The Ancestry of 'Equitable Treatment' in Trade: Lessons from the League of Nations During the Inter-War Period
Journal of World Investment & Trade Vol. 15, No. 1, 2014
64 Pages Posted: 19 Jun 2014 Last revised: 8 Jun 2015
Date Written: June 19, 2014
Mona Pinchis explores the history of the ‘equitable treatment’ concept as set out in Article 23(e) of the Covenant of the League of Nations. In particular, the author considers how the League’s Economic Committee created an ‘equitable treatment’ clause in 1933 to address the problem of new forms of ‘unfair’ State measures that impaired the objectives of international commercial treaties. The author defends the thesis that the historical consideration of ‘equitable treatment’ in the inter-war period will expose how the concept relates to contemporary remedies and obligations. In the trade context, the inter-war ‘equitable treatment’ clause was transplanted into the General Agreement on Tariffs and Trade as the ‘non-violation’ nullification and impairment procedural remedy. Similar to the League negotiators’ views, the role of the ‘non-violation’ remedy was the protection of good faith and reasonable expectations of contracting States, irrespective of whether treaty terms were breached or not.
Subsequent to writing the paper, the author explores new perspectives on the substantive ‘fair and equitable treatment’ (FET) obligation in international investment treaties. The broad interpretation of this legal standard has caused several States to examine the purpose of the clause in their treaties. Understanding the past enables investment law-makers to assess what could be done with the FET obligation, so as to make it more effective and acceptable to States. In this regard, several academics have suggested that the origins of the FET language may be connected to ‘equitable treatment,’ as found in the League Covenant. The author argues that an under-explored aspect of this argument is the rationale for how ‘equitable treatment’ was used in the development of multilateral efforts to regulate commercial relations, the interaction between several different conceptions of ‘equitable treatment’ during the inter-war period, and the inheritance of these considerations for law-makers after the Second World War. The purpose of the analysis is not to abandon existing views of FET altogether, but rather to suggest the need to rethink the past, and explore the dynamism of ‘equitable treatment’ from the inter-war period.
Keywords: equitable treatment, nullification and impairment, legal history, League of Nations, inter-war period, non-violation claim, political economy, fair and equitable treatment.
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