Standard of Review in Indirect Expropriation: Reconciling the Effect Rule with the Doctrine of Intent

The standard of review that underpins investor-state dispute resolution particularly in the energy and natural resources sectors remains mired in a conundrum of legitimacy. While the jurisprudence of arbitral tribunals illustrates that the effect doctrine constitutes the central standard of review, and the intent behind the measure is largely jettisoned, questions remain as to whether the exclusive reliance on the effect doctrine reflects the interest of both parties and actually balances such interests in such strategic sectors as oil and gas where a trade-off is critical in view of massive State reliance on accrued revenue. In essence, it is contended that the doctrine of intent be deployed to complement the effect doctrine. Such an approach will not only enhance the substantive legitimacy of the dispute settlement process but equally reflect the balanced interest emblematic of the proportionate commitment of both parties.