Too Low a Threshold: Bilcon v Canada and the International Minimum Standard of Treatment

Minimum Standard ◽

Customary International Law ◽

Low Threshold ◽

Government Of Canada ◽

Equitable Treatment ◽

Minimum Standard Of Treatment

AbstractTreaty obligations to afford foreign investors a minimum standard of treatment (MST) and/or fair and equitable treatment (FET) are hallmarks of international investment law. However, the relationship between such treaty-based obligations and customary international law has been the subject of considerable debate. In the North American Free Trade Agreement (NAFTA) context, the majority tribunal decision and dissenting opinion in Clayton and Bilcon of Delaware Inc. v Government of Canada (Bilcon) reflect ongoing disagreement regarding the threshold for breach of the MST under NAFTA Article 1105. This article charts NAFTA investment tribunals’ decisions regarding FET claims under Article 1105 and the development of the customary international MST on which that provision is based, in particular, the prohibition on arbitrary treatment. It argues that the majority in Bilcon applied an inappropriately low threshold in finding a breach of Article 1105, which could represent a new and unwelcome direction in NAFTA Chapter 11 jurisprudence.

Fair and Equitable Treatment in International Investment Agreements

International Law ◽

10.1093/obo/9780199796953-0158 ◽

2017 ◽

Author(s):

Roland Kläger

Keyword(s):

International Law ◽

Due Process ◽

General Character ◽

Minimum Standard ◽

Customary International Law ◽

International Investment Agreements ◽

Equitable Treatment ◽

Investment Agreements

Fair and equitable treatment is a central norm in international investment law. This norm is contained in the vast majority of international investment agreements as one of the main standards for the protection of foreign investors. Historically, international investment agreements contained short and general clauses of fair and equitable treatment, which were formulated either as free-standing provisions with a reference to general international law, or to the international minimum standard of customary international law. Especially since the first decade of the 21st century, drafting approaches to fair and equitable treatment became increasingly diverse and generated complex and elaborate clauses seeking to address the different elements of the norm that have developed over time. The drafting approaches reflect the long-standing controversies with regard to fair and equitable treatment and the question of whether this concept is to be constructed in accordance with the international minimum standard or as an independent and self-contained standard possibly exceeding customary international law. Both concepts have remained vague and have created difficulties in the interpretation of fair and equitable treatment, which due to its general character became a prominent cause of action in investor-state arbitration proceedings. The evolution of arbitral jurisprudence stimulated the emergence of different elements of fair and equitable treatment, including the protection of the investor’s legitimate expectations, the protection against discrimination and arbitrary treatments, and the principles of due process, denial of justice, and transparency. The increasing number of cases on the basis of fair and equitable treatment also led to concerns and criticism that a far-reaching concept of the norm would threaten the host states’ sovereignty and their right to regulate, as well as the principle of sustainable development. These concerns and the fact that a growing number of investment disputes were brought against developed countries motivated first the North American Free Trade Agreement member states and subsequently other states and the European Union to adapt their international investment agreements in order to try to concretize the concept of fair and equitable treatment and to limit the discretion of arbitrators. The concept of fair and equitable treatment has also received considerable attention by scholars who propose a variety of different approaches to the interpretation of the norm and the balancing of the conflicting private and public interests at stake.

Minimum Standard of Treatment of Aliens, Fair and Equitable Treatment of Foreign Investors, Customary International Law and the Diallo Case before the International Court of Justice

The Journal of World Investment & Trade ◽

10.1163/221190008x00313 ◽

2008 ◽

pp. 51-70 ◽

Cited By ~ 1

Author(s):

Alberto ALVAREZ-JIMÉNEZ

Keyword(s):

International Law ◽

Minimum Standard ◽

International Court Of Justice ◽

Foreign Investors ◽

Customary International Law ◽

Court Of Justice ◽

International Court ◽

Equitable Treatment ◽

Minimum Standard Of Treatment

States' Reassertion of Control over International Investment Law: (Re)Defining ‘Fair and Equitable Treatment’ and ‘Indirect Expropriation’

Reassertion of Control over the Investment Treaty Regime ◽

10.1017/9781316779286.013 ◽

2016 ◽

pp. 285-308 ◽

Cited By ~ 4

Author(s):

Eric De Brabandere

Keyword(s):

Investment Law ◽

Fair and Equitable Treatment Between the International and National Rule of Law

The Journal of World Investment & Trade ◽

10.1163/22119000-12340141 ◽

2019 ◽

Vol 20 (4) ◽

pp. 513-552 ◽

Cited By ~ 1

Author(s):

Velimir Živković

Keyword(s):

Decision Making ◽

Rule Of Law ◽

The Rule Of Law ◽

Investment Protection ◽

National Rule ◽

Investment Law ◽

Abstract Promoting the rule of law is a potentially strong legitimating narrative for international investment law. Illustrating the interlinkage, the ubiquitous ‘fair and equitable treatment’ (FET) standard embodies distinctly rule of law requirements. But these requirements remain open-textured and allow understanding their meaning in either more ‘international’ or ‘national’ way. An ‘international’ understanding – detached from the host State’s vision on how the rule of law should look like – should remain dominant. But I argue that decision-making under the FET standard should also involve a systematic engagement with how these requirements would be understood in the host State’s law and how they were complied with from that perspective. Whilst not determinative for establishing a breach, this assessment better respects the expectations of the parties, strengthens the persuasiveness of findings and helps enhance the national rule of law as a key contributor to the ultimate goal of investment protection – economic development.

International Investment Arbitration: Substantive Principles, Principles of International Investment Law and The Fair and Equitable Treatment Standard in International Foreign Investment Law

British Yearbook of International Law ◽

10.1093/bybil/79.1.378 ◽

2009 ◽

Vol 79 (1) ◽

pp. 378-388

Author(s):

C. Baltag

Keyword(s):

Foreign Investment ◽

Treatment Standard ◽

Investment Arbitration ◽

Investment Law ◽

Preventing the Regulatory Chill of International Investment Law and Arbitration

International Law Research ◽

10.5539/ilr.v9n1p85 ◽

2020 ◽

Vol 9 (1) ◽

pp. 85

Author(s):

Atif M. Alenezi

Keyword(s):

Foreign Investors ◽

Regulatory Changes ◽

Resolution System ◽

Investment Law ◽

Foreign Corporations ◽

Equitable Treatment ◽

Legitimacy Crisis

International investment law has increasingly come under attack because it does not put host states on par with foreign investors. Foreign investors can evoke broad investment rights and pursue investment arbitration. The threat of substantial arbitral awards can result in host states not enacting policies, regulations, laws or reaching decisions, despite them being needed in order to protect a variety of important public interests. The concern is, therefore, that international investment law, including the investor-state dispute resolution system, causes a regulatory chill. The paper examines how the asymmetric relationship between foreign investors and host states can be remedied, so that trust in international investment law is strengthened and its legitimacy crisis is overcome. One core issue with international investment law is that the customary international minimum standard and its therein subsumed full protection and security, and fair and equitable treatment and compensation principles are inherently vague, thereby contributing to the overprotection of foreign investors. Arbitral cases further highlight how regulatory changes can result in host states incurring liability and thus enable foreign corporations to shift potential costs and risks. International, and national solutions to prevent the regulatory chill of international investment agreements are spelled out.

Fair and Equitable Treatment and Investor’s Due Diligence Under International Investment Law

Netherlands International Law Review ◽

10.1007/s40802-020-00170-7 ◽

2020 ◽

Vol 67 (2) ◽

pp. 233-255

Author(s):

Yulia Levashova

Keyword(s):

Due Diligence ◽

Host State ◽

Political Background ◽

Legitimate Expectations ◽

Investment Law ◽

The Stability ◽

Abstract The investor’s due diligence has become a significant factor in determining whether the legitimate expectations of an investor give rise to protection under the FET standard. This is especially relevant when an investor’s claim for the protection of its legitimate expectations is based on the stability of a regulatory framework. The investor’s due diligence in the context of the FET standard goes beyond the risk-based business due diligence performed by a foreign investor for its own benefit. It has implications for a state’s right to regulate in the public interest and a broader notion of business responsibilities. Investors are expected to conduct proper due diligence before investing in a host state by demonstrating their reasonable efforts to collect information about the rules and regulations that are pertinent to the proposed investment. In some cases, due diligence extends to an investor’s duty to assess the possible risks related to the broader economic situation and socio-political background of a host state. Focusing on the recent renewable energy awards, this article analyses and clarifies the role of due diligence in the context of the FET standard, as well as its potential application for asserting responsible business conduct in the broader framework of international investment law.

The Application of the Principle of Proportionality to Assess Compensation: Some Reflections Arising from the Case of Joseph Charles Lemire v. Ukraine

The Law and Practice of International Courts and Tribunals ◽

10.1163/15718034-12341275 ◽

2014 ◽

Vol 13 (2) ◽

pp. 199-222

Author(s):

Sondra Faccio

Keyword(s):

Case Law ◽

International Human Rights Law ◽

Human Rights Law ◽

Investment Treaty ◽

Investment Law ◽

Principle Of Proportionality ◽

In the last few years, the principle of proportionality has appeared with a certain frequency in international investment case law: arbitrators have employed it to determine whether the State’s regulatory measure under scrutiny represents a form of indirect expropriation, to assess violations of the fair and equitable treatment (‘fet’) standard, to counterbalance competing obligations drawn from international investment law and international human rights law, and to assess compensation. This article will focus on the so-called “quantum phase” – the part of the award devoted to the assessment of the monetary compensation due to the foreign investor for the breach of the investment treaty provision – and will discuss whether the principle of proportionality can effectively play a role in the assessment of compensation. The work will start from the analysis of the case of Joseph Charles Lemire v. Ukraine, where arbitrators expressly resorted to proportionality to verify whether the indemnity awarded to the claimant for the breach of the fet standard was adequate in light of the specific characteristics of the investment lato sensu and the investor, to then approach the issue of proportionality more in detail.