On The Legal Value Of The Terms Of Fair And Just Treatment In International Investment Agreements

The Fair and Equitable Treatment Standard(FET)is an important clause in international investment agreement(IIA).Recently,investors have been using this clause to protect their interests through arbitration and gained support from arbitral tribunals.As an independent standard,FET offers investors high standard of protection.Nonetheless,due to its ambiguity,it is difficult to define FET's specific meaning.As a result,the connotation of the FET needs to be determined based on specific circumstances of the case in practice,which authorizes the arbitral tribunal great discretion.The tribunal usually interprets FET in a broad way,or apply it indiscreetly,which may greatly impair the sovereignty of the host country over foreign investment.This situation has led to the imbalance of interests between countries and investors.Therefore,it is necessary to clarify the legal value of FET.In practice,there are mainly four model types for the fair and equitable treatment clause including “stipulating FET without restrictions”,“refining FET improperly” and “connecting FET with other treatment standards”,and “linking FET with customary international law”.Each type of regulatory model has its own problems,including the abuse of litigation against host countries,rigid application of FET,significant increase of risk for the host country being sued,and unclear application of FET and so on.As a result,many scholars have put forward corresponding theoretical solutions,but they still cannot solve the predicament of fair and equitable treatment clause.Actually,FET clause itself will bring about imbalance of interests between parties and it is unnecessary to stipulate FET clause in IIA.FET clause has very little legal value.On the contrary,the problems it brings are complex and difficult to solve.There also exist international precedents that do not stipulate FET clause.Therefore,abolishing FET clause may be the way to solve the predicament.