Reconceptualising FET standard in international investment arbitration

In the realm of international investment treaties, Fair and Equitable Treatment (hereinafter, FET) has over the years been considered as a core investment protection standard. In the same breath, FET has also been considered as the most debated and controversial protection standard considering its 'catch-all' scope and the wide discretionary power that it provides the arbitrators with. The high volume of disputes against host developing countries and the significant economic impact of these disputes upon the same raise serious concerns regarding the invocation and enforcement of this catch-all provision by the foreign investors and the arbitrators respectively to combat virtually any adverse treatment by the host developing countries.

Dr. Rumana Islam has seen the FET standard through critical legal specs in her book “The Fair and Equitable Treatment (FET) Standard in International Investment Arbitration: Developing Countries in Context”. Commonwealth scholar Dr. Islam is Associate Professor of law at University of Dhaka and Assistant Director of Research (Law) (part-time) at the Bangladesh Institute of Law and International Affairs (BILIA). In the foreword of the book, Professor M. Sornarajah, Faculty of Law, National University of Singapore has lauded the approach adopted by Dr. Islam as a refreshing one on the subject.

Upon introducing the readers with the background and context of the endeavour, the author in second chapter of the book sheds light upon the historical development of the FET standard which encompassed the emergence of the standard through multinational treaties and the development of the same by the developed countries by making a room for it in multilateral agreements as well as in numerous Bilateral Investment Treaty(ies) with their developing country counterpart(s).

The third chapter focuses on the variant interpretation of the FET standard in different investment treaties at bilateral, multilateral and regional levels which have generated complexity, controversy and debate over the issue. The fourth chapter contextualises the entire discussion by taking recourse to the diverse classifications of countries that different international organisations and academic scholarship have adopted, in order to set a premise in the book for the developing host countries participating in international investment arbitration.

The fifth and sixth chapter critically examine some selected arbitral awards which go on to demonstrate how the issues of political stability and particular political, socio-political circumstances of the host developing countries form a significant contextual background for the enforcement and invocation of the FET standard in respect of investor-state dispute against these countries. These two chapters show how FET standard prioritises the interests of foreign investors and neglects the perspectives of host developing countries.

Chapter seven investigates the loopholes as well as the key cross-cutting problems associated with the interpretations of the FET standard adopted by the arbitral tribunals over the years.

In conclusion, the book argues for the pressing need of reconceptualising the interpretation of the FET standard and for considering the different perspectives of the host developing countries in an investment dispute context. The book is a part of the series 'International Law and the Global South: Perspectives from the Rest of the World' and is an immensely scholarly contribution made to the realm of existing knowledge dedicated thereto.

From Law Desk.