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The fact that an issue becomes a political matter does not mean that a rational policy does not exist
The FET standard is not a standard of perfection; a measure has to be manifestly unfair or unreasonable to constitute a violation of the standard
A state measure forcing a private party to change its contractual rights violates the standard of protection from unreasonable measures; a measure may, however, affect contractual rights as long as it is based on public policy and not aimed at the contractual rights only
- International Investment Treaties (IITs) > Protection of Investors under IITs > Expropriation and Standards of Protection > Arbitrary and Discriminatory Measures
- Investment Contracts
A measure is not unreasonable or discriminatory if a rational policy exists and the state's act is reasonable in relation to that policy; a policy is rational if it is taken following a logical explanation and in the public interest
If a state's measure is motivated by a legal obligation arising from European Union law, it constitutes a rational public policy measure
The full protection and security standard is not a strict liability standard
While the standard of full protection and security can extend beyond a protection of physical security, it does not protect against a state's right to regulate
An expropriation requires a certain degree of interference with the investment; a substantial deprivation of the investor is necessary
A dispute is a disagreement on a point of law or fact, a conflict of legal views or interest between parties; it must relate to clearly identified issues between the parties
IITs must be interpreted using the rules of interpretation laid down in the VCLT
- International Investment Treaties (IITs) > International Law Rules Applicable to IITs > Law of Treaties > Rules of Interpretation > Interpretation Rules of the Vienna Convention on the Law of Treaties (VCLT) as Reflecting Customary International Law
- Vienna Convention on the Law of Treaties > Article 31 - General rule of interpretation > Further Problems > Articles 31 et seq. Reflect Customary International Law
Regimes established by international treaties have a dual nature; they are part of international and national law
In treaty-based arbitration, the agreed rules of law within the meaning of Article 42(1) ICSID Convention are those of the treay
The law of the European Union has to be considered as a fact by a tribunal
Article 351 TFEU is applicable to agreements between member states and non-member states only
The question whether respondent was obliged to a certain measure under European Union law is relevant only when considering the "rationality", "reasonableness", "arbitrariness" or "transparency" of the measure in light of the IIT
If no frivolous claim was filed and no bad faith was observed from the parties, a tribunal may conclude that each party shall bear its own costs and expenses
Legitimate expectations can only be created at the moment of the investment
The duty to provide a stable legal and business framework has to be interpreted in light of the applicable law; due to the states' right to regulate, any analysis must depend on the specific case, i.e. whether specific commitments were made
Discrimination implies according a different treatment in comparison with the generality
In international arbitration, national laws are to be considered as facts
International Law Rules Applicable to IITs
Relationship of IITs to Other Sources of International Law
Relationship of an IIT to Other Treaties
General Remarks
Regimes established by international treaties have a dual nature; they are part of international and national law
IITs and the Law of the European Union
If a state's measure is motivated by a legal obligation arising from European Union law, it constitutes a rational public policy measure
The law of the European Union has to be considered as a fact by a tribunal
Article 351 TFEU is applicable to agreements between member states and non-member states only
The question whether respondent was obliged to a certain measure under European Union law is relevant only when considering the "rationality", "reasonableness", "arbitrariness" or "transparency" of the measure in light of the IIT
Relationship of IITs to Domestic Law
Applicability of Domestic Law / Renvoi
In international arbitration, national laws are to be considered as facts
Law of Treaties
Rules of Interpretation
Interpretation Rules of the Vienna Convention on the Law of Treaties (VCLT) as Reflecting Customary International Law
IITs must be interpreted using the rules of interpretation laid down in the VCLT
Protection of Investors under IITs
Expropriation and Standards of Protection
Expropriation
General Requirements of an Expropriatory Act
Degree of Interference
An expropriation requires a certain degree of interference with the investment; a substantial deprivation of the investor is necessary
Fair and Equitable Treatment
Character and Scope
The FET standard is not a standard of perfection; a measure has to be manifestly unfair or unreasonable to constitute a violation of the standard
Case Groups
Legitimate Expectations
Legitimate expectations can only be created at the moment of the investment
Further Cases
The duty to provide a stable legal and business framework has to be interpreted in light of the applicable law; due to the states' right to regulate, any analysis must depend on the specific case, i.e. whether specific commitments were made
Arbitrary and Discriminatory Measures
The fact that an issue becomes a political matter does not mean that a rational policy does not exist
A state measure forcing a private party to change its contractual rights violates the standard of protection from unreasonable measures; a measure may, however, affect contractual rights as long as it is based on public policy and not aimed at the contractual rights only
A measure is not unreasonable or discriminatory if a rational policy exists and the state's act is reasonable in relation to that policy; a policy is rational if it is taken following a logical explanation and in the public interest
Discrimination implies according a different treatment in comparison with the generality
Full Protection and Security
Character and Scope
The full protection and security standard is not a strict liability standard
While the standard of full protection and security can extend beyond a protection of physical security, it does not protect against a state's right to regulate
A state measure forcing a private party to change its contractual rights violates the standard of protection from unreasonable measures; a measure may, however, affect contractual rights as long as it is based on public policy and not aimed at the contractual rights only
Costs
General Remarks
If no frivolous claim was filed and no bad faith was observed from the parties, a tribunal may conclude that each party shall bear its own costs and expenses
Article 31 - General rule of interpretation
Further Problems
Articles 31 et seq. Reflect Customary International Law
IITs must be interpreted using the rules of interpretation laid down in the VCLT
Jurisdiction of the Centre (Articles 25-27)
Article 25
Jurisdiction Ratione Materiae
Legal Dispute
A dispute is a disagreement on a point of law or fact, a conflict of legal views or interest between parties; it must relate to clearly identified issues between the parties
Arbitration (Articles 36-55)
Article 42
Article 42(1)
Article 42(1)(1) - "rules of law as may be agreed by the parties"
In treaty-based arbitration, the agreed rules of law within the meaning of Article 42(1) ICSID Convention are those of the treay