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)

Illegal Investments in International Arbitration

The proper allocation of interpretive authority between states and arbitral tribunals is central to current debates about investment treaty arbitration. States traditionally have given arbitrators broad latitude to interpret and apply international investment agreements. But as states gain greater experience with international investment arbitration, they are reclaiming interpretive authority from arbitrators as part of states’ broader reform efforts. To that end, states have devised at least four treaty-drafting techniques: interpretive guidelines, which tell tribunals how to interpret important treaty provisions, such as indirect expropriation, national treatment, and fair and equitable treatment; interpretive clarifications, which provide “greater certainty” on the meaning of investment protections in new treaties and interpretive gloss on existing treaties; interpretive indicators, which may tilt the interpretive balance toward the drafting states’ policy preferences, such as environmental protection; and interpretive markers, which record in the travaux préparatoires states’ preferred treaty interpretations. These drafting techniques can be enormously important. They may curtail arbitrators’ interpretive discretion, influence the interpretation of prior investment treaties, and even alter the outcome of arbitral cases. These techniques starkly illustrate the move from a traditional “delegation” model of IIAs to a more “prescriptive” model. Given their increasing use, these techniques are likely to affect the development of international investment law and arbitration for years to come.

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

The obligation of the parties to investment agreements to provide to each other’s investments “fair and equitable treatment” has been given various interpretations by governmental officials, arbitrators and scholars. Discussion of this standard has focused mainly on whether the standard of treatment required is measured against the customary international law minimum standard, a broader international law standard including other sources such as investment protection obligations generally found in treaties and general principles or whether the standard is an autonomous self-contained concept in treaties which do not explicitly link it to international law. Because of the differences in its formulation, the proper interpretation of the “fair and equitable treatment” standard depends on the specific wording of the particular treaty, its context, negotiating history or other indications of the parties’ intent. The attempts to clarify the normative content of the standard itself have, until recently, been relatively few. This document provides factual elements of information on jurisprudence, literature and state practice related to the fair and equitable treatment standard. It examines the origins of the standard and its use in international agreements and state practice, its relationship with the minimum standard of international customary law and the elements of its normative content as identified by arbitral tribunals.

One of the seminal characteristics of most modern–day international investment agreements (IIAs) is the provision for access to investor–State dispute settlement (ISDS), through which an investor alleging a violation of the agreement may directly claim against its host State in international arbitration. Protection standards offered to investors through these international law instruments, such as fair and equitable treatment, full protection and security, and a guarantee of ‘prompt, adequate and effective’ compensation in case of expropriation, have been tested when their provisions came to be interpreted by arbitral tribunals. And it is so that investor–State arbitration evolved into the centrepiece and guarantor of this system of investment protection and was placed in a unique position from which to formulate international investment law. This privileged position of investment arbitration, evident in the proliferation and growing importance of arbitral tribunals and exponential recourse to dispute settlement, has acted as a catalyst bringing to the fore the uncomfortable tension between investment protections and host State regulatory interests, and, by the same token, it has revealed arbitration as part of a problem. It should then not be astonishing that the much–publicised discussion on the need for reform of international investment law started with and focused on the reform of the investor–State dispute settlement mechanism. The debate has recently intensified, and reform is currently underway. Institutional developments that will lead in the long run to systemic changes are reflected in both novel investment treaty provisions and collective efforts made at various international fora.KeywordsInvestment ProtectionDispute SettlementNorth American Free Trade AgreementArbitral TribunalInvestment TreatyThese keywords were added by machine and not by the authors. This process is experimental and the keywords may be updated as the learning algorithm improves.

Today there are more than 2,500 bilateral investment treaties (BITs) around the world. Most of these investment protection treaties offer foreign investors a direct cause of action to claim damages against host-states before international arbitral tribunals. This procedure, together with the requirement of compensation in indirect expropriations and the fair and equitable treatment standard, have transformed the way we think about state liability in international law. We live in the BIT generation, a world where BITs define the scope and conditions according to which states are economically accountable for the consequences of regulatory change and administrative action. Investment arbitration in the BIT generation carries new functions which pose unprecedented normative challenges, such as the arbitral bodies established to resolve investor/state disputes defining the relationship between property rights and the public interest. They also review state action for arbitrariness, and define the proper tests under which that review should proceed. State Liability in Investment Treaty Arbitration is an interdisciplinary work, aimed at academics and practitioners, which focuses on five key dimensions of BIT arbitration. First, it analyses the past practice of state responsibility for injuries to aliens, placing the BIT generation in historical perspective. Second, it develops a descriptive law-and-economics model that explains the proliferation of BITs, and why they are all worded so similarly. Third, it addresses the legitimacy deficits of this new form of dispute settlement, weighing its potential advantages and democratic shortfalls. Fourth, it gives a comparative overview of the universal tension between property rights and the public interest, and the problems and challenges associated with liability grounded in illegal and arbitrary state action. Finally, it presents a detailed legal study of the current state of BIT jurisprudence regarding indirect expropriations and the fair and equitable treatment clause.

Fair and Equitable Treatment As Boilerplate

International investment cases show the frequent use of good faith arguments by both investors and respondent states. These cases also illustrate how parties and tribunals tend to conceptualize the good faith principle which has become an important rule of international investment law. This article will explore recent trends in order to assess the importance of this argument for both parties and at different stages of the proceeding. This article will also provide an overview of responses given by the tribunals faced with good faith arguments. Whereas claimants have traditionally relied on this concept to argue the breach of fair and equitable treatment and legitimate expectations, recent cases such as Inceysa, Phoenix and TSA Spectrum, indicate a new defense strategy for respondent states. Given the fact that investment tribunals have shown willingness to treat the good faith principle as autonomous and as a self-standing standard, the possibilities for respondent states have increased. Respondent states can rely on good faith to deny the right of claimants to seize the tribunal (Article 41(5) of the ICSID Rules), to challenge the jurisdiction of the tribunal or admissibility, to contest the right of the claimant to have a decision in its favor, or to challenge the right to compensation.

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 article explores two themes. The first one addresses the legal nature of arbitral awards and an attempt is made to offer a legal definition also by looking at the legal nature of arbitration and related theories. The conclusion is that awards are de facto and de jure functional equivalents of court judgments. In this regards the article also looks at the ‘value' of arbitral awards. The second theme is whether the interference of judicial or other State authorities with the enforcement of a foreign arbitral award may be the trigger for investment protection (for treatment short of fair and equitable treatment or even expropriation) in investment treaty arbitration; this may be on the basis of a bilateral investment treaty and/or the Convention on the Settlement of Investment Disputes between States and National of Other States (‘ICSID Convention’). It is well established that States party to the 1958 Convention on the Recognition and Enforcement of Foreign Arbitral Awards (‘New York Convention’) have a public international law obligation to enforce a foreign arbitral award unless they find that one of the limited grounds to resist enforcement exists. A number of recent cases rely on investment treaties to establish jurisdiction against States which aggressively and arbitrarily or negligently and willfully refuse to enforce an award with a foreign party beneficiary. While a trend emerges there are also cases which reject such applications for lack of jurisdiction under investment treaties. The article provides guidance as to which State conduct in relation to enforcement of arbitral awards may warrant investment arbitration.

The global push towards reaching the climate change mitigation goals and energy transition has placed the spotlight on international investment law and investment arbitration from a different angle, opening reform avenues focused on modifying investment treaties and arbitration to fit the contemporary sustainable development goals. These reforms are considered as high priority due to the widely perceived detrimental effects of investment protection standards in old-generation investment treaties, as interpreted by arbitral tribunals. During the past decade, the tension between the state’s right to regulate in the public interest and modify existing renewable energy schemes and the guarantees and protections granted to existing investors was on full display in an increasing number of investment arbitrations filed by renewable energy investors, primarily against Italy, the Czech Republic and Spain. The fair and equitable treatment standard (FET) has consistently featured as the most frequent and most successful claim by claimant renewable investors, regardless of the respondent host state and type of investment. Although critics have complained of inconsistent outcomes, a deeper analysis shows that arbitral tribunals have developed consistent lines of interpretation which can (and have) impacted the reformed new-generation FET standard. The awards issued to date in the “renewable energy investment arbitration sagas” reveal a wealth of legal and policy insights, and the potential for a reformed FET standard which can be applied to the benefit of the energy transition process. Through the lens of the Spanish renewable investment awards, as the most abundant and growing sample of case law, this article explores the evolution of the FET standard through arbitral jurisprudence and the proposed reforms which may help harness its protective effects to boost sustainable development.

Historically, banks have tended to prefer litigation over arbitration for their disputes. However, in recent years, banks have increasingly been using international arbitration instead, particularly when doing transactions in Asia and in emerging markets. The 2018 Queen Mary International Arbitration Survey also concluded that financial institutions, including banks, and their counsel are ‘contemplating arbitration with much greater interest than ever before’. In addition to using international commercial arbitration more often, banks have increasing sought to benefit from treaty-based international investment arbitration. The protections afforded in investment treaties mitigate some of the key risks banks face when investing abroad, such as having their investment nationalized or being subjected to unfair investigations. This article focuses on banks as claimants in treaty-based investment arbitrations, a subject not addressed in commentaries. It examines the publicly available investment arbitration awards in cases brought by banks against States and sets out to identify some key trends and themes. banks, investment arbitration, jurisdiction, investor, investment, fair and equitable treatment, expropriation

This chapter analyses the prominent role of due diligence in international investment law. It points out that due diligence was relevant in this field as an element of customary law norms requiring compliance with an international minimum standard for the treatment of aliens and prohibiting denial of justice, before modern day investment treaties were concluded. The chapter’s analysis reveals that due diligence underlies host states’ obligation to provide full protection and security and fair and equitable treatment. It underlines that also investors carry a responsibility of due diligence throughout the whole period of their investment and that an investor’s negligence can lead to loss of protection under investment treaties. The chapter argues that due diligence has emerged as a balancing paradigm between protection of foreign investors and regulatory freedom of host states.

This article draws upon original research in the French government archives to uncover the story of the negotiations of France’s first bilateral investment treaty – a 1963 treaty with Tunisia. France’s model for the treaty was not Germany’s now-famous 1959 investment treaty with Pakistan but, rather, Switzerland’s own (and far more obscure) first investment treaty, also with Tunisia. The article also shows that the treaty’s invocation of ‘fair and equitable treatment’ was intended to reflect only what customary international law already required. The treaty, despite the lack of an investor-state arbitration clause, seems to have been a relative success. France and Tunisia, entangled in a complex and sensitive post-colonial relationship, successfully managed the fallout from Tunisia’s sudden nationalization of French-owned agricultural properties.