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This chapter explores the possibility of applying the proportionality principle, which is currently used by the ECtHR in its jurisprudence, in investor-state arbitration and, particularly, in expropriation-related claims. It argues that when States' obligations flowing from international investment treaties and human rights law come into tension, the application of the ‘proportionality test’ in the course of investor-state arbitration concerning expropriation may represent one of the routes through which a balancing of human rights protection imperatives and investor interests can take place. The complexity of this interplay relates to the fact that interests on both sides of the balance have human rights aspects. By virtue of ‘double proportionality’ testing, investor-state arbitration practice may be merging investment and human rights law proportionality standards — a development that is to be encouraged.

This chapter addresses those exceptions that apply in intra Community and third-country contexts alike, i.e., Article 58 (1) lit. b EC and the ‘rule of reason’ (unwritten exceptions). Within this context, the operation of the proportionality test is considered. Article 58 (1) lit. b. EC contains three different groups of grounds of justification. Each group of grounds of justification is addressed in this chapter separately with respect to its scope of application, predominantly with attention given to the first and third groups, which are the most relevant ones in practice. Within the first group, the focus is placed on national measures securing effective fiscal supervision and preventing tax evasion and avoidance. They carry great potential for protectionist interferences with direct investments, though not constituting a phenomenon specific to this economic activity. The discussion in the context of the third group, referring to the ordre public exception, revolves around the question of whether and to what degree it allows the Member States to self judge their requirements of public policy and public security. The ordre public clause constitutes the most important potential legal basis for saving national measures aiming specifically at the restriction of cross border direct investment. In regard to the rule of reason, its scope in the ambit of free movement of capital is set out first, thereby focusing on the question of whether the formula applies only to hindering or also to discriminatory national measures. Second, the chapter elaborates on mandatory requirements accepted and refused by the Court. In doing so, particular attention is paid to the recognised mandatory requirement of fiscal cohesion and the refused one of securing the tax base; both play a significant role later, in the discussion on the operation of the rule of reason in a third-country context.

This chapter argues that the principle of proportionality is a tool for the structured resolution of conflicts of autonomy interests. Each of the four stages of the proportionality test has its own role to play in this regard. The purpose of the legitimate goal stage is to exclude goals which are based on moralism or impermissible paternalism. The point of the suitability or rational connection stage is to establish the extent to which there is a genuine conflict between the two autonomy interests at stake. The necessity stage deals with alternative, less restrictive policies. At the balancing stage (sometimes called proportionality in the strict sense) the conflict is ultimately resolved, using the framework developed in Chapter 6. In assessing the balance, the courts grant the original decision-maker a ‘margin of appreciation’; this doctrine incorporates the reasonableness requirement proposed in Chapter 5 into constitutional rights law. Thus, the principle of proportionality, properly applied, guides judges through the reasoning process as to whether a policy is constitutionally legitimate.

This chapter examines the relevance of freedom of expression to the parody exception. It first considers the debate on the interaction between intellectual property rights and fundamental rights before discussing the ways in which freedom of expression may address the excessive expansion of exclusive rights as well as the outer limits of the parody exception. The chapter explains how human rights are embodied in the parody exception and how factors established in the European Court of Human Rights jurisprudence may legitimately restrict freedom of expression. It also explores how national legislators and courts in France, Australia, Canada, the United States, and the United Kingdom strike a balance between freedom of expression values and copyright values. It shows that the outer limits of the parody exception in each jurisdiction are determined by the influence of freedom of expression on copyright, the margin of appreciation, and the proportionality test.

Article 86 EC In the case of public undertakings and undertakings to which Member States grant special or exclusive rights, Member States shall neither enact nor maintain in force any measure contrary to the rules contained in the Treaties, in particular to those rules provided for in Article 18 and Articles 101 to 109.