After several cases assessing whether state regulation in the public interest gives rise to a claim under an investment treaty, commentators have begun asking questions about the applicable standard of review that should be applied in evaluating those claims. Now that there is emerging clarity around the interpretation of the most common substantive investment treaty standards, the determinative question seems to be taking a new form. Specifically, advocates appear to be recasting the relevant query with respect to public interest regulation in terms related to the deference that ought to be accorded to states in their adoption of such measures. Drawing on nomenclature from municipal inquiries of a similar nature, the query is often framed as: what is the applicable standard of review? As we have elsewhere provided, the phrase “‘standard of review’ refers to the criterion by which an adjudicative entity assesses the validity of a legislative, executive or administrative action.”
It seems that an important threshold matter in determining the appropriate standard of review is identifying the source from which the standard is derived. Recent studies have suggested a variety of approaches to making this determination, with a particular focus on taking into account the public law nature of the matters being addressed. More general studies contend that we are heading towards a “general margin of appreciation doctrine in international law.” Both of these approaches suggest that tribunals should impose a more lenient standard of review in assessing state conduct, especially in the context of domestic regulation in the public interest. The tribunal in S.D. Myers v. Canada embraced that approach, stating that the determination of whether a breach of the investment treaty occurred “must be made in light of the high measure of deference that international law generally extends to the right of domestic authorities to regulate matters within their own borders.” Other approaches suggest that the standard of review applicable can be ascertained from the investment treaty itself. For instance, the tribunal in Glamis Gold v. the United States found “the standard of deference to already be present in the standard as stated, rather than being additive to that standard.”
In the international investment treaty context, as a general matter, the applicable law is international law. In particular, the lex specialis is the investment treaty being applied. Lacunae can be filled with reference to the general background of international law, including other international treaties or conventions that might otherwise be applicable in the relations between the parties, customary law, or general principles of law. Judicial decisions and the teachings of the most highly qualified publicists should be considered as a subsidiary means for determining the applicable law.
As such, the starting point for establishing the criteria by which to assess the validity of government public interest regulation is the applicable treaty itself. One ought to begin by asking what the substantive investment treaty standards say about the standard of review. Certain investment treaty standards are formulated in such a way as to articulate both the standard of protection and the standard of review; that is, both the treatment that investors are guaranteed, and the criteria by which a state’s conduct ought to be judged. For example, the fair and equitable treatment requirement ensures a certain level of treatment to investors, but by interpreting what is meant by “fair” and “equitable” a tribunal is also establishing the criteria by which the government measure is being reviewed. Without getting into the details of defining the standard, a task we have undertaken elsewhere, the tribunal essentially builds an assessment of the importance of the state’s policy interests into its application of the standard: asking, for example, whether it is fair and equitable to adopt an environmental regulation for which there is imprecise scientific support. This query inevitably requires a tribunal to establish the degree of deference it must accord to the state in making such determinations. In other words, the appropriate standard of review follows from the interpretation of the substantive standard of protection itself.
This is not to say that other relevant sources of international law cannot aid in the determination of the appropriate standard of review, but that the bilateral investment treaty itself is an important source of making this determination in the first instance. As has been suggested by others, general principles of international law can help guide tribunals in this regard; however, care must be taken to ensure that principles that are being relied on are in fact commonly accepted by “all or nearly all states.” Similarly, customary international law may also become a source to assist tribunals in assessing the appropriate standard of review. For instance, in assessing the appropriate standard of review, it may be appropriate to apply the principle that states are generally permitted to regulate in areas that are not otherwise specifically proscribed by international law.
Cases and commentaries citing the existence of a principle in international law whereby states are generally owed deference in regulating matters within their borders do not often articulate where this legal obligation arises. This poses a significant concern as it suggests that tribunals are free to adopt a standard of review that they see fit, which would introduce an undesirable bias into the decision-making process, and undermine the objectives of certainty and consistency in deciding investment claims. Further, in the context of cases under the auspices of the International Center for the Settlement of Investment Disputes (ICSID), the failure to apply the applicable law can render any resulting award subject to annulment.
This short article argues that the question of the applicable standard of review ought to be answered with reference to the applicable law as agreed by the parties. The determination of the applicable standard of review is too important and determinative to be subject to approaches inserted by arbitrators, as learned as they may be, on an ad hoc basis. Tribunals should follow the discipline of asking what the parties to the treaty have agreed with respect to the criterion by which their actions are to be judged. It is only this approach that can gain the legitimacy that comes with the rule of law.
Author: Rahim Moloo is General Counsel at the University of Central Asia, an international treaty organization; and Senior Research Fellow at the Vale Columbia Center for Sustainable International Investment, a joint Center of Columbia Law School and the Earth Institute. The author is grateful to Justin Jacinto for helpful comments. All opinions and mistakes remain my own.
 Rahim Moloo and Justin Jacinto, ‘Standards of Review and Reviewing Standards: Public Interest Regulation in International Investment Law,’ in Karl P. Sauvant (ed), Yearbook on International Investment Law and Policy 2011-2012 (2012) (forthcoming).
 See, e.g., William W. Burke-White and Andreas von Staden, ‘Private litigation in a public law sphere: The standard of review in investor-state arbitrations,’ 35 Yale Journal of International Law 283, 285-86 (2010); William Burke-White and Andreas von Staden, ‘The need for public law standards of review in investor-state arbitration,’ in Stephan Schill, ed., International Investment Law and Comparative Public Law 689-720 (New York: Oxford University Press, 2010); Stephan W. Schill, ‘Deference in Investment Treaty Arbitration: Re-conceptualizing the Standard of Review through Comparative Public Law,’ Society of International Economic Law Working Paper No. 2012/33; Caroline Henckels, ‘Indirect Expropriation and the Right to Regulate: Revisiting Proportionality Analysis and the Standard of Review in Investor-State Arbitration,’ 15 Journal of International Economic Law 223, 255 (2012).
 Yuval Shany, ‘Toward a General Margin of Appreciation Doctrine in International Law?’ 16 European Journal of International Law 907 (2005). See also Burke-White and von Staden, ‘Private litigation in a public law sphere: The standard of review in investor-state arbitrations,’ supra note 3.
 S.D. Myers, Inc. v. Government of Canada, NAFTA/UNCITRAL, Partial Award (November 13, 2000) at 263; see also, Saluka Investments BV (The Netherlands) v. the Czech Republic, UNCITRAL, Partial Award (March 17 2006), at 305; Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Decision on Jurisdiction and Liability (January 14, 2010) at 505; Gemplus S.A., SLP S.A. and Gemplus Industrial S.A. de C.V. v. the United Mexican States and Talsud S.A. v. the United Mexican States, ICSID Cases Nos. ARB(AF)/04/3 & ARB(AF)/04/4, Award (June 16, 2010) at part IV, p. 14.
 Glamis Gold v. the United States of America, NAFTA/UNCITRAL, Award (June 8, 2009) at 617.
 Many investment treaties expressly call for the application of international law. See, e.g., Energy Charter Treaty, (1994) 2080 U.N.T.S. 95, Article 26(6), <http://www.encharter.org/fileadmin/user_upload/document/EN.pdf> accessed 22 February 2012; 2012 US Model BIT (2012), Article 30 <http://www.ustr.gov/sites/default/files/BIT%20text%20for%20ACIEP%20Meeting.pdf> accessed 22 May 2012. Where the dispute is submitted to the jurisdiction of the International Centre for the Settlement of Investment Disputes (ICSID), Article 42(1) of the ICSID Convention requires tribunals to decide disputes in accordance with applicable ‘rules of international law’ if no selection to the contrary is made. Convention on the Settlement of Investment Disputes between States and Nationals of Other States, (1965), Art. 42(1), 575 U.N.T.S. 159.
 ICJ Statute, Article 38(1)(a)-(c). Jus cogens also applies irrespective of the terms of the treaty, and can override the parties’ treaty obligations. See generally Ian Brownlie, Principles of Public International Law 510-12 (7th ed. 2008). In the investment treaty context, jus cogens has been applied in the Decision on the Annulment of Fraport AG Frankfurt Airport Services Worldwide, ICSID Case No. ARB/03/25 (23 Dec. 2010), paras. 197-208.
 ICJ Statute, Article 38(1)(d).
 See generally Rahim Moloo and Justin Jacinto, “Health and Environmental Regulation: Assessing Liability under Investment Treaties,” 29 Berkeley Journal of International Law 1, 37-56 (Fall 2010) (discussing liability under the fair and equitable treatment standard for environmental and health regulation).
 We have elsewhere provided a detailed analysis of the standards of review applicable vis-à-vis indirect expropriation, fair and equitable treatment, non-discrimination and non-precluded measures. See Moloo and Jacinto, ‘Standards of Review and Reviewing Standards: Public Interest Regulation in International Investment Law’ supra note 1.
 Schill, supra note 3 at 16-17, 20-21.
 Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals 25 (1953).
 Moloo and Jacinto, ‘Standards of Review and Reviewing Standards: Public Interest Regulation in International Investment Law’ supra note 1, Part B.1, referring to: Accordance with International Law of the Unilateral Declaration of independence in Respect of Kosovo, Advisory Opinion 84 (July 22, 2010); Case Concerning Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States of America), Judgment (June 27, 1986), ICJ Reports 258 (1986); Joseph Charles Lemire v. Ukraine, ICSID Case No. ARB/06/18, Decision on Jurisdiction and Liability (January 14, 2010), para. 505.
 ICSID Convention, Article 52(1)(b) (“Either party may request annulment of the award by an application in writing addressed to the Secretary-General on one or more of the following grounds: . . . (b) that the Tribunal has manifestly exceeded its powers.”). CMS Gas Transmission Co. v. Argentine Republic, ICSID Case No. ARB/01/8, Decision of the Ad Hoc Committee on the Application for Annulment of the Argentine Republic (September 25, 2007) para. 49 (“A complete failure to apply the law to which a Tribunal is directed by Article 42(1) of the ICSID Convention can also constitute a manifest excess of powers.”).