{"id":463,"date":"2016-06-22T10:57:14","date_gmt":"2016-06-22T14:57:14","guid":{"rendered":"http:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/?page_id=463"},"modified":"2018-01-24T22:54:37","modified_gmt":"2018-01-25T06:54:37","slug":"5-4-5-fair-and-equitable-treatment-fet-or-minimum-standard-of-treatment-mst","status":"publish","type":"page","link":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/5-investment-provisions\/5-4-safeguarding-policy-space\/5-4-5-fair-and-equitable-treatment-fet-or-minimum-standard-of-treatment-mst\/","title":{"rendered":"5.4.5 Fair and Equitable Treatment (FET) or Minimum Standard of Treatment (MST)"},"content":{"rendered":"

In most investment treaties, states commit to providing FET or MST to foreign investors. It has become a controversial provision, as it can become a \u201ccatch-all\u201d clause for investors, allowing them to succeed where their expropriation, non-discrimination and other claims have failed. Typically the wording of the treaty does not offer detailed guidance on how dispute settlement bodies should interpret these provisions, resulting in widely differing interpretations\u2014some of which are expansive\u2014and lack of legal security for host states. A particular problem in this respect is the notion of investors\u2019 \u201clegitimate expectations,\u201d pursuant to which several tribunals have struck down the denial of environmental permits, arguing that the investor had a legitimate expectation to be granted such a permit. Generally applicable environmental and health regulations have also been challenged for alleged violations of FET.31<\/sup> To prevent the possibility of overly expansive interpretations of the scope of FET, some states have been excluding it altogether from their international agreements.<\/p>\n

Others have continued to include some version of FET or MST in the agreement, but have tried to limit its scope. One approach has been to draft the standard or an interpretive note indicating that the treatment means no more than customary international law minimum standard of treatment of aliens, which sets a basic floor below which states may not go. This was the approach taken by NAFTA parties as evidenced by the binding interpretation issued through the NAFTA Free Trade Commission<\/a>. This understanding has now been included in the Canadian Model BIT<\/a> [Article 5], the U.S. Model BIT<\/a> [article 5] and post-2004 investment treaties. Its use has spread well beyond North America.32<\/sup> However, even such a refined approach has been subject to broad and unpredictable interpretations by international arbitral tribunals. Consequently, several states are becoming yet more specific. Some enumerate exhaustively the types of situations that amount to a breach of the FET or MST standard (for example, denial of justice, harassment, targeted discrimination based on race or gender, etc.); others clarify the threshold further (for instance, providing that state conduct must be outrageous or egregious in order to violate FET). In order to avoid expansive interpretations of tribunals in relation to FET, some treaties now avoid using the \u201cfair and equitable\u201d terminology.<\/p>\n

Given the evolution of the different approaches, the language below emanates from one of the most recent types of approaches designed to respond to the past years of activist and expansive interpretations of the FET\/MFN clauses through arbitral tribunals.<\/p>\n

<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

In most investment treaties, states commit to providing FET or MST to foreign investors. It has become a controversial provision, as it can become a \u201ccatch-all\u201d clause for investors, allowing them to succeed where their expropriation, non-discrimination and other claims have failed. Typically the wording of the treaty does not offer detailed guidance on how… Read more »<\/a><\/p>\n","protected":false},"author":7,"featured_media":0,"parent":130,"menu_order":6,"comment_status":"closed","ping_status":"closed","template":"","meta":{"_acf_changed":false,"footnotes":"2"},"class_list":["post-463","page","type-page","status-publish","hentry"],"acf":[],"_links":{"self":[{"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/pages\/463","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/pages"}],"about":[{"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/types\/page"}],"author":[{"embeddable":true,"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/users\/7"}],"replies":[{"embeddable":true,"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/comments?post=463"}],"version-history":[{"count":0,"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/pages\/463\/revisions"}],"up":[{"embeddable":true,"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/pages\/130"}],"wp:attachment":[{"href":"https:\/\/www.iisd.org\/toolkits\/sustainability-toolkit-for-trade-negotiators\/wp-json\/wp\/v2\/media?parent=463"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}