Investment Treaty Clauses for Revoking and Reclaiming Subsidization and State Aid

Edwin Vanderbruggen

 

ABSTRACT: This article investigates the regulation of subsidies within investment agreements, focusing on states’ rights to withdraw and recover subsidies and state aid. It examines the subsidy clauses emerging in recent treaty practice and their role in safeguarding policy flexibility. The article identifies definitional ambiguities and assesses the strengths and limitations of these approaches, contextualizing them against the recent surge of renewable energy investment decisions. It concludes that, for investments within the EU, these provisions effectively mitigate many of the constraints on state flexibility highlighted in investment jurisprudence. However, reciprocally, their reliance solely on orders by competent authorities in non-EU host states to exclude investment protection, absent a comprehensive, principled framework for reclaiming subsidization, may expose EU investors to asymmetrical risks in jurisdictions with less robust institutional frameworks.