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SAREN ABGARYAN
interpreted, which can be burdensome for tribunals for the interpretation
in cases of investor-state disputes.
Full Protection and Security Clause
Full protection and security (PFS) clauses have particular
applications for foreign investors in times of civil unrest, public
disturbances, and violence, and can also include non-violent situations
when investors are deprived of legal security and protection. It
encompasses the damages caused to investors due to governments’
unlawful actions or inactions that cause investors to suffer losses. 57
There have been considerable arbitral awards that interpret the FPS
clause narrowly only to include protection against the physical security of
the investment, and this has seen extensive discussion by a number of
authorities in academia. 58 FPS clauses can also be interpreted more
broadly to include legal protection, business protection, physical
protection (police protection), and even economic regulatory powers. 59
The view of broader interpretation was advanced in arbitral decisions. In
certain cases, tribunals merely admitted that the scope of FPS could be
wider than physical security and, in other cases, the tribunals defined the
wider scope to include also legal and business protection.
The Armenia – China BIT’s FPS clause does not clarify whether
the parties expect security limited to physical protection, or if protection
go beyond that to include legal and business protection.
Nationalization and Expropriation Clause
Expropriation and nationalization can be defined as the outright
physical seizure of an investor’s property or its mandatory legal title
transfer to the state or a state-mandated third party. However, some
measures carried out by the state might not manifest as a physical seizure
of the property but might substantially and permanently damage the
interest of investor, highly decrease the economic value of its property,
57
UNCTAD, Investor-State Disputes Arising from Investment Treaties: A Review(New
York and Geneva, 2005, 40-1).
58 See e.g.,Mahnaz Malik “The Full Protection and Security Standard Comes of Age: Yet
another challenge for states in investment treaty arbitration?” International Institute for
Sustainable Development, (2012): 7-9; Nartnirun Junngam,"The Full Protection and
Security Standard in International Investment Law: What and Who Is Investment Fully
Protected and Secured From," Am. U. Bus. L. Rev. 7 (2018): 61-2.
59 Thomas Wälde, "Energy Charter Treaty-based Investment Arbitration," Transnational
Dispute Management 1, no. 3 (2004): 390-1.
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