Reference to national security in FDI has traditionally been linked to the ex post dimension of the investment. The state relies on national security, national essential security interests or similar grounds to design or implement certain measures relating to investments already implemented in its territory. This ex post dimension is deeply linked to the network of IIAs entered into by sovereign states and is framed within the classic debate of the protection of the rights of investors and their investments.

This debate is now affected by the quest to rebalance the rights of the host state and of the investor, ensuring the former has the ability to protect certain basic legitimate public interests. The debate is reflected in the increased inclusion of exception clauses in IIAs, clauses that give the host state the right to limit the protection provided to foreign investors by the agreement in times of emergency and crisis.

Issues of national security transcend commercial relationships between nations and have gained additional importance in the aftermath of 9/11 and the financial crisis. They are also increasingly important in the area of FDI, where, pre-9/11, they did not play a significant role. Neoliberalism is now increasingly being challenged, and it seems that we are entering a new phase for FDI and investment law, in which some of the major traits that have characterised both over the last three decades are being questioned or are under scrutiny; the whole system seems to be in a ‘state of transition’. One of the basic issues on which the process of re-evaluation of international investment law stands relates to the fact that states, both developing/emerging and developed, are striving to recover some of their powers and to realign some of the principles upon which international investment law has rested so far. Public and private interests must be rebalanced. Investors should not be deemed any longer the sole protagonists and beneficiaries of FDI, and since investment is an important driver for economic and social development, all stakeholders must benefit equally.

That ultimately means that the legitimate rights and expectations of investors should be balanced with the preservation of the necessary power of the state to protect some basic areas of its economy and the normal functioning of society.