Fair and Equitable Treatment As Boilerplate

Abstract

The super-norm in the investment treaty regime is the treatment standard of fair and equitable treatment (“FET”) — a standard that has no analogue in the trade regime. FET features in nine out of ten investment treaties. The paper contends that fair and equitable treatment provisions in investment treaties are a prominent example of boilerplate provisions. It argues that the character of FET as boilerplate suggests that investment tribunals ought to adopt a modified interpretive stance compared to negotiated provisions in treaties. Boilerplate provisions should be interpreted using the contra proferentem principle — with ambiguities resolved against the drafter of the FET provision — and considering the reasonable expectations of the contracting state that received a draft boilerplate FET provision from its counterparty.

Section II explains the dataset and this article’s text-as-data-methodology. Section III sets out the main types of FET provisions, drawing on the existing literature. Section IV examines the clusters that emerge from this paper’s text-as-data methodology and considers FET as a social network. Section V contends the FET standard is a prominent example of a boilerplate provision. Section VI argues that the character of FET as boilerplate suggests that investment tribunals ought to adopt a modified interpretive stance compared to negotiated provisions in treaties.

Keywords: boilerplate, model, template, fair and equitable treatment, international investment law, contra proferentem, interpretation

JEL Classification: K33