The fair and equitable treatment (FET) standard in bilateral investment treaties protects investors against arbitrary, discriminatory, or opaque host state conduct. FET breaches typically involve frustration of legitimate expectations, failure of due process, and lack of transparency.
Political risk experts explain host state conduct in its political and regulatory context, establishing whether it fell below the international minimum standard. Legitimate expectations arise from specific representations, stable regulatory frameworks, permits, or assurances of treatment.
FET jurisprudence has evolved significantly post-Philip Morris, with tribunals increasingly applying proportionality analysis and distinguishing between legitimate policy change and treaty breach.
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Frequently Asked Questions
What constitutes a breach of fair and equitable treatment?
FET breaches typically involve frustration of legitimate expectations created by host state representations, failure of due process in regulatory or judicial proceedings, discriminatory or arbitrary conduct, and lack of transparency. Political risk experts explain the host state's conduct in its political and regulatory context.
How do legitimate expectations arise in investment treaty claims?
Legitimate expectations arise from specific representations or commitments made by the host state to the investor, a stable regulatory framework, a specific permit or licence, or assurances of treatment. Political risk experts analyse the policy and regulatory environment at the time of investment and the changes that frustrated the investor's expectations.