Determination Of Cumulative Conducts In Violation Of Fair And Equitable Treatment

Fair and equitable treatment is the most frequently invoked treatment clause in international investment arbitration practice,and investors often file claims against host countries on the grounds of breach of fair and equitable treatment.With the rapid development of international investment,there are more and more investment disputes regarding the fair and equitable treatment standard,because the ambiguity and uncertainty of the connotation of the treatment clause has led to many disputes in the application of the treatment.For example,in the past,most of the arbitration practice only analyzed whether the host country’s conduct violated the obligation of fair and equitable treatment from the perspective of individual acts,but in recent years,some arbitral tribunals began to analyze whether the cumulative conduct of the host country violated the treatment from the overall perspective.What is the rationale for this approach and what are the negative consequences of this approach have become issues that need to be studied.This issue needs to be discussed by means of empirical and comparative analyses.The analysis is based on the application and interpretation of the arbitral tribunal’s determination of cumulative conduct as a violation of fair and equitable treatment in practice,and the specific details of the determination and application of cumulative conduct in practice are analyzed by means of induction and summary.At the same time,by comparing the concepts of "gradual expropriation" and "comprehensive act",which are similar to cumulative acts,we analyze the reasonable basis for the determination of cumulative acts.In current practice,the application of the concept of cumulative violations in the fair and equitable treatment standard covers two main areas.The first aspect is that some minor violations of a principle contained in the fair and equitable treatment standard are not sufficient to constitute a violation of the standard itself,but such minor violations,when taken together or in combination,constitute a violation of the fair and equitable treatment standard.At this point,the context of cumulative violations is premised on the distinction between a violation of a principle contained in the fair and equitable treatment standard and a violation of the standard itself,and contains an assumption that a certain threshold must be exceeded before one or more violations of the fair and equitable treatment principle can be considered a violation of the fair and equitable standard.The second aspect concerns the obligation to uphold the legitimate expectations or expectations of investors,in particular the obligation to maintain a stable and effective legal and commercial framework.Here too,the concept of "progressive" or "cumulative" violations entails the assumption that a State’s changes to the legal or commercial framework must exceed a certain threshold in order to be considered a violation of fair and equitable treatment.While a finding of cumulative conduct is reasonable and helps to ensure justice in individual cases,it creates more uncertainty in the application of an already broad treatment standard.Given the lack of uniformity in the regulation and understanding of the meaning of fair and equitable treatment,arbitral tribunals have more discretion and room for maneuver in applying the perspective of cumulative conduct,not only that,they usually interpret the treatment in favor of protecting the interests of investors,and in practice,they often do not follow the systematic interpretation method stipulated in the Vienna Convention on the Law of Treaties in interpreting treaties.The problem with the continuation of this practice is that in introducing the concept of cumulative violations,the balance between the interests of the foreign investor and the interests of the host country will become more and more unbalanced.In terms of the object and purpose of fair and equitable treatment,the main consideration is to protect the legitimate interests of the parties in the investment process so that the interests of both Contracting States and foreign investors are respected.Although the new generation of investment treaties has begun to focus on balancing the interests of host countries and foreign investors,and gradually clarify the provisions of the treaty on the obligation of fair and equitable treatment,most of the provisions on such treatment still adopt an open-ended,single-sense enumeration,and the rules of treaty interpretation have not formed an effective and uniform practice model.Therefore,in view of these problems in practice,and in order to better improve the perspective of the determination of cumulative acts,consideration can be given to solving the problems in the application of the determination of cumulative acts from three aspects: improving the provisions on the standard of treatment,improving the interpretation of the treaty by the tribunal and introducing the principle of proportionality in the application of fair and equitable treatment.States parties should improve the provisions on fair and equitable treatment in the process of reforming the new generation of treaties,adopt a closed enumeration to clarify the content of the obligations of such treatment,and specify the meaning of the perspective of determining cumulative acts.For example,under the formulation of the fair and equitable treatment provision in CETA in the new generation treaty,both individual acts and a series of acts are included in the process of finding a violation of the standard of treatment.When interpreting existing treaties,the arbitral tribunal should strictly follow the rules of interpretation of Articles 31 and 32 of the 1969 Vienna Convention on the Law of Treaties(VCLT),while respecting and taking into account the host country’s contractual intent and subsequent practice,and refine the explanations of treaty interpretation in the process of adjudication.In the process of treaty interpretation,the principle of proportionality is applied,and the issue of the threshold of cumulative violations is analyzed in accordance with the analytical framework of the objectives of legality,the principle of appropriateness,the principle of necessity,and the principle of proportionality in a narrow sense.This not only facilitates the arbitral tribunal to take into account the balance of interests between investors and states when interpreting the treaty,but also helps to return to the essence of fair and equitable treatment to maintain the fairness of international investment,so that investors and contracting states can reasonably anticipate the expectations and obligations of each party.