Rumana Islam - The Fair and Equitable Treatment (FET) Standard in International Investment Arbitration: Developing Countries in Context

International Editorial Board

Prof. Dr. Balveer Arora , Former rector and Pro-vice Chancellor, Jawaharlal Nehru University, New Delhi, India

Hon. Justice Prof. Eros Roberto Grau , Former Minister, Brazilian Supreme Court; and Emeritus Professor, Faculty of Law, University of Sao Paulo, Brazil

Associate Prof. Dr. Denise Prvost , Maastricht University Law Faculty, The Netherlands

Prof. Dr. Carlos Miguel Herrera , Director of the Centre for Legal and Political Philosophy, University of Cergy-Pontoise, France

Hon. Justice Robert Ribeiro , Permanent Judge, Hong Kong Court of Final Appeal, Hong Kong, SAR China

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There have been many books written in recent times on the fair and equitable treatment (FET) standard in investment treaties. It has become the basis on which several recent awards have been made against developing countries. As a result of the extensive interpretation given to this once-dormant phrase by arbitrators from the dawn of this millennium, every claimant has made the standard the focus of his claims. Consequently arbitrators intent on broadening the scope of investment protection through this broadly phrased clause, claimants have seldom lost arbitrations they had initiated. The existing literature constitutes largely of analysis that is devoid of the social and other consequences of such expansive interpretation. These analytical studies are intent on dissecting the subtleties involved in the possible interpretations so far advanced in the awards than in the raging debates as the legitimacy of the system that has been evoked particularly by the centrality of the fair and equitable treatment plays in modern investment arbitration.

Dr. Rumana Islam adopts a refreshing approach to the subject looking at the law in the context of the intense debates it has provoked in recent times. She brings into focus the fact that the FET standard as the focal point of the law has created inequities and imbalances against developing countries, after debunking the myth that the law is held with even hands between the rich and the poor. She explores issues as to the overall justice demands involved in the evocation of a standard which in itself is paradoxically committed to justice but does not deliver it to the state by denying any arguments by the state as to the deleterious and other conduct of the investor.

The context of her later discussions are set in a socio-economic account of the development of the FET standard. It is important to understand the asymmetries of power in which the treaties were constructed as well as in the arbitration mechanisms which provide it with compliance factors. To ignore the confrontation of power with the inability of poorer states to resist impositions of standards favorable to investment is to turn a blind eye to the reality that befuddles the law and has led to the present legitimacy crisis. The approach in this book draws away the curtain that has hidden the factors that brought about the treaties and the interpretation of the treaties. Imbalance in knowledge was also a factor as the developing countries did not understand the possible uses to which such an innocent phrase could be put to in later times by astute arbitrators seeking to liberalise further the global system of investment protection.