9 Part III: Investment Promotion and Protection

2020 ◽  
Author(s):  
Hobér Kaj
Keyword(s):  
Foreign Investor ◽  
Foreign Investments ◽  
Host State ◽  
Investment Promotion ◽  
Home State ◽  
Fair And Equitable Treatment ◽  
Energy Charter Treaty ◽  
Equitable Treatment ◽  
Legal Entities ◽  
The Way

This chapter explores Part III of the Energy Charter Treaty, which sets forth the provisions on substantive protection of investments. Promotion and protection of investments are different things. Promotion of investment is concerned with attracting and permitting foreign investments. Protection of investment deals with the way in which investments must be treated, once they have been made. As a matter of policy, however, promotion and protection of investments are closely linked. That explains why the two concepts are addressed in one and the same article of the ECT: Article 10, which is entitled ‘Promotion, Protection and Treatment of Investments’. The chapter then describes the concept of fair and equitable treatment (FET). Article 11 of the ECT obliges Contracting Parties to treat key personnel of Investors in a fair way. Article 12 deals with loss of and damage to the property of Investors in situations where Article 13, concerning expropriation, is not applicable. Article 14 in essence creates a right for Investors to repatriate capital and earnings in a prompt and effective way. Article 15, a so-called subrogation clause, provides for the transfer of rights that a foreign investor may have in relation to the host State, if it has received compensation from its home state under an investment insurance or guarantee. Meanwhile, Article 16 addresses the situation when the ECT overlaps with other treaties. Lastly, Article 17 restricts the benefits of Part III of the ECT to certain categories of legal entities or Investments of Investors.

Ensuring Reasonableness in the Conduct of Host States

2019 ◽  
pp. 101-174
Author(s):  
Federico Ortino
Keyword(s):  
Foreign Investments ◽  
Host State ◽  
Police Powers ◽  
Investment Treaty ◽  
Fair And Equitable Treatment ◽  
Investment Treaties ◽  
Equitable Treatment ◽  
Full Protection

The aim of the chapter is twofold. First, it investigates the extent to which investment treaties include a guarantee of ‘substantive reasonableness’ as one of the key protections granted to foreign investments. Second, it attempts to identify the standard of review that have been employed by investment tribunals in assessing the lawfulness of host States’ conduct. The analysis focuses on the following treaty provisions: (a) full protection and security; (b) non-impairment through arbitrary or unjustifiable measures; and (iii) fair and equitable treatment. This chapter also examines the application by investment tribunals of the ‘police powers’ doctrine in defining an indirect expropriation. One key finding stems from the present analysis. While investment treaty tribunals have (at least for the most part) applied these open-ended standards as reasonableness-based provisions, tribunals have crucially differed with regard to the specific reasonableness test employed in order to review the lawfulness of the host State conduct.

Deutsche Bank AG v. Democratic Socialist Republic of Sri Lanka

ICSID Reports ◽  
2021 ◽  
Vol 19 ◽  
pp. 446-484
Keyword(s):  
Due Process ◽  
The State ◽  
State Responsibility ◽  
Responsibility Attribution ◽  
Content Type ◽  
Host State ◽  
Fair And Equitable Treatment ◽  
Municipal Law ◽  
Equitable Treatment ◽  
Debt Recovery

446Jurisdiction — Investment — Derivative transactions — Interpretation — Claims to money used to create an economic value — Claims to money associated with an investment — Whether a hedging agreement constituted an investment under the BITJurisdiction — Investment — Territorial requirement — Derivative transactions — Whether a hedging agreement satisfied the condition of territorial nexus to the host StateJurisdiction — Investment — ICSID Convention, Article 25 — Interpretation — Derivative transactions — Salini test — Contribution to economic development — Regularity of profit and return — Whether a hedging agreement constituted an investment — Whether all five elements of the Salini test were legal criteria for an investment under ICSID jurisdictionJurisdiction — Investment — ICSID Convention, Article 25 — Interpretation — Derivative transactions — Ordinary commercial transaction — Contingent liability — Whether a hedging agreement was an ordinary commercial transaction or a contingent liabilityJurisdiction — Contract — State-owned entity — Municipal law — Whether a hedging agreement was void because the transaction was outside a State-owned entity’s statutory authorityState responsibility — Attribution — Judicial acts — ILC Articles on State Responsibility, Article 4 — Whether a superior court was an organ of the host StateState responsibility — Attribution — Central bank — ILC Articles on State Responsibility, Article 4 — Whether a central bank was an organ of the host StateState responsibility — Attribution — State-owned entity — ILC Articles on State Responsibility, Article 4 — ILC Articles on State Responsibility, Article 5 — ILC Articles on State Responsibility, Article 8 — Whether a State-owned entity was an organ of the State — Whether actions of a State-owned entity were attributable to the State as an exercise of governmental authority — Whether a State-owned entity was acting under instructions or the direction and control of the StateFair and equitable treatment — Judicial acts — Due process — Interim order — Political motive — Whether court orders violated the standard of fair and equitable treatment — Whether public statements of a senior judge evidenced the political motive of court ordersFair and equitable treatment — Autonomous standard — Interpretation — Minimum standard of treatment — Whether the standard of fair and equitable treatment was materially different from customary international law447Fair and equitable treatment — Government investigation — Due process — Bad faith — Transparency — Whether a central bank’s investigation violated the standard of fair and equitable treatmentExpropriation — Indirect expropriation — Contract — Derivative transaction — Substantial deprivation — Debt recovery — Municipal law — Whether the subsistence of a contractual debt and the possibility to claim under the chosen law of a third State prevented a finding of expropriation — Whether the possibility of recovery in a third State was to be assessed as a prerequisite in the cause of action of expropriation or as a matter of causation and quantumExpropriation — Indirect expropriation — Contract — Substantial deprivation — Legitimate regulatory authority — Proportionality — Whether an interference with contractual rights was an exercise of the host State’s legitimate regulatory authority — Whether the regulatory measures were proportionateRemedies — Damages — Causation — Contract — Debt recovery — Whether the claimant suffered damages if it had the possibility to recover a contractual debt in the courts of a third StateCosts — Indemnity — Egregious breach — Bad faith — Whether the egregious nature of the host State’s breaches of its international obligations meant the claimant was entitled to full recovery of its costs, legal fees and expenses

Legitimate Expectations and Fair-and-Equitable-Treatment under the Energy Charter Treaty

2022 ◽  
Author(s):  
Niclas Landmann
Keyword(s):  
Renewable Energy ◽  
Energy Sector ◽  
Comprehensive Analysis ◽  
Due Diligence ◽  
The Past ◽  
Treatment Standard ◽  
Fair And Equitable Treatment ◽  
Energy Charter Treaty ◽  
Legitimate Expectations ◽  
Equitable Treatment

A recent tide of ISDS cases in the renewable energy sector has generated a large number of arbitral awards that turn of the notion of legitimate expectations. The Fair and Equitable Treatment Standard (FET) and the notion of legitimate expectations has been highly undetermined in the past. This work contains a comprehensive analysis of the renewable energy awards and the interpretation of the notion of legitimate expectations therein. In particular, it is examined whether arbitral jurisprudence formed a cohesive body of caw-law. The author analyses which aspects with regard to commitment by the states, due diligence of the investors, and level of impact were considered a violation of the FET Standard by recent arbitral tribunals.

Taxation Measures under the Energy Charter Treaty after the Yukos Awards Articles 21(1) and 21(5) Revisited

2019 ◽  
Vol 34 (1) ◽  
pp. 85-106
Author(s):  
Sebastián Green Martínez
Keyword(s):  
International Law ◽  
The State ◽  
Foreign Investor ◽  
Sovereign Power ◽  
Bad Faith ◽  
Public International Law ◽  
Host State ◽  
General Revenue ◽  
Energy Charter Treaty ◽  
Bona Fide

Abstract As the number of investment arbitrations under the Energy Charter Treaty has soared in recent years, parties and arbitrators have faced arguments concerning its Article 21 on taxation measures, which had seldom been applied before. In 2014, the tribunal ruling on the Yukos trilogy held that even though Article 21 excludes taxation from the scope of the treaty, the carve-out could apply “only to bona fide taxation actions, i.e., actions that are motivated by the purpose of raising general revenue for the State”. Article 21 also provides that in cases regarding expropriation “[t]he Investor or the Contracting Party alleging expropriation shall refer the issue of whether the tax is an expropriation or whether the tax is discriminatory to the relevant Competent Tax Authority. Failing such referral by the Investor” in cases of investor-state arbitration, the tribunal “shall make a referral to the relevant Competent Tax Authorities”. The Yukos tribunal considered said referral to be a futile exercise when it is unequivocal that the host State acted in bad faith towards the foreign investor. As a consequence of the Yukos trilogy, the Energy Charter Secretariat has published a report on the issue that recommends potential amendments to clarify Article 21. A number of investor-state arbitral tribunals have also addressed these issues since the Yukos trilogy. Taking a public international law approach, this article critically explores awards and decisions rendered by those tribunals, paying particular attention to their findings on Article 21 vis-à-vis the sovereign power to tax. This article concludes that recent awards dealing with Article 21 arguments have struck an appropriate balance between the prerogatives of States and their obligations under the Energy Charter Treaty. Thus, the article affirms that no amendment seems necessary.

3 Fair And Equitable Treatment

2009 ◽  
Author(s):  
Gallagher Norah ◽  
Shan Wenhua
Keyword(s):  
Bilateral Investment Treaties ◽  
National Treatment ◽  
Standard Format ◽  
Foreign Investors ◽  
Host State ◽  
Fair And Equitable Treatment ◽  
Investment Treaties ◽  
Equitable Treatment ◽  
Full Protection

Like other bilateral investment treaties (BITs), Chinese BITs establish a set of general standards of treatment accorded to foreign investors by the host state. The most commonly found general standards of treatment include fair and equitable treatment (FET), (full) protection and security (PNS), most favoured nation treatment (MFN), and national treatment (NT). The first two belong to the group of non-contingent standards (or so-called “absolute standard of treatment”), whilst the latter two are forms of contingent standards (or “relative standards of treatment”). Absolute standards do not depend on treatment granted to other investors. In contrast, the relative standards are contingent on treatment given to other categories of investors, nationals of the host state in the case of NT and investors from third states for the MFN. This chapter begins with an examination of the FET standard, focusing on the different approaches of interpretations that have been developed in theory and in arbitration practice. It then analyzes the standard under Chinese BITs and assesses the implications of its standard format and any variations.

scholarly journals Klausula Counter-claim dalam Bilateral Investment Treaty Indonesia

2019 ◽  
Vol 2 (6) ◽  
pp. 2219
Author(s):  
Nabilla Zelda Nasution
Keyword(s):  
Dispute Settlement ◽  
National Treatment ◽  
Bilateral Investment Treaty ◽  
Host State ◽  
Investment Treaty ◽  
Fair And Equitable Treatment ◽  
Equitable Treatment

Investor-State Dispute Settlement (ISDS) merupakan suatu mekanisme penyelesaian sengketa antara investor dan negara penerima investasi (host state) karena suatu pelanggaran terhadap Hukum Investasi Internasional. Berdasarkan data UNCTAD, alasan yang sering diajukan dalam gugatan ISDS umumnya meliputi empat hal permasalahan yakni Most Favoured Nations, National Treatment, Non Exproriation, dan Fair and Equitable Treatment. Namun pengaturan penyelesaian sengketa investasi dengan mekanisme ISDS dianggap lebih berpihak kepada pihak investor dibandingkan kepada host state karena sebagian besar IIA mengijinkan ISDS diajukan oleh investor, dan dalam prakteknya investor merupakan satu-satunya penggugat yang diizinkan. Ketidakseimbangan kedudukan para pihak dalam mekanisme ISDS memberikan pemikiran counter-claim sebagai upaya menyeimbangkan kedudukan investor dan host state dalam mekanisme ISDS. Selain itu pentingnya counter-claiim dalam mekanisme ISDS antara lain karena belum ada aturan yang seragam mengenai counter-claim, counter-claim memungkinkan responden untuk mencari keadilan di forum yang sama sehingga lebih efisien. Serta bagi host state, counter-claim dapat digunakan untuk membersihkan reputasi host state atas gugatan yang diajukan oleh investor. Penelitian ini mengkaji klausula counterclaim yang dapat diadopsi dalam BIT Indonesia sehingga dapat menyeimbangkan kedudukan para pihak dalam mekanisme ISDS, khususnya Indonesia sebagai host state. Penelitian hukum yang digunakan adalah pendekatan konseptual (conseptual approach), pendekatan perundang-udangan (statute approach), dan pendekatan kasus (case approach) dalam membahas counterclaim dalam mekanisme ISDS serta dalam menganalisa rumusan klausula counterclaim yang dapat di adopsi dalam Bilateral Investment Treaty (BIT) Indonesia.

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

2020 ◽  
Vol 67 (2) ◽  
pp. 233-255
Author(s):  
Yulia Levashova
Keyword(s):  
International Investment ◽  
Due Diligence ◽  
International Investment Law ◽  
Host State ◽  
Fair And Equitable Treatment ◽  
Political Background ◽  
Legitimate Expectations ◽  
Investment Law ◽  
The Stability ◽  
Equitable Treatment

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 legitimate expectation of regulatory stability under the Energy Charter Treaty

2020 ◽  
Vol 33 (2) ◽  
pp. 451-466
Author(s):  
Diego Zannoni
Keyword(s):  
Legal Framework ◽  
Eu Member States ◽  
Legitimate Expectation ◽  
Investment Treaty ◽  
Long Run ◽  
Fair And Equitable Treatment ◽  
Energy Charter Treaty ◽  
Legitimate Expectations ◽  
The Stability ◽  
Equitable Treatment

AbstractOne of the main catalysts for the shift towards renewable energies has been the practice of support schemes in a key number of EU member states. Some of these states have since withdrawn or revoked much of their original support, which has resulted in investment treaty arbitrations being filed against them under the Energy Charter Treaty. Arguably, a balance should be found between investors’ legitimate expectations concerning the stability of the legal framework and the host states’ right to adapt regulations to new needs. This can be achieved by clarifying and delimiting the principle of fair and equitable treatment, and by encapsulating it in a more precise set of rules. Due to its open character, this principle could otherwise become too intrusive a standard of judicial review for the exercise of sovereign power by host states. It could be diluted into a rhetorical framework inviting uncertainty and subjective judgment. While the focus of this article is on energy, the concern for legal stability equally applies to all those sectors where large upfront investments are required, which can only be recouped in the long run.

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