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Protecting or overprotecting? - An investigation of the balancing of interests in the international investment law regime

Johansson, Evelina LU (2020) JURM02 20202
Department of Law
Faculty of Law
Abstract
Through a traditional judicial method the purpose of this paper is to examine the development of the international investment protection regime and the balancing of rights and obligations of on the one hand the investor, and on the other hand the host state. International investment law has derived from European legal systems and it has mostly benefited investors of capital-exporting nations to be treated in accordance with international standards of investment protections. In most investment treaties today, the host state commits to treat the investor in accordance with the FET standard. One element of the FET standard is the protection of the investors legitimate expectations. While many tribunals have emphasised the right of the host... (More)
Through a traditional judicial method the purpose of this paper is to examine the development of the international investment protection regime and the balancing of rights and obligations of on the one hand the investor, and on the other hand the host state. International investment law has derived from European legal systems and it has mostly benefited investors of capital-exporting nations to be treated in accordance with international standards of investment protections. In most investment treaties today, the host state commits to treat the investor in accordance with the FET standard. One element of the FET standard is the protection of the investors legitimate expectations. While many tribunals have emphasised the right of the host state to regulate within its territory, the state may in some situations be bound to honour its commitments made to the foreign investor on which the investor relied on when deciding to invest. Even in a situation of emergency, such as during an economic crisis, the host state might be obliged to ensure that its measures in tackling the crisis do not frustrate the investor’s rights. Some tribunals have held that the investor is required to perform a due diligence investigation before investing, where possible political risks are analysed. It is however, unclear exactly how extensive such an investigation must be and it appears to depend on factors such as the size of the investment.

The ambiguity of the FET and element of legitimate expectations has resulted in the tribunals having a considerable margin of appreciation when defining the concepts which in many instances have benefited the investor. By specifying the limitations of the FET standard and the protection of legitimate expectations in the treaty, a more balanced and fair result may be achieved. (Less)
Abstract (Swedish)
Genom en traditionell juridisk metod är syftet med denna uppsats att
undersöka utvecklingen av det internationella investeringsskyddssystemet. I synnerhet kommer läran om skyddet för berättigade förväntningar och balansen mellan rättigheter och skyldigheter för å ena sidan investeraren och å andra sidan värdstaten att undersökas. Internationell investeringsrätt har sitt ursprung i europeiska rättssystem och det har främst gynnat investerare från kapitalexporterande länder att behandlas i enlighet med internationella skyddsstandarder. I de flesta investeringsavtal idag förbinder sig värdstaten till att behandla investerare rättvist och skäligt. Rätten till en rättvis och skälig behandling inkluderar ett skydd för investerarens berättigade... (More)
Genom en traditionell juridisk metod är syftet med denna uppsats att
undersöka utvecklingen av det internationella investeringsskyddssystemet. I synnerhet kommer läran om skyddet för berättigade förväntningar och balansen mellan rättigheter och skyldigheter för å ena sidan investeraren och å andra sidan värdstaten att undersökas. Internationell investeringsrätt har sitt ursprung i europeiska rättssystem och det har främst gynnat investerare från kapitalexporterande länder att behandlas i enlighet med internationella skyddsstandarder. I de flesta investeringsavtal idag förbinder sig värdstaten till att behandla investerare rättvist och skäligt. Rätten till en rättvis och skälig behandling inkluderar ett skydd för investerarens berättigade förväntningar. Även om flera skiljenämnder har betonat värdstatens suveränitet i sitt territorium, kan staten i vissa situationer vara bundna till att uppfylla sina åtaganden gentemot den utländska investeraren som denne investerare förlitade sig på när denne fattade beslutet att investera i värdstaten. Även i en nödsituation, såsom under en ekonomisk kris, kan värdstaten vara tvungen att se till att de åtgärder som tas till för att hantera krisen inte bryter mot den utländska investerarens rättigheter. Vissa skiljenämnder har hävdat att investeraren måste utföra en så kallad due diligence innan investeringen görs där eventuella politiska risker analyseras. Det är emellertid oklart exakt hur omfattande en sådan undersökning måste vara och det verkar bero på faktorer som storleken på investeringen.

Oklarheten rörande den rättvisa och skäliga behandlingsstandarden och
skyddet för investerarens berättigade förväntningar har lett till att
skiljenämnderna har en omfattande frihet att själva definiera begreppen,
vilket i mångt om mycket har gynnat investeraren. Att istället specificera ramarna för rätten till skälig och rättvis behandling samt skyddet av berättigade förväntningar i investeringsavtalet verkar vara ett framgångsrikt sätt att få ett mer balanserat och rättvist resultat. (Less)
Please use this url to cite or link to this publication:
author
Johansson, Evelina LU
supervisor
organization
course
JURM02 20202
year
type
H3 - Professional qualifications (4 Years - )
subject
keywords
public international law, International investment law, FET standard, legitimate expectations.
language
English
id
9034624
date added to LUP
2021-01-25 12:21:51
date last changed
2021-01-25 12:21:51
@misc{9034624,
  abstract     = {{Through a traditional judicial method the purpose of this paper is to examine the development of the international investment protection regime and the balancing of rights and obligations of on the one hand the investor, and on the other hand the host state. International investment law has derived from European legal systems and it has mostly benefited investors of capital-exporting nations to be treated in accordance with international standards of investment protections. In most investment treaties today, the host state commits to treat the investor in accordance with the FET standard. One element of the FET standard is the protection of the investors legitimate expectations. While many tribunals have emphasised the right of the host state to regulate within its territory, the state may in some situations be bound to honour its commitments made to the foreign investor on which the investor relied on when deciding to invest. Even in a situation of emergency, such as during an economic crisis, the host state might be obliged to ensure that its measures in tackling the crisis do not frustrate the investor’s rights. Some tribunals have held that the investor is required to perform a due diligence investigation before investing, where possible political risks are analysed. It is however, unclear exactly how extensive such an investigation must be and it appears to depend on factors such as the size of the investment. 

The ambiguity of the FET and element of legitimate expectations has resulted in the tribunals having a considerable margin of appreciation when defining the concepts which in many instances have benefited the investor. By specifying the limitations of the FET standard and the protection of legitimate expectations in the treaty, a more balanced and fair result may be achieved.}},
  author       = {{Johansson, Evelina}},
  language     = {{eng}},
  note         = {{Student Paper}},
  title        = {{Protecting or overprotecting? - An investigation of the balancing of interests in the international investment law regime}},
  year         = {{2020}},
}