Critically analyse fair and equitable treatment standard in Essay

Critically analyse fair and equitable treatment standard in international investment treaties, taking into account recent treaty - Essay Example The specification of the standard, however, has been subject to various interpretations through the years because of its reliance on principles of equity. Debates over the FET revolve around whether this standard should be based on other standards of law or whether it is an autonomous and self-contained standard in itself. The standard it is most commonly related to is the customary international law minimum standard, and sometimes it is measured against more general principles of international law. In this paper, the evolving meaning of what constitutes fair and equitable practice as contained in BITs and as interpreted by arbitral tribunals shall be discussed and critiqued. The bases and rationale for the continued development of the FET will provide implications into the continued growth of foreign direct investments in this increasingly globalized economy. ... The most important principles that attach to FET are transparency, stability, and the investor’s legitimate expectations, compliance with contractual obligations, procedural propriety and due process, action in good faith, and freedom from coercion and harassment.3 The FET appears consistently in investment treaty practice since it was first articulated in the Havana Charter of 19484 where it is stated in Article 11(2) (a) (i) thereof: ‘to assure just and equitable treatment for the enterprise, skills, capital, arts and technology brought from one Member country to another.’ While the Charter was never enforced, U.S. treaty practice was influenced by its reference to FET.5 It was thereafter included in codifications of investor rights, beginning with the 1959 Draft Convention on Investments Abroad,6 Article 1 of which states that ‘Each party shall at all times ensure fair and equitable treatment to the property of the nationals of other parties.’ The identical wording was adopted in the 1967 OECD Draft Convention on the Protection of Foreign Property.7 As a result of the lack of precision in its definition, various treaties accord different contexts to the application of FET. Some BITs link FET with a substantive norm such as nondiscrimination, such as the treaty between Bangladesh and Iran which provides that each party extend to covered investment ‘fair treatment not less favourable than that accorded to its own investors or investors of any third state, whichever is more favourable.’8 There are a host of cases that link FET with customary international law in a variety of ways, as shall be seen in the discussion of the use of FET in BITs in the