only aspect of the doctrine with which it engaged, lacked careful engagement with the evidence. As a result of these shortcomings, the Tribunal’s reasons lend a precarity to the police powers doctrine which belies its relatively settled status in investor-state arbitration and reveals the need for greater rigour and lucidity in its future application.