Risk, responsibility, and fairness in international investment law

Azernoosh Bazrafkan, Alexia Herwig

Research output: Chapter in Book/Report/Conference proceedingChapterAcademic


International investment agreements (IIAs) accommodate two framings of risk in need of mitigation: political risks and risks of physical externalities. The chapter discloses that there is no consistency in the finer-grained framing of these risks in arbitral awards, and analyses these framings from the perspective of the fair and equitable treatment (FET) standard. It is argued that the requirements of fairness and equity call for a just distribution of systemic risks, which IIAs create. It must be ensured that IIAs yield greater ex ante benefits than risks for each stakeholder. The implication is twofold: governmental regulation necessary to protect human rights can never give rise to a right to damages under FET for frustration of expectations and good faith imperfections in regulations by developing countries must be tolerable insofar as emerging development is the constitutive reason for why foreign investment is likely to yield higher ex ante benefits than risks to investors.
Original languageEnglish
Title of host publicationRisk and Regulation of Uncertainty in International Law
EditorsMonika Ambrus, Rosemary Rayfuse, Wouter Werner
Place of PublicationNew York
PublisherOxford University Press
Publication statusPublished - 2017


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