Research On The Fair And Equitable Treatment Standard In American Investment Arbitration

The fair and equitable treatment, as one of the core of investment protection, hasbeen widely adopted and applied in both the international investment agreements andthe international investment arbitrations. While the cognizance standards of it havenot been specifically given in most of international agreements, practices ofinvestment arbitration in U.S. has enriched the standards. By far, the number ofNAFTA cases concerning the fair and equitable treatment has reached up to about20and that of cases related to American BIT has accounted to14in accordance with thewriter’s statistics. It will be of significant theoretical value to make an analysis onthese cases by generalizing grounds the rulings of the cases have relied on,reexamining the various views on the fair and equitable treatment of different arbitraltribunals, and concluding the elements of standard that can be applied to determinethe fair and equitable treatment. Moreover, as to China being a great-power involvingboth capital-importing and capital-exporting, the balance of interests between Chineseinvestors abroad and foreign investors in China needs to be considered whenconcluding investment treaties with foreign parties. Experiences of the U.S. in termsof the fair and equitable treatment can be and is of necessity to be used as referencefor China. Thus, the thesis attempts to make a systematic research on the definition ofthe standard of the fair and equitable treatment in American investment arbitration.The thesis conducts both an inductive and an comparative analysis on the fairand equitable treatment stipulated in the American investment agreements. Bygeneralizing interpretations on the treatments made by the United Nations Conferenceon Trade and Development and some viewpoints of some western scholars, based onthe analysis of American investments arbitration cases, the thesis evaluates thetreatment standard in four aspects: reasonableness, consistency, transparency and dueprocess.At the very beginning of the thesis, there is a brief introduction with six chapters followed.The first chapter is an introduction of the standards of the fair and equitabletreatment in U.S. investment agreements. This part discusses the treatment in twoaspects, the prescriptions of American free trade agreement and of the Americanbilateral investment agreements. From the fact that Article1105in the NorthAmerican Free Trade Agreement and Article2in1984U.S. Model BilateralInvestment Treaty combine the fair and equitable treatment with international law, andthe interpretation made on Article1105by the Free Trade Commission and Article4in2004U.S. Model Bilateral Investment Treaty both regard the fair and equitabletreatment as the minimum standard of treatment, it can be concluded that theexpansionary interpretation of the treatment has changed to a restrictive way in theUSA. Besides, such change is in accordance with the trend of international investmentdevelopment in the USA.Chapter2is the thorough discussion of the standard of reasonableness. From theaspects of both the reasonableness of the host state’s conduct and that of the investor’sexpectation, the thesis combines the related investment practices in the USA todemonstrate that the fair and equitable treatment requires reasonable correlationbetween the acts of the host countries and investors and legitimate public policyobjective.Chapter3is the discussion of the standard of consistency. By combining therelation between standard of consistency and legitimate expectation and generalizingrelated American cases of investment arbitration, the thesis elaborates theembodiment of the fair and equitable treatment from three aspects, consistency incontract validity, assurance validity and stipulations in law.Chapter4is the examination of the standard of transparency. This part firstlymakes an interpretation of the relation between transparency and the standard of thefair and equitable treatment in an attempt to illustrate the reason why takingtransparency as the main standard of defining the fair and equitable treatment. Thenthe thesis, with the help of related American practices of investment arbitration,examines the application scope of transparency as the standard of the fair and equitable treatment.Chapter5describes the standard of due process. This part tries to examine theway in which to define whether host state’s conducts violate the fair and equitabletreatment from the aspect of due process. By analysing practices of Americaninvestment arbitration, the thesis seeks to show that only arbitrary acts of host stateshas reached to a certain degree will the acts constitute the violation of due process.The thesis closes in Chapter6with some revelations which can be drawn fromthe standards of the fair and equitable treatment adopted in American investmentarbitration. This part firstly undertakes an analysis on the stipulations of the treatmentmade in investment agreement established in China, and then raises the problemsexisting in those stipulations by analysing the trend of international investmentdevelopment. In the last, in view of the fair and equitable treatment applied ininternational investment in future China, the thesis gives some constructive advices.