Chicago Journal of International Law

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Investor-state arbitral provisions are incorporated into various bilateral and multilateral investment agreements, providing foreign investors means to recover from host states when investment expectations change. There is debate on the merits and harms of these investment arbitral provisions, some of which surrounds the provisions’ effects on public interest regulation. Vague treaty language has led to inconsistent arbitral outcomes and a chilling effect on public interest regulation. Despite attempting to improve health or environmental conditions, states may be vulnerable to large amounts of liability in international arbitration. How much regulatory liberty do the U.S. Model Bilateral Investment Treaty, North American Free Trade Agreement, and Trans-Pacific Partnership each provide to states? After arguing that the regulatory liberty is insufficient, this Comment considers various strategies for increasing state regulatory capacity, concluding that a good-faith inquiry tied to international norms would provide for a better balance between state and investor interests.