Full Protection and Security Standard: The Interpretation Challenge in Investment Treaty Arbitration

The Full Protection and Security Standard has gained significant importance in International Investment Law as majority of the treaties have now incorporated Protection and Security clause in their investment agreements. The paper studies the evolution of the standard from the medieval period to the modern times, exhibiting the numerous challenges that emerged because of the diversified views of the Tribunals in interpreting the standard. Some Tribunals hold that the state’s responsibility is restricted to providing only physical protection towards the foreign investor and their investment, while others have held that it extends to legal and economic standards. Some contend that the protection and security standard is similar to Fair and Equitable Standard, while the others differentiate the two. Also, a few have insisted that the standard be limited to the minimum standard of protection as defined under the Customary International Law, while others consider it independent and beyond Customary International Law. The Tribunals have divergent views on whether the standard of liability should be strict liability or the due diligence standard. This uncertainty caused due to the inconsistent approach of Arbitral Tribunals has created persistent controversies in the international investment law. The paper highlights the complications and attempts at providing suggestions for reducing the extensive gap in analysis of the standard.