Balancing Investors Rights and Regulatory Action: A Study of Fair and Equitable Treatment Standard in Investment Law

This research paper provides a comprehensive analysis of the Fair and Equitable Treatment (FET) standard in international investment law. It begins by tracing the historical evolution of FET and its different formulations, including the absence of any FET obligation, unqualified FET, FET linked to international law, and FET linked to the minimum standard of treatment of aliens under customary international law. The paper examines the NAFTA Free Trade Commission's Notes of Interpretation of 31 July 2001 and other treaties that have incorporated additional substantive content into the FET standard. Additionally, the paper analyses the Indian Model BIT and the FET standard, highlighting its differences from other BITs. The research paper also delves into the substantive contents of the FET standard, including the concept of legitimate expectations. It identifies the qualifying requirements for legitimate expectations and examines how investors' expectations can be balanced against legitimate regulatory action. Furthermore, the paper explores other interpretations of FET, such as the role of good faith, the prohibition of arbitrary conduct, and the role of customary international law. The paper concludes by highlighting the challenges that arise in the application of the FET standard, such as the lack of clarity in its formulation, the difficulty in balancing investor expectations and regulatory action, and the potential for the FET clause to become a "catch-all" provision for investors. Overall, this research paper provides a critical analysis of the FET standard in international investment law, highlighting its evolving interpretations, substantive contents, and challenges.