Saiganeshkumar. S & Tejaswini. VJ, B.Com.LL.B. (Hons.) School of Excellence in Law, TNDALU
ABSTRACT:
International investment law governs foreign direct investment and the resolution of disputes between foreign investors and sovereign states. Most international investment agreement (IIA) have a clause to treat foreign investments that is Fair and Equitable treatment (FET) which is one of the most controversial standards of treatment. As a part of protection for foreign investors from discriminatory and unfair treatment by host governments, fostering a stable and predictable environment for investment. The investor- state dispute settlement mechanism (ISDS) resolves disputes arising from fair and equitable treatment violations. However, the interpretation and application of FET are complex, giving rise to several issues and challenges, such as ambiguity and a lack of clarity of standards, potential bias towards investors over the host government. There are various grounds of action that might be considered a violation of fair and equitable treatment standards that favour investors, potentially restricting the government’s ability to regulate their economies and pursue public policy objectives.
This paper seeks to strike a balance between investor protection and the right of states to regulate their economies and pursue public policy objectives by analysing the issues related to FET standards. The G20 aims to foster a more stable, predictable, and responsible investment environment, by addressing the challenges of FET. Based on the findings, several recommendations are presented to address the issue. These include ensuring transparency and accountability in the interpretation and application of FET, reassessing FET standards with the rise of new investment patterns, providing clear guidance for the interpretation and application of standards, and reforming through initiatives like the UNCITRAL Working Group on Investor-State Dispute Settlement Reforms and the OCED investment policy principles.
Keywords: Foreign Investment, Unfair Treatment, Protection, Interpretation, Standards.
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