Environmental Engineering Reference
In-Depth Information
bad business decisions.
426
It is possible to limit the length of time that the stabili-
zation clause applies.
427
Nevertheless, according to the Iran-US Claims Tribunal, a
35-year-long stabilization clause is a permanent limitation of sovereignty.
428
The
principle of fair and equitable treatment also serves as a stabilization clause as it
protects legitimate expectations of the investor.
429
ICSID tribunals treat stabiliza-
tion clauses in a positive way if both parties freely agreed to its inclusion.
430
2.4.2.5 Effect and Problems of Stabilization Clauses
The stabilization clause only limits sovereignty concerning the respective contract
(e.g. concession).
431
In addition, stabilization clauses always interfere with state
sovereignty
432
as they freeze the status quo.
433
This means that the state party
cannot change or terminate the contract at an early stage, except when it uses
administrative measures or enacts a law.
434
When a state concludes a stabilization
clause, it is an expression of its sovereignty.
435
Sovereignty also encompasses the
possibility of limitation due to a sovereign act.
The mere breach of contract does not automatically constitute a breach of
international law.
436
Thus, international law does not guarantee the contractual
position, but compensation on a secondary level.
437
Some authors point out that
only a combination of stabilization and internationalization clauses lead to an
international law obligation to not change the domestic law.
438
The application of
both clauses seems to have decreased in recent years.
439
It is important to locate the stabilization clause in the international law, if the
host state law is the contract
s proper law, so as to prevent the host from changing
the stabilization clause.
440
A possible solution would be that international law
'
'
s
426
Aaken (
2006
), 544 (550-551).
427
Metje (
2008
), 110.
428
Aaken (
2006
), 544 (551).
429
Tietje (
2010
), 5 (12).
430
Schreuer (
2009
), 589 para 120; A stabilization clause is a compromise between the state and the
investor, in: Dolzer and Schreuer (
2008
), 75.
431
Berger (2003), 65 (77); Schreuer (
2009
), 588 para 117; Herdegen (
2003
), 13 (23).
432
Dolzer and Schreuer (
2008
), 75; Berger (2003), 65 (76); Metje (
2008
), 67-68.
433
Aaken (
2006
), 544 (551); Schreuer (
2009
), 588 para 117.
434
Aaken (
2006
), 544 (551).
435
Metje (
2008
), 68; A legal expropriation is not prohibited in international law, in: Shaw (
2008
),
828; cf Karl (
2003
), 37 (49-50); Herdegen (
2003
), 13 (17).
436
Herdegen (
2003
), 13 (17).
437
Herdegen (
2003
), 13 (17).
438
Metje (
2008
), 67.
439
Sch
obener et al. (
2010
), 245, Kap. 4 § 16 para 94; Dolzer and Schreuer (
2008
), 75.
440
Herdegen (
2003
), 13 (23).
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