Fair and Equitable Treatment - A Sequel

UNCTAD Series on Issues in International Investment Agreements II

image of Fair and Equitable Treatment - A Sequel
The concept of fair and equitable treatment, which has assumed prominence in investment relations between States, provides a yardstick by which relations between foreign direct investors and Governments of capital-importing countries may be assessed. In addition to discussing this issue, the publication also takes stock and analysis of: trends in the use of the standards; and models based on State practice. The publication also gives insight into the interaction of fair and equitable treatment standard with other issues and concepts that arise in investment practice.



Options for negotiators and policymakers

In light of the foregoing discussion and the current lack of predictability, the principal aim for negotiators in relation to the FET standard should be to clarify the source and the content of the obligation, and by doing so, to determine the degree of discretion that the contracting parties want to leave to the arbitral tribunal that will be asked to interpret the provision. In this regard, negotiators have a variety of choices and will need to decide whether they want to leave a high degree of interpretative discretion to the arbitral tribunal or whether they want to determine in the treaty itself the source and elements of content when referring to the FET standard. In addition, there is a broad range of policy choices available that take into account the priorities of negotiators and a desirable balance between a broad investor-protection-focussed standard and a more narrow formulation that seeks to preserve primarily the State's interests, while ensuring the investor has adequate protection against major forms of maladministration.


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