News

12/12/2016

Public Purpose in Investment Disputes

Lecture and Discussion with Pedro J. Martinez-Fraga and C. Ryan Reetz

On December 5 2016, the Bucerius Alumni Group on Public International and European Law hosted a lecture with Pedro J. Martinez-Fraga and C. Ryan Reetz about public purpose doctrine in international investment disputes. Partners in the Miami office of Bryan Cave, Mr. Martinez-Fraga and Mr. Reetz are experts in the field of investment arbitration. In their recently published book, Public Interest in International Law: Rethinking Regulatory Sovereignty in the Global Era, they call for a “public purpose” objective standard to increase predictability in investor-state actions.

In the course of the evening, Mr. Martinez-Fraga and Mr. Reetz explained that, pursuant to customary international law and investment treaties, states are not permitted to expropriate property unless they are taking the property for a “public purpose.” The problem is that “public purpose” is not defined in the investment treaties, so states have a lot of discretion to decide what falls under the exception. The speakers argued that such discretion renders the public purpose doctrine meaningless, and therefore the doctrine must be fixed. In order to avoid a legacy of the public purpose doctrine that is “self-judging” and “unreviewing,” states should consider defining the term. By defining “public purpose,” states would move away from a purely intuitive conception of the doctrine and increase predictability in investor-state actions. With a clearer definition of  “public purpose,” governments would indirectly boost foreign investment in these states.

After the lecture, attendees and speakers were able to continue discussions about the public purpose 

Julia von Türk and Enrique Fajer