A Study on Fair and Equitable Treatment: Requirements and Limitations of Legitimate Expectation

2021 ◽  
Vol 19 (1) ◽  
pp. 99-129
Author(s):  
Hanbit Min
Keyword(s):  
Legitimate Expectation ◽  
Fair And Equitable Treatment ◽  
Equitable Treatment

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 Some of these states have since withdrawn or revoked much of their original support, which has resulted in investment treaty arbitrations being filed against them under the Energy Charter Treaty.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.

Biwater Gauff (Tanzania) Ltd v. United Republic of Tanzania

ICSID Reports ◽  
2021 ◽  
Vol 19 ◽  
pp. 183-204
Keyword(s):  
Public Interest ◽  
Economic Loss ◽  
Content Type ◽  
Legitimate Expectation ◽  
Fair And Equitable Treatment ◽  
Municipal Law ◽  
Legal Security ◽  
Equitable Treatment ◽  
Domestic Law ◽  
Full Protection

183Procedure — Provisional measures — Confidentiality — ICSID Convention, Article 47 — ICSID Arbitration Rule 39(1) — Whether confidentiality measures were needed to ensure orderly disposition and procedural integrity of the arbitration — Whether the parties may engage in general public discussion — Whether the parties may apply for restrictions to be liftedProcedure — Amicus curiae — ICSID Arbitration Rule 37(2) — Public interest — Whether there was a public interest in the arbitration — Whether the non-parties’ proposed submission had reasonable potential to assist the tribunal in determining a legal or factual matter by bringing a perspective different from the parties to the dispute — Whether the non-parties would address a matter within the scope of the dispute — Whether the non-party had a significant interest in the proceeding — Whether the non-party submission would disrupt the proceedings or unfairly burden or prejudice either party to the dispute — Whether non-parties should be granted access to key arbitral documents — Whether non-parties should be permitted to attend oral hearingsJurisdiction — Investment — ICSID Convention, Article 25 — Interpretation — Salini test — Whether the elements of the Salini test were mandatory legal requirements — Whether the BIT contained a broad and flexible definition of investmentJurisdiction — Consent — ICSID Convention, Article 25 — Corporate formalities — Whether the claimant was barred from proceeding with the arbitration in the absence of proof of a formal resolution approving the arbitrationJurisdiction — Municipal law — Consent — ICSID Convention, Article 25 — Whether a tribunal may exercise jurisdiction over claims arising under domestic law calling for parties to agree an acceptable dispute resolution mechanism, but where no agreement had been reachedJurisdiction — Municipal law — Consent — ICSID Convention, Article 25 — Whether a State’s consent to ICSID arbitration in a BIT implied consent to ICSID arbitration for claims arising under domestic lawJurisdiction — Cooling-off period — Whether a claimant’s failure to strictly observe a BIT’s six-month cooling-off period was a bar to jurisdictionExpropriation — Contract — Cumulative acts — Public purpose — Economic loss — Whether a party’s interest in a lease contract was an asset capable of being expropriated — Whether a State’s breach of contractual rights was relevant to the determination of expropriation claims under a BIT — Whether the cumulative effects of multiple acts can constitute an expropriation — Whether typically commercial activities can form the basis for a claim of expropriation when carried out by the State or its agencies — Whether 184economic loss was relevant to the question of a State’s liability for interference with an investor’s rightsFair and equitable treatment — Expropriation — Whether conduct constituting expropriation necessarily constituted a violation of the standard of fair and equitable treatmentFair and equitable treatment — Legitimate expectation — Whether the appointment of a non-independent regulator in violation of a legitimate expectation that regulators would be independent violated the standard of fair and equitable treatment where the breach had no negative impact on the investmentFair and equitable treatment — Contract — State-owned entity — Change of circumstances — Whether the State’s failure to ensure that government agencies paid their water bills could be distinguished from a commercial actor’s failure to pay bills and constituted a breach of the standard of fair and equitable treatment — Whether a State-owned entity had an obligation to renegotiate contracts based on changed circumstances — What facts a claimant must prove to demonstrate change of circumstancesArbitrary or discriminatory measures — Reasonableness — Whether the requirement that States must not impair investments through unreasonable or discriminatory measures implied the same reasonableness standard as fair and equitable treatmentArbitrary or discriminatory measures — Political motivations — Whether public statements, withdrawal of tax exemptions and seizure of property were arbitrary and unreasonable when motivated by political considerationsFull protection and security — Physical security — Commercial and legal security — Whether the standard of full protection and security applied only to physical security or extended to commercial and legal securityFree transfer — Availability of funds — Whether a State’s actions that destroyed the value of an investment, thereby depriving an investor of funds, constituted a violation of the protection of free transfer of fundsRemedies — Damages — Whether a State caused an investor’s damages where the value of the investment was already in jeopardy prior to the challenged actsCosts — Whether costs should be awarded to a claimant who prevailed on the merits but was unable to prove damages resulting from the challenged State conduct

scholarly journals FAIR AND EQUITABLE TREATMENT STANDARD IN NTERNATIONAL INVESTMENT AGREEMENTS

2018 ◽  
Vol 7 (1) ◽  
pp. 1
Author(s):  
Sefriani .
Keyword(s):  
Due Process ◽  
International Investment ◽  
International Investment Law ◽  
Host State ◽  
Legitimate Expectation ◽  
Treatment Standard ◽  
International Investment Agreements ◽  
Fair And Equitable Treatment ◽  
Equitable Treatment ◽  
Investment Agreements

<pre><span lang="EN-US">In the last five years, the number of investors who suit against host state in the international arbitration forum increased significantly. Almost all lawsuits used fair and equitable treatment (FET) standard which has been violated by the host state. Most of international investment agreements including those that were made by Indonesia contain FET standard clauses. However, there are no definitions related to this standard. This condition potentially raises a very wide interpretation of the standard. The problem formulations in this article are how the history of FET is, where its position in international investment law is and what elements of FET standard are. The results show that the FET standard has existed since Havana Charter followed by various FCN, BIT and other international investment agreements. FET standard can be categorized as customary international, legally binding on all countries regardless their national law. Although there is no universal approval regarding the scope of FET standard, the writings which have been published and the arbitral tribunal decision mentions that those elements are legitimate expectation; due process; denial of justice; rule of law; non-discrimination; transparency; consistency, good faith, and reasonableness.</span></pre><pre><span lang="EN-US"> </span></pre>

AES Corporation and Tau Power BV v. Republic of Kazakhstan

ICSID Reports ◽  
2021 ◽  
Vol 19 ◽  
pp. 610-629
Keyword(s):  
Public Interest ◽  
Competition Law ◽  
The State ◽  
Content Type ◽  
Legislative Reform ◽  
Legitimate Expectation ◽  
Investment Treaty ◽  
Fair And Equitable Treatment ◽  
Municipal Law ◽  
Equitable Treatment

610Jurisdiction — Consent — Revocation — Municipal law — ICSID Convention, Article 25 — Whether a State may revoke consent to arbitration by repealing municipal lawJurisdiction — Investment — ICSID Convention, Article 25 — Municipal law — Whether investments were excluded from jurisdiction by express exceptions under municipal lawJurisdiction — Consent — Temporality — Municipal law — Whether the revocation of consent to arbitration through the repeal of municipal law affected investments made prior to repealAdmissibility — Fork-in-the-road clause — Judicial act — Competition law — Whether claims for breach of competition law before municipal courts were the same as the investment treaty claimsAdmissibility — Domestic litigation requirement — Whether the exhaustion of local remedies was required — Whether the question was best left to the merits stageContract — Legitimate expectation — Legal stability — Competition law — Whether an agreement between the claimants and the State gave rise to a legitimate expectation that the State would not amend competition lawMunicipal law — Stabilisation clause — Legitimate expectation — Legal stability — Adverse effect — Whether the claimants had a legitimate expectation to be protected by a stabilisation clause that had been repealed — Whether the claimants had a legitimate expectation to be protected against legislative reform — Whether the claimants demonstrated any adverse effect from legislative reform — Whether it was predictable that the State would undertake reform of its competition lawFair and equitable treatment — Legitimate expectation — Arbitrariness — Denial of justice — Legal stability — Whether changes to competition law were in breach of the investment treaties — Whether alleged harassment and coercion were in breach of the standard of fair and equitable treatment — Whether the claimants were denied justice in the application of competition law by municipal courtsUmbrella clause — Municipal law — Contract — Legal stability — Whether a breach of municipal law could give rise to an investment treaty breach — Whether there was a breach of municipal law — Whether the State agreed not to reform competition lawFair and equitable treatment — Legitimate expectation — Free transfer — Proportionality — Public interest — Whether the claimants had an expectation to make and have the right to dispose of a reasonable return on their 611investment — Whether the requirement to reinvest all profits was in breach of legitimate expectations — Whether the measure was a proportionate response in the public interestRemedies — Restitution — Whether restitution was a feasible remedy in the circumstancesRemedies — Damages — Burden of proof — Quantum — Whether the claimants had established the scope of damage they suffered as a result of treaty breachRemedies — Damages — Future damages — Whether the claim for future loss was premature

Introductory Note

2017 ◽  
Author(s):  
August Reinisch
Keyword(s):  
Ad Hoc ◽  
Treatment Standard ◽  
Fair And Equitable Treatment ◽  
Introductory Note ◽  
Equitable Treatment

In 2015, the jurisprudence of International Centre for Settlement of Investment Disputes (ICSID) tribunals and ad hoc committees largely followed established lines. However, the awards on jurisdiction in the Poštová banka and the Ping An cases evidenced very restrictive approaches to what is required in order to uphold jurisdiction over ICSID claims. On the substance of claims, the tribunals in Tidewater and in Quiborax reaffirmed the legality requirements of expropriations, a string of cases clarified the contours of the fair and equitable treatment standard, while the ad hoc committees in the Daimler and the Kılıç cases continued to diverge on the scope of most-favoured nation (MFN) clauses.

Enkev Beheer BV (of the Netherlands) v. Republic of Poland

ICSID Reports ◽  
2021 ◽  
Vol 19 ◽  
pp. 630-648
Keyword(s):  
Due Process ◽  
The State ◽  
Third Party ◽  
Waiting Period ◽  
Content Type ◽  
Fair And Equitable Treatment ◽  
Just Compensation ◽  
Default Rules ◽  
Equitable Treatment ◽  
Almost All

630Procedure — Addition of a party — Conditional application — UNCITRAL Rules, Article 22 — UNCITRAL Rules, Article 17 — Whether the UNCITRAL Rules or lex loci arbitri allowed for applications to be made conditional on a tribunal’s future decision — Whether the application was consistent with the State’s procedural rights — Whether the amendment to a claim under Article 22 of the UNCITRAL Rules allowed for the addition of a third party as claimantJurisdiction — Investment — Shares — Whether an investor’s shares and rights derived from those shares were protected investments under the BITJurisdiction — Investment — Assets of subsidiary — Whether profits, goodwill or know-how of a local subsidiary constituted investments of the investor protected by the BITJurisdiction — Consent — Cooling-off period — Premature claims — Whether the investor had communicated its own claims rather than those of its local subsidiary — Whether the investor’s failure to comply with a waiting period of six months under the BIT required a tribunal to deny jurisdiction or admissibility — Whether the negotiation of a local subsidiary’s dispute in good faith was relevant to jurisdiction over a foreign investor’s claimsInterpretation — Cooling-off period — VCLT, Article 31 — Object and purpose — Whether the object and purpose of the BIT required a tribunal not to adopt a strict or formalistic interpretation of the waiting period of six monthsRemedies — Declaratory award — Interpretation — Just compensation — Whether the tribunal had jurisdiction under the BIT to make a declaratory award on the interpretation and application of the term “just compensation”Jurisdiction — Dispute — Whether the tribunal had jurisdiction under the BIT to advise the parties of an imminent disputeExpropriation — Direct deprivation — Shares — Rights derived from shares — Whether the State directly deprived the investor of its rights as a shareholder in its local subsidiaryExpropriation — Indirect deprivation — Shares — Rights derived from shares — Whether the shares had lost all or almost all significant commercial value — Whether the measures were adopted in the public interest — Whether due process had been followed — Whether there were any undertakings by the StateExpropriation — Interpretation — “Just compensation” — Whether there was any difference between the terms of the BIT and general international law — Whether the meaning of just compensation could be determined in the abstract631Fair and equitable treatment — Whether the impending expropriation constituted a breach of the standard of fair and equitable treatment — Whether the claim concerned the investor’s rights derived from sharesFull protection and security — Whether the State failed to protect an investment from expropriation by local authorities — Whether the claim concerned the investor’s rights derived from sharesUmbrella clause — Whether there was any assurance directed at the investor that created any legal obligations — Whether the claim concerned the investor’s rights derived from sharesCosts — Arbitration costs — Variation by agreement — UNCITRAL Rules — Whether the terms of the BIT varied the default rules for the allocation of arbitration costs

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

Dan Cake (Portugal) S.A. v. Hungary (ICSID)

2016 ◽  
Vol 55 (3) ◽  
pp. 496-524
Author(s):  
Catherina Valenzuela-Bock
Keyword(s):  
Arbitral Tribunal ◽  
Rare Finding ◽  
Bilateral Investment Treaty ◽  
Investment Treaty ◽  
Treatment Provision ◽  
Fair And Equitable Treatment ◽  
Equitable Treatment

In Dan Cake v. Hungary, an arbitral tribunal constituted under the auspices of the International Centre for Settlement of Investment Disputes (ICSID) issued a rare finding of denial of justice in its adjudication of the claims by Portuguese investor Dan Cake, alleging that the Hungarian court’s actions during the liquidation proceedings of its subsidiary were a violation of the fair and equitable treatment provision of the Hungary-Portugal Bilateral Investment Treaty (BIT). The decision adds an example of the factual circumstances that lead to a finding of denial of justice and reaffirms the stringent requirements that need to be satisfied in order to succeed on such a claim.

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