Investment Treaty Interpretation, Fair and Equitable Treatment and Legitimate Expectations

Arwel Davies

 

ABSTRACT: Concerns about investor state dispute settlement have been attributed, in part, to the interpretation of fair and equitable treatment obligations as protecting the legitimate expectations of investors. This article offers a view on this development using an analytical framework described as ‘holistic but tailored’ treaty interpretation. Particular attention is given to accommodating comparative insights, and taking account of subsequent state agreement and practice, under the interpretive principles set out in Articles 31 and 32 of the Vienna Convention. Given that some fair and equitable treatment standards are tethered to the customary international law minimum standard of treatment, while others may be described as autonomous, attention is also given to the required extent of differentiation in terms of ascertaining the content and meaning of these norms. The article refutes the view that analysing fair and equitable treatment provisions with reference to legitimate expectations should be rejected. Rather, the position advanced is that the role of legitimate expectations in any given dispute should depend on a range of factors. These include the extent of recognition of legitimate expectations in the domestic legal systems of the state parties to the treaty in question, and the positions advanced by states whether through formal agreed interpretations of the treaty, or in the context of individual disputes.