Brief

Fair and Equitable Treatment: Why it matters and what can be done

IISD Best Practices Series

FET is one of the most controversial standards of treatment included in most IIAs. Yet, despite its widespread inclusion, the precise meaning of the term is uncertain, and there are different problems associated with FET. The present policy brief highlights the importance of the FET standard and provides policy options that can be considered by policy-makers when negotiating or renegotiating IIAs.
By Florencia Sarmiento, Suzy H. Nikièma on November 16, 2022
  • Our latest policy brief highlights the importance of the #FET standard and provides policy options that can be considered by policy-makers when negotiating or renegotiating #IIAs.

  • #FET is one of the most controversial standards included in most IIAs and invoked in the vast majority of known #ISDS cases. There are different policy actions and options that governments may consider to preserve their right to regulate and avoid ISDS claims. Check out our latest policy brief to know more.

  • Based on the analysis of treaty practice and jurisprudence, one thing is certain: states should pay special attention to the standard of treatment clause when negotiating or renegotiating #IIAs. Carefully drafted #FET provisions in new agreements should be accompanied by policy steps targeting existing IIAs in place, which often include unqualified FET clauses. Policy options are available in our latest policy brief.

The main takeaways from this brief can be summarized as follows:

  • FET is one of the most controversial standards included in most IIAs and invoked in the vast majority of known ISDS cases.
  • There are several problems associated with FET. These include the fact that the same standard has led to divergent interpretations, the wide array of measures that can potentially be considered as a breach of the obligation, and the regulatory chill effect it provokes.
  • Based on the analysis of treaty practice and jurisprudence, one thing is certain: states should pay special attention to the standard of treatment clause when negotiating or renegotiating IIAs.
  • There are different policy actions and options that governments may consider to preserve their right to regulate and avoid ISDS claims, such as excluding the FET clause from their IIAs, including an alternative to the standard that does not refer to the terms “fair and equitable,” or including a well-defined and limited FET standard.
  • Carefully drafted FET provisions in new-generation agreements should be accompanied by policy steps targeting existing IIAs in place, which often include unqualified FET clauses.

Brief details

Topic
Investment Law & Policy
Project
Investment Policy Best Practices Advisory Bulletins
Focus area
Economies
Publisher
IISD
Copyright
IISD, 2022