PUBLIC POLICY AND THE CHALLENGES OF CHANGE IN INVESTMENT ARBITRATION( ABOUT RIDING 4 UNRULY

HORSES)

"Public policy-it is an unruly horse and when once you get astride it, you never know where

carry you. It may lead you from the sound law. It is never argued at all but when other points fail."

(Justice Borrough - Richardson v. Mellish)

Author Mihaela Eugenia Dragomirescu LLM in International.Arbitration 2015

Abstract

Public policy is one of the important tools for states to ensure the preservation of their legitimate interest,moral and
justice.More than this the “European”,“international” or "transnatonal"character of public policy,surpass the states
border,making from “public policy” in some cases a real global shield in view of protecting citizen interests and
states soverignity.

But in the same time States must ensure a friendly environment for foreign investments and arbitration in view of
their same legitimate interests for development and welfare. On this conundrum of legitimate interests of states
versus legitimate expectation of investors,public policy is playing an important role in balancing interests. That is
why the public policy is one of the topical issues on the new wave of reform and trends in investment arbitration
manifested and challenged by :

-ICSID Reform proposals ,forthcoming UNCITRAL Working Group Investor-State Dispute Settlement Reform debate
and United Nations Convention on Transparency in Treaty-based Investor-State Arbitration entering into force on
18.10.2017

-The wave of new regional investment agreements proposed or ratified like TTIP,TPP,CETA,all implying large debates
on ISDS provisions connected also with the challenges of potential “public policy “issues.

-The other new trend of developing specific Investment arbitration rules by important arbitration hubs like SCIA,SCC
and SIAC,challenging and aiming to share a piece of the pie of old consolidated investment arbitration environment
of ICSID.

- The EU law challange of the new exclusive FDI competence along with the cohort of Intra-EU BIT’s closed by EU
States on the infringement risk.On the public policy issue along with the challenge of the clash between EU law legal
order ( competition law,state-aid provisions)and Arbitration legal order,there is also an already manifested
dychotomy between interpretation of public policy criteria in European Union and larger European space as proved by
the 2006 Swiss Court Seminal decision concerning antitrust laws and public policy: EEC antitrust law is not part of
public policy in a Swiss arbitration

-The proposals of EU for a specialized Court system for Investments with a final proposal of a Multilateral
Investment Court which are expressly,proposals underlining the express provision of "right to regulate".

- The overall picture is completed also with the world debates and working group on harmonisation and equality of
arms in investment arbitration,underlining the lack of possibility of states to make claims first and not only as
counter claimants in ICSID arbitration.

All these trends & reforms & challanges put a pressure on both the “public policy”role as a public interest protection
shield and on configuring the international arbitration environment.both for investment and commercial arbitration.
Therefore,taking into account the importance of these trends on international investment and commercial arbitration
as well, on one hand and the “public policy” issue on the other hand, this paper claim is stating that the new world
investment arbitration landscape changes represents also a way for riding the 4" unruly horses alliance" of public
policy concept ( national,international,multinational,global).The overview of the recent trends in investment
arbitration are meant to reflect the bi-directional challanges "of" and "for"public policy issue.

More than this,research claim is underlining the interference between investment arbitration and international
commercial arbitration in what concerns the impact of "public policy" issue.This interferrence focused also on the
topical question" Is arbitral award an investment?"which answer relates to application of investmen and can also
influence the status of regulation and interpretation of “public policy” topic.If an arbitral award is deemed to
constitute or form part of a protected investment, a state’s failure to enforce an award may in principle amount to an
investment treaty violation.

So the balance between creating a friendly environment for investors and arbitration and the public interest of states
in ensuring a sustainable development,welfare for their citizens as well,the mastering of "public policy" in both
investment and commercial arbitration environment is a difficult endeavour in which this paper can be viewed only
as a preliminary insight of a more detailed study aiming at a Comparative organisational benchmarking study on
institutional investment arbitration towards harmonisation.

PRELIMINARY SUMMARY

.Introduction-Public policy an everlasting topical issue for international arbitration.

I..Public policy as a multidimensional concept.

1.Public policy-"ordre public" - a still "non-identifiable legal object"?

2.Public policy-the "4 unruly horses" riding challange.

2.1 The national public policy

2.2.The international public policy

2.3.The European public policy

2.4.The Transnational public policy

II.Public policy & investment arbitration

III.Public policy &challange of change in investment arbitration

1.The new trends and reforms of investment arbitration.

2.The challenge of changing investment arbitration landscape and public policy concept

IV.Conclusion-Mastering public policy in investment arbitration-as state defense shield and tool for balancing the
state legitimate interests and investors legitimate expectations.