Stabilization Clauses: Do They Have a Future?

There are three pillars of legal stability in international oil and gas investments: stabilization clauses, expectations of a stable legal framework under an investment treaty and guarantees set out in the host state’s domestic legislation. The diverse and pervasive character of stabilization clauses in investment agreements makes them the most important in practice. This article reviews their resilience alongside the other two pillars and concludes that they retain significant advantages. Even in a wider context of policies favouring a lower carbon consumption in the energy sector, and consequent long-term change, such clauses are likely to remain a continuing feature of investment agreements as a legal response to investors’ needs for predictability in making long-term commitments