Limits of state regulatory power in investment law and under national legislation: search for common denominator

Recent years have seen a considerable increase in the amount of investment cases against both developing and developed countries. In many of those cases, investors attempted to challenge a number of sensitive and political decisions of States. This trend provoked a discussion of whether it is legitimate to limit a State’s regulatory power, even if the measures taken impact on investors’ rights and legal expectations. This paper highlights the importance of finding a reasonable and just balance in the protection of a State’s sovereign power to regulate and an investor’s legitimate expectations and rights against the unreasonable, unexpected, and discriminatory decisions of States. It is argued that the possibility and necessity of finding a common dominator in national legislation and International investment law exists. The aim of this article is to identify the main rules applicable to the limits of a State’s regulatory changes impacting on investors’ rights and legitimate expectations in investment law and under national legislation. Further, the article analyses whether it is possible to find a just and reasonable balance between the investors’ legal expectations and the State’s right to regulate by comparing the main differences and similarities between national and investment law and by answering the question of whether it would be possible to harmonise State liability rules on the issue, at least at the conceptual level.