Reasonableness: a guiding light—A probe into the World Court's landmark judgment on substantive standards of investment protection and its takeaways for investment treaty tribunals.

The article analyzes the International Court of Justice’s (ICJ) 2023 Judgment in the Certain Iranian Assets case, focusing on the Court’s interpretation of the “fair and equitable treatment” (FET) standard and the prohibition of unlawful expropriation under the 1955 Treaty of Amity between Iran and the USA, a Friendship, Commerce, and Navigation (FCN) treaty. The ICJ introduced a detailed “reasonableness” test for assessing state measures, requiring that such measures pursue a legitimate public purpose, be appropriately related to that purpose, and not have a manifestly excessive adverse impact on protected rights. This formulation offers states a broader margin of appreciation and a less stringent proportionality standard than some investment treaty tribunals, potentially easing states’ burden of proof in justifying regulatory actions affecting foreign investors. The article suggests that the ICJ’s nuanced approach could influence future investment treaty arbitrations by providing greater clarity and predictability in applying FET and expropriation standards, thereby balancing states’ regulatory rights with investor protections.