Full Protection and Security in International Investment Law

Inhaltsverzeichnis

1. Frontmatter

2. Chapter 1. Introduction

   Sebastián Mantilla Blanco

   Abstract

   The FPS standard embodies the customary duty to provide protection and security to aliens. The obligation has been the subject of numerous political and legal disputes throughout the centuries. Most present-day investment treaties include an FPS clause. Still, the meaning and scope of the obligation continues to be the subject of intense controversy. Debate has chiefly focused on whether FPS is a guarantee of physical security only or ensures legal security too. In addition, FPS’s complex connection to the notion of due diligence poses significant challenges for theory and practice.

3. Formation of the Standard: The Long Path to Customary International Law

   1. Frontmatter

   2. Chapter 2. ‘Full Protection and Security’ in Historical Perspective: The Challenge of the Sources

      Sebastián Mantilla Blanco

      Abstract

      Historical arguments are essential to the identification and elucidation of customary norms of international law. Historical sources about the customary FPS standard pose significant challenges. Analyzing the evolution of FPS involves dealing with diverse intellectual and political agendas. Relevant decisions were rendered under the most varied jurisdictional frameworks, and referred to overlapping causes of action. A study of FPS and its connection to the notion of due diligence must additionally consider the shortcomings of the present-day distinction between primary and secondary norms of international law. Despite these obstacles it is possible to develop a plausible historical narrative about the FPS standard. This narrative is an essential ingredient of the legal argument.

   3. Chapter 3. The Origins of ‘Full Protection and Security’. From Medieval Reprisals to the Age of Enlightenment

      Sebastián Mantilla Blanco

      Abstract

      The standard of ‘full protection and security’ embodies a protection obligation in respect of foreign citizens. The standard originated in the practice of private reprisals in the European Middle Ages. It was, however, only until the eighteenth century that legal scholars ‘rationalized’ the protection obligation. In this vein, they resorted to the fiction of a ‘tacit agreement’ between the Sovereign and the foreigner who enters into his dominions. By this agreement, the Sovereign promises protection and the foreigner obedience. As an alternative to the theory of the tacit agreement, early positivist scholars sought to establish the foundations of the protection obligation through an analysis of state practice, and characterized FPS as a customary obligation. These theories had a likely influence on international treaties.

   4. Chapter 4. A Battle of Gunboats and Books: ‘Full Protection and Security’ and the Minimum Standard of Treatment in Historical Perspective

      Sebastián Mantilla Blanco

      Abstract

      Between the mid-nineteenth and the early twentieth centuries, naval powers used military force to compel weaker states to compensate foreigners for damages originating in acts of private individuals, particularly in the context of revolutionary wars. The gunboat diplomacy would set the stage for the emergence of the idea of an absolute minimum standard for the treatment of aliens. The reaction of intellectuals from other regions of the world crystalized in the doctrine of equality, which posited that no state is obliged to offer foreigners a better treatment than it gives to its own nationals. The debate continued for decades. The customary obligation to exercise diligence in the protection of aliens was at the core of the dispute.

   5. Chapter 5. The Calm After the Storm: ‘Full Protection and Security’ as an Element of the Minimum Standard of Treatment

      Sebastián Mantilla Blanco

      Abstract

      State practice about the customary minimum standard of treatment was strikingly inconsistent for a long time, and efforts to deduce the standard from general principles of international law were never successful. The widespread acceptance of the minimum standard is therefore of recent vintage. Express declarations about the existence of a customary minimum standard in investment treaties provide evidence of said standard’s present-day customary status. Contemporary treaty language also indicates that the FPS standard is nowadays normally regarded as an element of the more-general minimum standard. This general standard remains imprecise, despite efforts to specify its content through analogies to human rights and other argumentative devices. The fact that the minimum standard is the opposite to the doctrine of equality could still have some significance, however limited, on the scope and content of the customary FPS standard.

4. Scope of the Customary Standard

   1. Frontmatter

   2. Chapter 6. Scope of Application of the Customary Standard: Conceptual Framework

      Sebastián Mantilla Blanco

      Abstract

      International investment law characterizes the obligation to provide ‘full protection and security’ as a standard. This characterization implies placing some margin of discretion on adjudicators, but does not prevent FPS from having a delimited scope of application. The key to FPS is the notion of security. Social scientists understand security as concept describing a relation between security agents, secured objects and secured risks. These elements delimit the scope of any meaningful use of the term ‘security’. The FPS standard must therefore refer to specific agents (provider and beneficiary of FPS), protected interests or assets (object of FPS), and a set of covered risks.

   3. Chapter 7. Subjective Scope of Application of the Customary Standard of ‘Full Protection and Security’

      Sebastián Mantilla Blanco

      Abstract

      Two elements define the subjective scope of application of the FPS standard in customary international law. The first element corresponds to the beneficiary of the security obligation. As an institution of the law of aliens, the FPS standard entails a foreignness requirement and thus protects only foreign natural and juristic persons. The second element refers to the provider of security. As a rule, the security obligation is imposed upon the state exercising territorial jurisdiction over foreign nationals. The FPS standard is however also applicable in respect of non-state entities, provided they are accountable under international law and exercise actual territorial control (e.g. de facto regimes).

   4. Chapter 8. Objective Scope of Application: Protected Interests and Covered Risks

      Sebastián Mantilla Blanco

      Abstract

      FPS clauses protect investments as defined in the applicable treaty. By contrast, the customary FPS standard protects a wide array of rights and interests of aliens. The notion of ‘acquired values’ facilitates the description of such broad object of protection. The customary FPS standard covers only specific categories of risk, which are ascertainable by their source. The essence of FPS pertains to the reaction of the host state towards a risk that does not originate in its own conduct. The heart of the standard is thus the protection of aliens against injuries caused by private individuals and other third parties, including other states and international organizations. In addition, FPS refers to environmental risks and collateral damages inflicted in the course of security operations, such as counterinsurgency maneuvers.

   5. Chapter 9. Objective Scope of Application: Irrelevance of the Distinction Between Physical and Nonphysical Harm

      Sebastián Mantilla Blanco

      Abstract

      Academic debate on the scope of FPS has chiefly focused on whether the standard refers only to physical protection, or whether it also encompasses the notion of legal security. The physical security approach is inconsistent with the definition of ‘investment’ in numerous treaties, which typically covers both physical and non-physical assets. The extension of FPS to legal security rests on shaky ground too, as it relies on mere arguments of authority and has no basis in customary international law. A better understanding of FPS is that it pertains to physical and non-physical risks, provided the source of risk is external to the host state. It is the source of risk, and not its physical or non-physical character, what determines the applicability of the FPS standard.

   6. Chapter 10. The Temporal Scope of Application of the Customary Standard of ‘Full Protection and Security’

      Sebastián Mantilla Blanco

      Abstract

      The FPS standard is applicable both before and after the occurrence of a harmful event. Prior to the injury, FPS imposes an obligation to exercise due diligence in the prevention of harm. After the infliction of an injury, FPS requires the host state to provide adequate means of redress. While both functional dimensions of the FPS standard refer to the same type of risks, the activation of the redress obligation is not contingent upon a previous breach of the prevention obligation. The injury as such triggers the obligation of redress, regardless of whether the failure to prevent its occurrence constitutes an internationally wrongful omission.

5. Content of the Standard

   1. Frontmatter

   2. Chapter 11. The Characterization of the Obligation to Provide ‘Full Protection and Security’

      Sebastián Mantilla Blanco

      Abstract

      The FPS standard has been consistently defined as a due diligence obligation. Still, FPS is not an obligation of means or a pure obligation of diligence in the traditional sense of the terms. In addition to a want of diligence, a breach of FPS requires the occurrence of a harmful event. These requirements admit no exception. The due diligence aspect of the standard implies, first, that approaches arguing that FPS encompasses obligations which impose strict liability (e.g. an obligation to create a judicial and administrative system, as opposed to the obligation to set in motion such system in response to a threat) are ill founded. A second implication is that a breach of FPS always refers to a failure to do something, that is to say, an omission.

   3. Chapter 12. Due Diligence in the International Law of Aliens: Conceptual Framework

      Sebastián Mantilla Blanco

      Abstract

      In the law of aliens, due diligence is closely related to the concept of fault. Responsibility for fault or due diligence represents a middle path between the national community’s collective responsibility for acts of its individual members and the exclusion of state responsibility for acts of individuals. The role of fault in state responsibility dominated centuries of scholarly debate. As international law excluded fault from the elements of the internationally wrongful act, the primary obligation to protect foreigners was defined in terms of due diligence. Due diligence thus appears as a functional equivalent to the notion of fault. In this system, the host state is not indirectly responsible for acts of individuals, but directly responsible for its own omissions in the protection of aliens.

   4. Chapter 13. Due Diligence in the Context of ‘Full Protection and Security’ Claims

      Sebastián Mantilla Blanco

      Abstract

      Investors advancing FPS claims bear the burden of proving a want of diligence on the part of the host state. Due diligence is an objective rather than a subjective standard. The objective standard of due diligence implies comparing the host authorities’ conduct with the course of conduct that could be expected from an average state with similar resources and in similar circumstances as the host state. Due diligence cannot be reduced to a general definition. Several factual circumstances play a role in the assessment of diligence. Among other factors, tribunals should consider the existence of an opportunity for positive action, host authorities’ awareness about the risk, certainty as to the legitimacy of the rights and interests at stake, the investor’s conduct, the existence of support by public authorities to private offenders, the need to strike a balance between the investor’s interests and the general interest, compliance with relevant provisions of domestic law, and fulfillment of other due diligence obligations under international law.

6. ‘Full Protection and Security’ Clauses in International Investment Agreements

   1. Frontmatter

   2. Chapter 14. ‘Protection and Security’ Clauses in Investment Treaties: A Typology

      Sebastián Mantilla Blanco

      Abstract

      The language of FPS clauses is signalized by diversity. Investment treaties’ FPS clauses can be classified on the basis of three criteria. The first criterion is the existence or absence of a reference to customary or general international law. These references, while typically aiming at clarifying the relationship between the treaty-based standard and the customary standard, may fulfill different functions in different treaty frameworks. The second classification criterion is the presence of a reference to the domestic law of the host state, which in some cases could entail a derogation from customary law. The third criterion refers to the use of adjectives in the formulation of FPS clauses and extent to which the choice of a formula such as ‘full protection and security’, ‘constant protection and security’ or ‘legal protection and security’ has a bearing on the substance of the treaty-based standard.

   3. Chapter 15. ‘Full Protection and Security’ Clauses and Other Treaty Provisions

      Sebastián Mantilla Blanco

      Abstract

      FPS clauses are closely related to other standards of investment protection. The relationship between the FPS and the FET standards has given rise to divergent approaches, including the characterization of the two obligations as a single standard and the classification of FPS as an element of the FET standard. The better view is, however, that the two standards are independent from each other. As FPS refers primarily to protection against third party violence, the standard crystalizes the security function of the ‘Hobbesian’ state, whereas the FET standard is intertwined with the rule of law. There might also be an interplay between the FPS standard and expropriation clauses, the prohibition of discriminatory and arbitrary measures, national treatment, MFN clauses, and war clauses. Still, as a rule, a fairly clear line can be drawn between responsibility for breach of the FPS standard and responsibility for breach of other obligations under international investment agreements.

   4. Chapter 16. Conclusion: The Night Watchman State

      Sebastián Mantilla Blanco

      Abstract

      The FPS standard requires the state to exercise the monopoly of the use of force to the benefit of foreign citizens, protecting them from external sources of risk. In this sense, the host state could be thought of as a ‘night watchman’. FPS has a specific scope of application and a limited content. Cases concerning risks that are not properly covered by the FPS standard must be assessed through the prism of other standards of investment protection.

7. Backmatter