Analysis On The Development Of FET Clause In International Investment Agreements And Its Implications On China's Practices

FET clause originated from the Friendship Commerce Navigation Treaty signed between the United States and other countries,and it was incorporated in the bilateral and multilateral agreements since then.But many FET clauses in the treaties at the multilateral level have not been in force due to the lack of consensus between developed and developing countries.Currently,Most of International Investment Agreements in the world incorporate FET clauses.In order to better study the FET clause,it is necessary to clarify the nature of the FET clause.FET clause clearly reflects the relationship between the protection of investor interests and the power of government to regulate,and has the characteristics of balance of interests.As for the connotation of the FET clause,although there is no clear definition in the treaty,the specific elements of the FET clause can be summarized through past arbitration practice,which can be mainly divided into entity elements and procedural elements.How to explain FET clause will affect the application of the FET clause.First of all,whether the FET clause constitutes to customary international law,there are affirmative and negative opinions.The current mainstream view is that the FET clause has not yet developed into customary international law.The FET clause originated from the International Minimum Treatment Standard.At present,when explaining and applying the FET clause,it will also be limited by the content of the InternationalMinimum Treatment Standard,but the FET clause differs from the International Minimum Treatment Standard in many respects.The treaty practices of the FET clause are extensive,it is mainly divided into four categories,namely,independent FET clause,FET clause combined with international law,FET clause combined with the International Minimum Treatment Standards in customary international law and the adoption of enumerated FET clauses.Different expressions reflect different attitudes towards investor interests and government's power to regulate.An analysis on the FET clause in the US and European Union investment agreements shows the attitude of US and European Union.The fundamental contradiction contained in the FET clause is the conflict between the expansion of the regulatory power of the host government and the protection of the interests of investors.However,the concept of government regulatory power is not derived from international investment law,but from domestic law.The interests of investors originated from the protection of private property.When applying this clause,even if the investor itself has a large fault,the arbitral tribunal will still recognize the behavior of the host country as a violation of the FET clause,which is particularly evident in the MTD v.Chile case.This shows that the arbitral tribunal is more inclined to protect the interests of investors.And there are two reasons for this tendency in the arbitral tribunal.One is that the arbitral tribunal has neglected that for many countries,the level of protection for foreign investors has exceeded the level of protection for domestic investors,and the protection of foreign investors has been emphasized.Another is that the arbitral tribunal regards the public interest of the host country and the interests of the investor as the same level of interest in interpreting the FET clause,ignoring the public law nature of the government's regulatory power.This leads to an imbalance of interests in the FET clause.On the one hand,the interests of investors have expanded.On the other hand,the government's regulatory powers have been restricted.Even in the “public interest”,it may violate the FET clauses.The imbalance of interests under the FET clause has caused the unfair state of international investment practice.However,to achieve fairness and justice,as well asto achieve the balance between the interests of investors and the government's power to regulate is the fundamental purpose of the FET clause.Facing the damage to the government's power to regulate,there has been a new trend in the FET clauses.This was reflected in the case Parkerings-Compagniet AS,BG Group PLC Group v.Argentina.When ‘investors legitimate expectation' is involved,the arbitral tribunal's determination is more cautious,and requiring investors' legitimate expectations to be protected should meet the conditions for the host country to make specific commitments to investors.The FET clause in the US and European Union investment agreement is also a manifestation of the balance of interests.From the perspective of Chinese practices,China currently has the dual status of capital exporting countries and capital importing countries,and it cannot unilaterally emphasize on the protection of investors' interests,or government' power to regulate.Instead,it should choose the mode that is most beneficial to the balance of interests.A model of the enumerated list can be used and an exception to the FET clause can be incorporated.