The Obligation of Regulatory Stability in the Fair and Equitable Treatment Standard: How Far Have We Come?

Journal of International Economic Law (4, 2018)

King's College London Law School Research Paper No. 19-6

21 Pages Posted: 20 Nov 2018 Last revised: 22 Mar 2019

See all articles by Federico Ortino

Federico Ortino

King's College London – The Dickson Poon School of Law

Date Written: October 9, 2018

Abstract

While ‘regulatory stability’ regularly features in the decisions of investment arbitral tribunals interpreting the fair and equitable treatment (FET) provision, the extent to which the FET standard disciplines ‘adverse regulatory change’ in the absence of an express stabilization commitment from the host State is far from clear. Based on the conceptual distinction between the requirement of ‘strict’ v ‘soft’ regulatory stability, the paper aims to show the way investment treaty tribunals have applied the FET provision in cases of host States’ regulatory change. The paper argues that, despite the fact that investment tribunals have increasingly recognized the need to find a better balance between protecting foreign investors from adverse regulatory changes and the right of host States to regulate in the public interest, several recent arbitral tribunals still fail to clearly set out the role of regulatory stability within the FET standard, thus failing to assuage the fears that investment treaties may indeed function as imposing excessive restraints on host States’ right to regulate.

Keywords: strict stability, soft stability, fair and equitable treatment

Suggested Citation

Ortino, Federico, The Obligation of Regulatory Stability in the Fair and Equitable Treatment Standard: How Far Have We Come? (October 9, 2018). Journal of International Economic Law (4, 2018); King's College London Law School Research Paper No. 19-6. Available at SSRN: https://ssrn.com/abstract=3263592

Federico Ortino (Contact Author)

King's College London – The Dickson Poon School of Law ( email )

Somerset House East Wing
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London, WC2R 2LS
United Kingdom
+44(0)2078481747 (Phone)

HOME PAGE: http://www.kcl.ac.uk/law/people/academic/fortino.aspx

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