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XIX ‘Fair and Equitable Treatment’, ‘Full Protection and Security’, and ‘War Clauses’

Sabahi Rubins

From: Investor-State Arbitration (2nd Edition)

Borzu Sabahi, Noah Rubins, Don Wallace, Jr.

From: Investment Claims (http://oxia.ouplaw.com). (c) Oxford University Press, 2021. All Rights Reserved. date: 19 October 2021

Subject(s):
Investor — Fair and equitable treatment standard — Full protection and security — Standards of treatment

This chapter describes the standards of protection in modern investment treaty disputes: fair and equitable treatment (FET), full protection and security (FPS) and their relation to the minimum standard of treatment under customary international law; and war clauses. Faced with the broad FET provisions, investment arbitration tribunals have tried to attribute objective and concrete meaning to the term. A review of arbitral practice demonstrates several key points. First, violation of FET does not necessarily involve bad faith on the part of the state. Second, arbitrators tend to agree that the application of FET depends on the facts presented in a particular case. Third, a number of arbitral tribunals have recognized that states may be entitled to a margin of appreciation in exercising their regulatory powers. While FET targets affirmative action by the state, FPS relates primarily to the state’s failure to take action. Meanwhile, war clauses concern the treatment of foreign investors in times of civil disturbance and armed conflict.

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