Police Powers Doctrine and International Investment Law

Disagreement is endemic to the study of concepts so fluid and elusive as the state’s police powers. According to the so-called police powers doctrine, a measure that falls within the state’s police powers resulting in loss of property does not constitute an indirect expropriation, and, accordingly, does not give rise to an obligation to compensate. Despite the apparent propinquity of the state’s police power to its police force, the two are not coterminous. As Adam Smith pertinently remarked in his 1763 Lectures on Justice, Police, Revenue and Arms, the word ‘police’ ‘is originally derived from the Greek πολιτeία [politeia], which properly signified the policy of civil government.’ The chapter explores the police powers doctrine in international investment law and inquires into its status as a general principle of law, as customary international law or as a concept displaying a different kind of timbre, ‘an eminently interpretative operation’ that belongs to the sphere of arbitral discretion.