There's an interesting exchange on ISDS/ICS between MEP Bernd Lange and EU Trade Commission Cecilia Malmstrom (the latter is a subscriber-only Inside US Trade document). I was particularly interested in Commissioner Malmstrom's explanation of the new "right to regulate" provision (discussed here and here):
The article on the right to regulate is one of the important innovations in the new EU approach. It is intended to guide the interpretation of the substantive standards of protection and ensure that the right of governments to take regulatory measures in the public interest is not hindered in any way by the conclusion of the trade and investment agreements, including by what has become known as "regulatory chill" (i.e. alleged hesitation of governments to adopt measures in the public interest due to the fear of being sued by investors). ...
The provision is in Article 2.1 of the EU draft TTIP investment text, and reads:
The provisions of this section shall not affect the right of the Parties to regulate within their territories through measures necessary to achieve legitimate policy objectives, such as the protection of public health, safety, environment or public morals, social or consumer protection or promotion and protection of cultural diversity.
My sense is that the minimum standard of treatment has been one of the more difficult international economic law provisions for which to articulate a clear meaning. And at first glance, the right to regulate provision would be similarly challenging.
So what happens when the right to regulate provision "guides the interpretation" of the minimum standard of treatment? How exactly would the right to regulate interact with a minimum standard of treatment?
For example, the minimum standard of treatment targets, among other things, "manifestly arbitrary" government actions. How would a right to regulate guide the interpretation of the phrase "manifestly arbitrary"? Would it provide flexibility to governments to be a bit more arbitrary than otherwise? How arbitrary can they be when the right to regulate is present, as opposed to when it is not?
I can imagine a lot of possibilities. It is not clear which one a tribunal (or an appellate tribunal) might choose.
