Fair And Equitable Treatment

한·일 및 한·중·일 투자협정의 투자자-국가 분쟁해결제도 연구：국내법원판결에 관한 판정례를 중심으로 (A Study on Investor-State Dispute Settlement System of the Korea-Japan and the Korea-China-Japan Investment Treaty: Denial of Justice in Cases)

Submission to Australian Government Department of Foreign Affairs and Trade Review of Australia’s Bilateral Investment Treaties

As an important legal document signed between two countries to promote and protect investment, bilateral investment treaties play an important role in bilateral international investment. This paper intends to answer the following questions: What is the impact of bilateral investment treaties on Chinese companies’ overseas mergers and acquisitions（M&A）? What is the impact mechanism? How should Chinese companies take advantage of the effect of bilateral investment treaties on overseas M&A, so as to expand the scale and scope of overseas M&A while promoting the success of M&A?Based on the progressive difference-in-difference model, this paper delves into the theoretical mechanism and impact of bilateral investment treaties on Chinese companies’ overseas M&A by using bilateral investment treaties as a quasi-natural experiment with the country panel data of 140 countries from 2004 to 2018. It comes to the following conclusions: Firstly, compared with countries that have not signed bilateral investment treaties, bilateral investment treaties have a significant positive effect on Chinese companies’ willingness to acquire overseas and successful M&A. Secondly, in terms of dynamic effects, bilateral investment treaties have a long-term effect on the promotion of Chinese companies’ overseas M&A, and their volatility has increased. Thirdly, the promotion effect of bilateral investment treaties is significantly heterogeneous. The promotion effect of bilateral investment treaties is more significant in Asia and Africa, stronger in high-quality countries and developed countries, and stronger in non-state-owned companies. Fourthly, the expansibility test shows that the quality of the text of bilateral investment treaties have a significant promoting effect on China’s overseas M&A. Fifthly, through the decomposition and quantification of the specific provisions of investment treaties, “Definition and Scope of Investment”“Fair and Equitable Treatment” and “Most Favored Nation Treatment” are the key provisions that affect the promotion of China’s overseas M&A in bilateral investment treaties. This paper enriches the research theory in the field of bilateral investment treaties and overseas M&A relations, provides policy revelations for Chinese companies’ overseas M&A and the new round of bilateral investment treaty practices, and contributes Chinese wisdom to global economic governance.In short, this paper contributes to the existing research in the following three perspectives: Firstly, it specifically examines the impact of bilateral investment treaties on the number of Chinese companies’ M&A cases and successful M&A cases in a more in-depth way. Secondly, it uses bilateral investment treaties as a quasi-natural experiment, and conducts an empirical research based on the progressive difference-in-difference model. It also explores the impact of the text quality of investment treaties, and examines the internal mechanism of bilateral investment treaties from the dimensions of investment definition and scope, fair and equitable treatment, national treatment, most-favored-nation treatment, expropriation compensation, umbrellas, and investment dispute settlement based on the specific terms of investment treaties. Lastly, it lays an important empirical foundation for deepening bilateral investment treaties and promoting overseas M&A by Chinese companies, as well as for building a scientific and reasonable bilateral investment treaty system and promoting the formation of a new pattern of comprehensive opening.

This study explores the implementation of the concepts of control by the host state and protection for foreign investment by analyzing the dispute between Oleovest Pte. Ltd. and the Government of Indonesia, alongside a comparative analysis of the 2005 and 2018 Indonesia–Singapore Bilateral Investment Treaties (BITs). The core focus lies in the legal and policy tension between the state’s sovereign right to regulate its domestic affairs for public interest and its obligation to provide legal protection and guarantees to foreign investors. This tension is especially significant in investment treaty arbitration, where claims of unfair treatment or indirect expropriation must be balanced against the host state's regulatory authority. The Oleovest case exemplifies this dynamic, with allegations of breaches of fair and equitable treatment (FET) and indirect expropriation raised by the investor, while Indonesia asserts its right to regulate in pursuit of national development and public welfare. The changes between the 2005 and 2018 BITs reflect Indonesia’s evolving approach to balancing investor protection with regulatory autonomy, shifting from broad protections toward clearer exceptions that emphasize the host state’s right to regulate. This study underscores the importance of developing clearer legal frameworks that support both foreign investor confidence and state sovereignty, ensuring that investment treaties remain fair, balanced, and aligned with sustainable development goals.

International Investment Law: The Perpetual Search for Consensus

As the most core and widely applicable investment protection standard in international investment agreements (IIAs), Fair and Equitable Treatment (FET) clauses have played an important role in regulating the behavior of host countries and safeguarding the legitimate foreign investors' rights and interests.Based on the development of the FET clause, this paper systematically analyzes its connotation and arbitration practice, and reveals its interpretation path in terms of legitimate expectation, non-discriminatory treatment and procedural justice through typical case analysis. The article further points out that in the application of FET clauses, it is not easy to find out the path of interpretation of FET clauses. The article further points out that the FET Clause faces the main problems of ambiguous connotation, inconsistent arbitration standards and inhibition of host country's policy space in the process of application. To overcome these issues, this article proposes that the scope of the Fair and Equitable Treatment (FET) clause's applicability be modified. through measures such as narrowing the scope of provisions, establishing mechanisms to protect regulatory authority, applying proportionality assessments, and formalizing the dispute resolution process. The goal is to achieve a balanced equilibrium between safeguarding investments and preserving national sovereignty.

Article 207 TFEU confers upon the European Union exclusive competence with regard to 'foreign direct investment'. This article argues that this competence may be broad enough to cover most, if not all, the matters usually addressed in a Bilateral Investment Treaty. It covers both the initial 'admission' of investments and 'post-admission' matters, such as 'national treatment', 'most-favoured nation treatment' or 'equal and fair treatment'. Member States retain the right to expropriate the assets of foreign investors, but the Union may subject its exercise to certain conditions. Article 207 TFEU does not cover 'portfolio investments', but the Union may have implied exclusive competence by virtue of the common rules on capital movements (Articles 63-66 TFEU). Competence in the 'field of transport' remains, in principle, 'shared'. Member States may maintain the restrictions 'grandfathered' by Article 64(1) TFEU. It is arguable, but more doubtful, that Article 65(1)TFEU also provides an exception.

Rules on expropriation have long formed the core of the field of international investment law, but have not been in the centre of arbitral practice and scholarly debate in the past decade. Several developments may explain this loss of prominence. First, cases of outright expropriations have become rare after the 1990s, in a climate with an international focus on the beneficial effects of foreign investment. High-profile nationalizations in Latin America are an exception to this overall trend. Second, counsel and tribunals have tended to focus less on rules of expropriation and more on the scope of rules on fair and equitable treatment (FET) in cases of host State interference with foreign investment below the threshold of a formal taking. Third, the emphasis in arbitral practice on continued control on the part of the investor as a dividing line between compensable takings and non-compensable regulatory measures has contributed to reduce the practical significance of rules on indirect expropriation. When faced with the option to decide a case under rules on FET or norms on indirect expropriation, tribunals have been more inclined to turn to the former, albeit for reasons that are not always clearly articulated.

This article examines the Sanum award and two decisions of Singapore courts dealing with the question of whether the China-Laos bilateral investment treaties (BIT) extended to Macao after the cession of this territory to China in 1999. The award and the decisions provide the first comprehensive analysis regarding the question of state succession to BITs. The article examines how these decisions have analysed the ‘moving treaty frontiers’ principle and the different exceptions set out under Article 15 of the 1978 Vienna Convention on Succession of States to Treaties in the specific and unique context of a cession of territory. These decisions also contain the first assessment of the territorial scope of application of Chinese BITs regarding Special Administrative Regions (SAR) after their handover to China. The article discusses the likely impact of the findings of the award and the decisions on the application of other Chinese BITs to the territory of Macao and that of Hong Kong.

With the increasing climate change crisis, the ongoing global energy security challenges, and the prerequisites for the development of sustainable and affordable energy for all, the need for renewable energy resources has been highlighted as a global aim of mankind. However, the worldwide deployment of renewable energy calls for large-scale financial and technological contributions which many States cannot afford. This exacerbates the need for the promotion of foreign investments in this sector, and protecting them against various threats. International Investment Agreements (IIAs) offer several substantive protections that equally serve foreign investments in this sector. Fair and Equitable Treatment (FET) clauses are among these. This is a flexible standard of treatment whose boundaries are not clearly defined so far. Investment tribunals have diverse views of this standard. Against this background, this article asks: What are the prominent international renewable energy investment threats, and how can FET clauses better contribute to alleviating these concerns? Employing a qualitative method, it analyses the legal aspects and properties of FET and concludes that the growing security and regulatory threats have formed a sort of modern legitimate expectations on the part of renewable energy investors who expect host states to protect them against such threats. Hence, IIAs and tribunals need to uphold a definite and broadly applicable FET approach to bring more consistency and predictability to arbitral awards. This would help deter many unfavourable practices against investments in this sector.

The dispute-resolution provisions in bilateral investment treaties (BITs) have become the “ultimate” investor protection in modern investment treaties. This chapter reviews the different types of dispute-resolution provisions of the Chinese BITs. It first looks at the choice of arbitrations made in its treaties, ICSID, ad hoc, or other arbitration rules. It then continues to review the two main types of investor-state dispute-resolution clauses in China's BITs: restrictive—where the BIT permits international arbitration of disputes on the amount of compensation for expropriation only; and more liberal or expansive—which allows access to international arbitration for all disputes between the investor and host state. It then considers a topic of particular interest right now for investors and potential investors in China: the application of the MFN clause to dispute resolution. Finally, it looks at the applicable law to dispute settlement and the requirement to exhaust domestic remedies.

China and the Global Governance of Foreign Direct Investment – The Emerging Liberal Bilateral Investment Treaty Approach

Journal Article The Future of Investment Arbitration by Catherine A. Rogers and Roger P. Alford Get access The Future of Investment ArbitrationbyRogers Catherine A. and Alford Roger P.. Published by ITA-ASIL and Oxford University Press ( 2009). Ruth Teitelbaum Ruth Teitelbaum Search for other works by this author on: Oxford Academic Google Scholar Arbitration International, Volume 26, Issue 1, 1 March 2010, Pages 187–190, https://doi.org/10.1093/arbitration/26.1.187 Published: 01 September 2014

This paper reviews the EU Solidarity Contribution that was recently introduced by the Council Regulation on Emergency Intervention to Address High Energy Prices and proposes a more proportional alternative. It is argued that the legitimacy of the EU Solidarity Contribution might be disputed. The role that Member States have played in driving up energy prices by filling their natural gas storages much more than the EU’s filling trajectory prescribes raises questions as to whether the EU Solidarity Contribution could be in conflict with the proportionality principle and whether all formal requirements of Article 122(1) Treaty on the Functioning of the European Union (TFEU) have been fulfilled. Furthermore, it is argued that the EU Solidarity Contribution may compromise protection of investments under international investment agreements (IIAs) as the current design might entail elements that violate fair and equitable treatment (FET). As an alternative to the EU Solidarity Contribution, the article proposes the following. First, a legal commitment should be introduced for fossil fuel companies to invest 100% of their realized excess profit for decarbonizing the economy under the threat of taxing away those excess profits in their entirety should it become apparent that the investments are not actually realized. Second, in lieu of the EU Solidarity Contribution, the incidental financial support measures for vulnerable households could be financed with the excess (windfall) revenue collected from Value Added Tax (VAT) and excise due to the high inflation in the EU in 2022. EU tax policy, EU law, international investment law, EU solidarity contribution, proportionality, emergency intervention, energy prices, fair and equitable treatment

The fair and equitable treatment (FET) standard is undoubtedly a key feature of most International Investment Agreements concluded by developing countries today. In practice however, the standard raises a number of potent concerns which have not gone unnoticed. This article accordingly attempts to critically analyze the increasing intrusiveness of the FET standard in light of growing concerns expressed by developing countries following a number of large arbitral awards which have been handed down against them. In this regard, the article not only challenges the conceptual underpinnings of the standard but also the substantive elements which have become synonymous with it. It concludes by providing an approach to regulatory balancing which would reposition the FET standard in the context of other investment protection standards as well as the standing of developing countries.