An Analysis Of The Legitimate Expectations Of Investors In International Investment Arbitration

This thesis discusses the issue of investors’ legitimate expectations in international investment arbitration. The doctrine of "legitimate expectations of investors" can be expressed as follows:where a host state’s conduct creates legitimate expectations on the part of an investor to act in reliance on said conduct, and the host state’s failure to honor these expectations causes the investor to suffer damages, the host state shall undertake corresponding responsibility.Chapter I briefly introduces the conception of "legitimate expectations of investors" and its development, and conducts statistical analysis on the usage of the "legitimate expectations of investors" in international investment arbitration. It also analyzes how "legitimate expectations of investors" are used in international investment arbitration. "Legitimate expectations of investors" in fact are always applied in the investment disputes relating to the expropriation clause or fair and equitable treatment clause in the international investment treaties. The function of "legitimate expectations of investors" differs when they are applied in different situations.Chapter Ⅱ examines the legitimacy of applying "legitimate expectations of investors" in international investment arbitration. There are two ways to justify the application of "legitimate expectations of investors" in international investment arbitration. One is to interpret the protection of "legitimate expectations of investors" as the intrinsic requirement of certain clauses in the international investment treaties. The other one is to regard the protection of "legitimate expectations of investors" as a general principle of law. While the former one is always used in practice by arbitral tribunals, the latter one seems more appropriate from my personal perspective of view.Chapter III discusses the composing elements of "legitimate expectations of investors". These include the government conducts which can give rise to the "legitimate expectations of investors", the investor’s reliance on the government conducts when he makes the investment, and the fact that the investor’s expectations are legitimate. With regard to the government conducts, the representations or assurances of the host state, the contracts between the host state and the investors and the laws and regulations of the host state can all create "legitimate expectations of investors". However, these government conducts have to meet different preconditions in order to give rise to "legitimate expectations of investors". With respect to whether the expectations are legitimate or not, the arbitral tribunals always examine this issue in both subjective and objective manner. When the arbitral tribunals determine whether the expectation of an investor is objectively legitimate, they will take various objective conditions into consideration.Chapter Ⅳ analyzes the exceptions of the protection of "legitimate expectations of investors". When it is required by the public interest, the host state may evade its obligation of protecting the "legitimate expectations of investors". Through such exception, the arbitral tribunals try to strike a balance between the "legitimate expectations of investors" and the sovereignty and public interest of the host state.Understanding the "legitimate expectations of investors" is of great realistic significance for China and the Chinese investors who invest overseas. This thesis finally contemplates the lessons that may be derived by China from the doctrine of the "legitimate expectations of investors", and provides relevant suggestions.