The Public Interest as Part of Legitimate Expectations in Investment Arbitration

Abstract

Abstract A key criticism of investor–state dispute settlement (ISDS) is the lack of consistency and correctness of arbitral awards. In the context of ISDS reforms within the UNCITRAL Working Group III, it has been noted that concerns of inconsistency were “particularly acute when different ISDS tribunals had reached contradicting conclusions about the same or similar substantive standard” and, more fundamentally, when “arbitral tribunals had interpreted the treaty provisions incorrectly”. Defenders of the current system, on the other hand, have argued that despite its ad hoc diffuse nature, the system is capable of achieving a consistent and sound jurisprudence with regard to key investment treaty standards. This chapter tests whether investment treaty tribunals have achieved a consistent and sound interpretation—using the concept of legitimate expectations as part of the fair and equitable treatment (FET) standard as its case study. There is no doubt that the FET standard today represents the most important substantive protection guaranteed by investment treaties. The concept of legitimate expectations represents the cornerstone of that protection. The chapter argues that after twenty years of arbitral practice, the application of the concept of legitimate expectations as part of the FET standard remains uncertain, inconsistent, and inaccurate, raising serious doubts about whether the current system will ever be able to achieve a consistent and sound jurisprudence—at least on this concept.