State responsibility for omissions : establishing a breach of the full protection and security obligation by omissions

• Main Author: Bastin, Lucas
• Other Authors: Berman, Franklin
• Published: University of Oxford 2017
• Online Access: http://ethos.bl.uk/OrderDetails.do?uin=uk.bl.ethos.729289

The full protection and security obligation traditionally requires a State to exercise due diligence to prevent physical damage from being inflicted on foreign investments within its territory, and to provide a means of redress for aggrieved foreign investors. Recently, tribunals have expanded this application of the obligation such that States are obliged to exercise due diligence to afford legal or regulatory protection to foreign investments. Establishing a breach of the obligation involves establishing a State’s responsibility for its omissions. The law of State responsibility has nuances in respect of establishing a breach of non-absolute positive obligations, such as this one. Evidence of the State's knowledge of the need to act, and of its capacity to act, provide the basis on which a breach of the obligation may be established. Causation is also an element of the proof of a breach, and is to be established by reference to an adequate counter-factual. The standard to which one must establish a breach is contested – as between an objective and subjective standard, or a hybrid – albeit an objective standard of due diligence is preferable. In this context, recent tribunals have fashioned diagnostics for determining a breach of the obligation which invoke concepts of legitimate expectations, and reasonableness and rationality. Using these diagnostics means that the objective standard of proof is satisfied when an investor’s legitimate expectations are frustrated by the conduct of the State, or when the State fails to act reasonably and in order to achieve rational public policy goals. These diagnostics offer a useful and workable development in the articulation of the standard of proof in relation to a breach of the full protection and security obligation.