Towards Rebalancing The Fair And Equitable Treatment Standard In International Investment Law

In today's global political space,there is a rising tide against international investment agreements and equally against the investor-state dispute settlement system(ISDS).International investment law and the international arbitration tribunals have been collectively preoccupied with the interpretation and the application of the standards of treatment for foreign investments.This preoccupation hasn't been on the entire cadre of treatment standards but more so with the promise of providing fair and equitable treatment(FET)to investment of foreign investors within the jurisdiction of the capital importing state.As such the conundrum is with the FET and its elusiveness within the general realm of international investment law.It has been argued that including the fair and equitable treatment standard in international investment treaties has threatened the sovereignty of states by limiting their regulatory space as such this treaty standard has been problematic.Based on the available scholarship there has been an increase in the number of cases that have been brought against capital importing countries;against certain measures of the state consequently,questioning the very fabric of their constitutional right to govern.Therefore,there is a theory,that during the post World War II era bilateral investment treaties were bolstered because of the developed countries need to impose certain conditions,specifically on developing countries which would ensure that their foreign investments were protected.In order for that to be done certain clauses were used in the treaties in order to ensure that certain conditions were imposed on the regulatory behaviour of the capital importing state.These clauses,would in theory ensure that the rights of the foreign investor were protected while encouraging the promotion of more foreign direct investments within the borders of developing countries.Although,the increase in foreign direct investment and the protection of foreign investors from unwanted risk have not been intrinsically linked,the use of these treatment standards were encouraged.These investment agreements with the relevant protection clauses have been promulgated as a means to ensure that the rule of law is upheld and to prevent discriminatory measures against foreign investors.This has been proven not to be historically correct,as there are other means of protecting investments without leaving countries legally liable to private actors whenever governments make any regulatory changes.As such,the most popular clause that is invoked against states during the last few decades have been the fair and equitable treatment standard.The FET standard has been described as vague,arbitrary and asymmetric and used in favour of foreign investors.Therefore,the fundamental aim of this research is to establish the problems with the FET standard vis-à-vis a state's regulatory right with an aim of rebalancing the standard.The thesis will therefore,seek to examine how these multifaceted problems are interpreted by the arbitral tribunals using the fair and equitable treatment standard.Also,the steps that are being taken by the capital importing states in an effort to prevent future breaches of the standard by reforming their model BITs.The history of the standard will be discussed and the sources used by arbitral tribunals to arrive at an interpretation of the FET standard.The problem with the FET is its lack of limitation,it also opens the door for the the state to be liable for things that are within their sovereign right such as regulating in the best interest of their country.Also,based on the literature it would seem that states have a problem with the ISDS system rather than with the obligation to provide fair and equitable treatment to foreign investors.The ISDS system allows the arbitral tribunal an expansive authority to interpret the actions of the state and to apply its own arbitral jurisprudence.This is done without precedent,as what the arbitral tribunal may find to be unfair and inequitable treatment may eventually run amok of the rule of law,as in the past it was clearly evident that each case was decided on its own merit.Developing countries have taken steps to get rid of the ISDS system completely and to management the interpretation of the FET standard.This was done in order to protect their regulatory space by utilising a closed list approach which is basically outlining what constitutes a breach of the fair and equitable treatment standard.The investment provisionswithin these treaties when they were envisaged were to ensure non-discrimination,fair treatment and to encourage free market access to both developed and developing countries.It has since changed to be about protecting the rights of private investors and their need to operate within environments that they consider to be fair and equitable at times without thought for the legitimate rights to regulate of the countries in which they operate.Nonetheless,there are legitimate rights that the investors may have and those are to be protected but not through the current ISDS system and not with the use of the fair and equitable treatment standard as it is today but within a real investment court so that there may be equity for both parties.Foreign investors do have the right to be protected and offered fair and equitable treatment but the way in which the FET standard is being interpreted is problematic and therefore specific steps need to be taken to revise or refine the clause in international investment agreements going forward so that there may be more clarity and equity for the parties involved.The research focus on the word rebalance has to do with creating equity as it concerns the interpretation and application of the FET standard.For there to be fair and equitable treatment of investors and investment,the behaviour of the foreign investors should be within the domestic laws of the state further,both parties must seek to honour the spirit in which the treaty was negotiated.Moreover,the foreign investor must ensure that their business operations are sustainable once it is being done within the borders of the host state.