Fair and Equitable Treatment, and Full Protection and Security

Abstract

CHAPTER OUTLINE This chapter discusses two important ‘absolute’ standards of treaty protection – fair and equitable treatment (FET) and full protection and security (FPS). Section 1 explains the idea of an international minimum standard (MST) for the protection of foreign-owned property, and its oft-perceived relationship with both FET and FPS treaty clauses. Section 2 contains excerpts of some well-known arbitral awards discussing both FET and FPS. Section 2.1 describes the most common heads of claim under the general rubric of FET. Section 2.2 goes on to reproduce tribunal awards which discuss the precise standard of treatment under FPS. Thereafter, Section 2.3 discusses some of the complexities faced today in the growing inter-relationship between FET and FPS. Section 3 goes on to reproduce two of the latest treaty clauses, including an attempt to enumerate and particularise the contents of the FET obligation, while Section 4 contains an expanded discussion of a possible key difference between ‘qualified’ and ‘unqualified’ treaty clauses – i.e. a difference which turns upon whether the treaty language stipulates or suggests a connection with customary international law standards of protection. Notwithstanding particular forms of treaty language, might there be a latent and even more complex conceptual interaction between custom and treaty? That issue might perhaps be distilled into a single question – with the many thousands of bilateral investment treaties which have come into being, has not the customary international law standard of protection risen over time on the back of such treaty practice? INTRODUCTION The standards discussed in this chapter are referred to as ‘absolute’, the reason being that unlike the most favoured nation standard which requires all foreign investors to be treated equally favourably, or the national treatment standard which requires foreign and domestic investors to be treated equally favourably, fair and equitable treatment (FET) and full protection and security (‘FPS’) are not measured against – they are not ‘relative to’ – the nature of treatment given elsewhere. It is also to be noted that a FET claim is the most popular head of claim today, by reason of the fact that it may be easier to establish than an expropriation claim. RELATIONSHIP WITH AN INTERNATIONAL MINIMUM STANDARD OF TREATMENT The ‘Minimum Standard’ of Treatment We begin with the perspective most commonly associated with contemporary US treaties.