Investor protection v. state regulatory discretion: definitions of expropriation and shrinking regulatory competence

The purpose of this paper is to demonstrate that the contemporary international legal framework offers opportunities to investors to challenge and control state action via what has been described as a 'regulatory freeze'. This means that changes to the way states behave are not being made because courts and tribunals have significantly expanded definitions of expropriation in order to massively restrict state regulatory discretion. On the contrary, a regulatory freeze is the consequence of states' own reluctance to legislate/regulate in areas where challenges might be brought. The costs of litigation and the potential of decisions adverse to the state mandating compensation for investors, even if they are largely remote in areas still considered an exercise of legitimate state 'police powers', make legislators doubly careful before upsetting market expectations via expanding regulation, for example in pursuit of environmental objectives.