The Interpretation And Application Of Fair And Equitable Treatment In IP-related International Investment Arbitration

With the integration of intellectual property(IP)into the scope of investment in international investment agreements(IIAs),investors who invest in the form of IP can protect their intellectual property rights(IPRs)by bringing international investment arbitration and invoking investment treatment clauses.Within various investment treatment clauses,fair and equitable treatment(FET)deserves special attention.Since the FET clause in most IIAs is not clear,the arbitration tribunal has large discretion to interpret the clause.If the arbitration tribunal expands its interpretation of FET,it may damage the sovereignty of the host country to administrate foreign investment.Specifically,from the perspective of the particularity of IPRs,it has territoriality and close connection to public welfare,and the granting of IPRs should be based on domestic laws and relate to public interests.If the tribunal’s interpretation of FET is too broad,it will impact the IP system of the host country and break the balance established by the IP system between the protection of private rights and social well-being.Eli Lilly v.Canada and Philip Morris v.Uruguay involved patent rights and trademark rights respectively.They are two typical international investment arbitration cases centered on the protection of IPRs.The claimants in both cases cited FET to protect their IPRs.Although the tribunal finally rejected the claimants’ claim,the existence of the dissenting opinions indicated the possibility of invoking FET successfully by investors.Therefore,it is necessary to study the interpretation and application of FET in such cases,so as to offer reference for investment treaty and arbitration practice.This dissertation is divided into three parts.The first part is FET and IP protection in IIAs.This chapter first introduces the main expression,interpretation and application of FET in IIAs.Secondly,considering the IPR’s territoriality and close connection to public interests and the tribunal practices in Lilly v.Canada and Phillip Morris v.Uruguay,this chapter summarizes the main issues of the application of FET in IPrelated cases,including denial of justice,violation of legitimate expectation of investors,arbitrariness and discrimination.The second part encompasses the second,the third and the fourth chapters.This part mainly analyzes the issues including denial of justice,violation of the legitimate expectation of investors,the arbitrariness and the discrimination,based on the decisions of the arbitration tribunals in Lilly v.Canada and Philip Morris v.Uruguay.With respect to denial of justice,the main disputes are whether the violation of FET by the judicial organ is limited to the denial of justice,and the identification of denial of justice.With respect to violation of legitimate expectation,the main issues are whether investors can have legitimate expectation based on the host state’s compliance with the obligations of the international IP norms,and the judgment of behaviors of the host state’s judicial organs and executive organs.On the issue of arbitrariness and discrimination,the main controversies are the judgement of arbitrariness and discrimination of the judicial organ,and the judgement of the arbitrary behavior of the administrative organ.When reviewing the host state’s behavior,the tribunal respected the host state’s IP laws and public policy choices,but there were also objections to the host state’s measures to safeguard public interests.The third part is the fifth chapter,which is,the current situation,problems and improvement of the FET clause in IPR protection in China’s IIAs.Based on the analysis of the FET provisions and the carve-out provisions of IPRs in China’s IIAs,this chapter holds that the provisions of FET in China’s IIAs are not clear at present,and the particularities of FET have not received enough attraction.In this regard,this chapter provides two approaches to reform,the first is based on the FET itself and prevents the arbitral tribunal from expanding the interpretation of FET in IP-related investment arbitration through specifying the FET clause.The other is to rely on the proper IPR exception,which directly excludes IPR protection from the application of FET.