Session 4 | Exploring contracts and investment treaties
Mar 30, 2026 | 2:15 PM - 3:45 PM
CC12
Description
Governments and others working on investment policy have shown growing interest in the role of contracts and their relationship with investment treaties. Contracts can raise a range of policy issues. For example, in democratic systems, governments are generally not permitted to bind future governments. This helps each government to be democratically responsive to its own electorate and avoids it being bound by the preferences of the past. Contract commitments with regard to public law applicable over time to an investment, however, may “fetter the discretion” of a successor government (or “entrench” the policies of the predecessor government). At the same time, stability and predictability are important elements for investment and for some contracts, such clauses may be valuable. Consideration of the validity, the appropriate scope of use and the design of such clauses requires careful analysis of multiple aspects.
Contracts can also interact with treaty-based investment protections. For example, in current practice, their co-existence frequently gives rise to multiple claims. As the domain of application of investment treaties to investment evolves, the potential for contract commitments to provide for protection from “hold-up” or other risks or to substitute for investment treaties is also an emerging issue.
