Symposium on International Investment Law & Contemporary Crises – Part 7 of 8
The Police Powers Doctrine and the Right to Regulate in Banking and Finance Investment Disputes: Drawing the Line in International Investment Law

Are “police powers” and the “right to regulate” really the same thing in investment arbitration?

In this morning’s symposium contribution, Saïda El Boudouhi (Université Paris 8) offers a rigorous analytical lens on a concept frequently invoked - and often conflated - in banking and finance disputes.

Building on the BIICL (British Institute of International and Comparative Law) empirical study, the piece distinguishes between:

- The police powers doctrine - an operative component of the indirect expropriation rule, allowing States to avoid compensation where measures genuinely pursue public welfare objectives; and
- The right to regulate - a broader, often declaratory principle that gains operative force primarily through its interaction with fair and equitable treatment (FET), particularly in assessing legitimate expectations.

Key insights include:

- Police powers have played a decisive role in emergency intervention cases
- Tribunals increasingly frame legitimacy in terms of “public welfare”, coupled with proportionality analysis
- The right to regulate cannot override treaty obligations—but can shape the assessment of reasonableness under FET
- Conceptual clarity matters: conflating the two risks diluting doctrinal precision

The broader takeaway? Investment law in the banking and finance sector demonstrates an evolving effort to balance compensation standards with sovereign regulatory space - especially in times of crisis.

Read the full contribution here: https://lnkd.in/eFUfa3Xc