House of Cards: The Relevance of Legitimate Expectations under Fair and Equitable Treatment Provisions in Investment Treaty Law

Abstract

This article examines the common practice of considering the relevance of an investor's 'legitimate expectations' in determining whether they have been afforded fair and equitable in investment treaty law disputes. The legitimate expectations doctrine has been divined from fair and equitable treatment provisions commonly found in international investment treaties. This article examines the different types and sources of fair and equitable provisions from which the legitimate expectations doctrine has been derived, and examines the development of both the customary international law minimum standard and the development of the law in arbitral practice. On examination, it is considered that neither customary international law nor the standard fair and equitable treatment provisions found in international investment treaties provide a sufficient basis for the consideration given to an investor's legitimate expectations in investment treaty law; this has been rather an invention of arbitrators. Furthermore, many arbitral tribunals have been severely lacking in grounding their decisions in law, generally citing other tribunal decisions which do not create law, or no law at all. Finally, it is considered that in addition to being a doctrine that has made its way into the canon of investment treaty law without any legal basis, the expectations of investors should be disavowed as an inappropriate standard by which to judge state conduct.