Investment in privatized utilities leads to a very particular form of political risk–the risk that regulatory conditions change and special taxes are imposed, all measures within the sovereign powers of the state. The normal forms of protection against political risk (investment insurance, stabilization clauses, international investment treaties and international arbitration clauses) have not yet caught up with the emergence of new forms of political risk. The 1997 UK windfall tax announced by the Chancellor of the Exchequer in that year’s budget speech is a case in point. This issue is not limited purely to the contemporary UK situation, but illustrates a structural situation which can, and is likely to be repeated wherever utilities are privatized, regulated and exposed to special industry taxes. Such actions are usually undertaken by a new government composed of parties hitherto opposed to privatization, which will be able to combine its previous opposition, and the values therein articulated with the ever present need of governments for new revenue to finance its political popularity objectives. This paper surveys shortly the possible responses by international law, mainly principles and practice of international investment protection, to situations which have recently arisen in the world privatization laboratory (the UK) and situations which are likely to arise in the many countries which currently copy the UK privatization model, once new governments come to power. The UK situation is of particular interest since in the absence of constitutional, federal or judicial constraints the prevailing concept of parliamentary supremacy means that any legal recourse can only be had from external sources of law.