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Regulatory takings, stabilization clauses and sustainable development

Lorenzo Cotula

Journal article

Paper prepared for the OECD Global Forum on International Investment VII “Best practices in promoting investment for development” Paris, 27-28 March 2008.

This article examines the implications of the regulatory taking doctrine and of stabilisation clauses for host state regulation in pursuit of sustainable development goals – specifically, for regulation raising the social and environmental standards applicable to investment projects. First, the article recalls the key elements of the international law on regulatory takings, and compares them to the legal standards applicable under a selection of stabilisation clauses. This analysis reveals that increasingly broad stabilisation clauses tend to ensure a level of regulatory stability that far exceeds that accorded by general international law under the regulatory taking doctrine. Second, the article analyses options to mitigate the constraints on host state regulation by limiting the scope of stabilisation clauses through a "compliance with international law" exception, and by building into these clauses some degree of evolution of applicable social and environmental standards.

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Publication information

  • External: X00009
  • Published: Mar 2008 - OECD
  • Theme: Sustainable markets
  • Source pub: Global Forum on International Investment
  • Journal ref: OECD Investment Policy Perspectives
  • Language: English

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Around the world, citizens' groups are taking action to change the way investments in natural resources are happening, to protect the rights of citizens and the environment for a fairer and more sustainable world. The Legal Tools for Citizen Empowerment initiative shares tools and tactics among practitioners.

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