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Abstract

As States increasingly seek to prevent opportunistic investors from treaty shopping, Denial of Benefits (‘DoB’) clauses have taken centre-stage in international investment law. However, there has been a long divide on a seemingly straightforward procedural issue: should States be allowed to invoke these provisions after the dispute has arisen? That is, can States invoke them retrospectively? This debate has reached the forefront of reform, with the UNCITRAL Working Group III debating whether a uniform approach should govern the timing and procedure for the invocation of DoB clauses.

Broadly, treaty practice reflects two different paradigms of DoB clauses — one that allows for retrospective invocation, viewing DoB clauses as jurisdictional filters that States may invoke at any time. The other paradigm requires their invocation before a dispute arises, seeking to guarantee investor expectations and procedural fairness.

In this light, this paper undertakes an empirical analysis of how States and tribunals have approached the issue of retrospective invocation over the past two decades. It seeks to excavate both the drafting patterns of treaty texts and their interpretations by tribunals. It focuses on the typologies of DoB clauses which affect their retrospective invocation - such as notification triggers, mandatory pre-dispute invocation requirements, and their classification as jurisdictional or merits issues. Based on these findings, this paper excavates a trend in the treatment of retrospective invocation of DoB clauses. This paper concludes by offering broad doctrinal reflections and situating these trends in the context of the Working Group III’s deliberations on the drafting and reform of DoB clauses.

Digital Object Identifier (DOI)

doi.org/10.55496/FEXR7638

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