Recent international economic
agreements between the EU and other non-EU states have included prohibitions on
performance requirements (PRs). Although the provisions prohibiting such
requirements typically specify the types of prohibited practices, the essence
of PRs, and the reasons for their prohibition remain unclear. The recent
concept of PRs has crept into the international legal framework seemingly
without a firm theoretical foundation and without any roots in customary
international law. It had initially been used in bilateral treaties as the
broad term for designating certain policy tools which States were prepared to
relinquish so as to promote a better investment regime. Noting the lack of a
generally recognised definition of PRs, this article provides an overview of
scholars’ opinions and adjudicators’ reasoning on this subject, highlighting
certain significant differences in approach. Guided by various examples from
arbitral practice and national legislation of selected countries, this article
seeks to distil the inherent features of PRs and to rationalise the
internationally-prevailing views on this subject. In summary, the article gives
an assessment of the prohibition of PRs and considers the reasons for which
States may seek to eliminate these types of measures.