Ostřanský: An Exercise in Equivocation: A Critique of Legitimate Expectations As a General Principle of Law Under the Fair and Equitable Treatment Standard

Josef Ostřanský (Graduate Institute of International and Development Studies) has posted An Exercise in Equivocation: A Critique of Legitimate Expectations as a General Principle of Law Under the Fair and Equitable Treatment Standard (in General Principles of Law and International Investment Arbitration, A. Gattini, A. Tanzi, & F. Fontanelli eds., forthcoming). Here's the abstract:

The notion of legitimate expectations has become considered the bedrock of the obligation to provide fair and equitable treatment (‘FET’) both in arbitral practice and in international investment law (´IIL´) scholarship. Claimants invoke it in virtually all investment cases, and tribunals frame their decisions around this notion. This is despite the fact that the concept has rather unclear sources and juridical origins. The more recent accounts seem to accept the notion of legitimate of legitimate expectations as a general principle of law. This chapter starts with an overview of different sources and justifications of the protection of legitimate expectations in international investment law offered in case law and doctrine, focusing primarily on legitimate expectations as a general principle of law. Next, in line with the methodology of deriving general principles of law, a limited comparative overview of national conceptions of legitimate expectations as well as international law conceptions in other than investment protection contexts is presented. In this section, the rationales for and limitations on the protection of legitimate expectations in these other legal systems and regimes is highlighted. Finally, the concept is analysed in the investment treaty arbitration case law. The main thesis of this contribution is that there is a significant disconnection between the justifications, functions, and contents of the conceptions of legitimate expectations in other than investment contexts, on the one hand, and the practice and doctrine of IIL, on the other. Investment treaty arbitration case law shows that legitimate expectations are often used in a much more relaxed calibration; not as a residual and limited remedy, but rather as a core principle under FET or as an overarching argumentative framework for FET. This poses exacting constraints on the regulatory powers of the host State, which may be viewed as problematic due to the not so solid juridical basis of the notion when treated as a general principle of law and due to the questionable normative basis of the international protection of foreign investment.