Non-precluded Measures Clauses : Regime, Trends, and Practice

“Non-precluded measures” (NPM) clauses have become a fixture of the modern international investment regime. As an integral aspect of attempts to recalibrate the public-private balance in investment treaties, these clauses are intended as a corrective to the pro-investor interpretations of early arbitral tribunals. They expressly provide for the primacy of public policy over investment protection standards under certain conditions. This contribution seeks to identify trends in the drafting of NPM clauses and identify their common components. It will categorize the conditions that must be satisfied in order that host states can have recourse to them, as well as the role that is provided – or denied – to arbitrators in circumscribing the suitability of an impugned measure in relation to the objective being pursued. Furthermore, recent investment arbitrations have highlighted the latent interpretive ambiguities that can accompany NPM clauses. Indeed, it will be argued that while NPM clauses do raise some difficulties with respect to extending the policy space of contracting parties, they are relatively effective in ensuring that public policy is a permanent feature of arbitrators' matrix of decision-making