Legitimate Expectation in Investor-State Arbitration: Re-Contextualising a Controversial Concept from a Developing Country Perspective
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Manchester Journal of International Economic Law
Volume 15, Issue 1: 45-61 2018
Legitimate Expectation in Investor-State Arbitration: Re-contextualising a
Controversial Concept from a Developing Country Perspective
Yenkong Ngangjoh-Hodu* and Collins C. Ajibo**
ABSTRACT: The concept of legitimate expectation has evolved as one of the substantive elements
of fair and equitable treatment (FET) standard to a self-standing doctrine. Although legitimate
expectation as a concept is without much substance, the way it has evolved over the years in arbitral
awards, it has provided more protection to investors to the detriment of host states. This piece
explores the different contexts in which the concept has been applied before making a case as to
why the concept of legitimate expectations as has been interpreted and applied over the years is not
sustainable. The paper argues that flexibility and availability of public policy space ought to be
ingrained in any investment arrangements. In other words, to the extent that the expectations of
foreign investors are integral parts of investment arrangements as well as interpretations by
arbitrators, citizens' expectations that governments in mostly developing countries properly
exercise sovereign rights to protect public interests ought also to be taken into account.
Consequently, legitimate expectation should be applied in such a fair and equitable way to all
stakeholders as to reflect the competing interests, protecting investors from host states conducts and
exonerating the host states where investors' conduct is questionable.
1. INTRODUCTION: PROBLEMS AND OVERVIEW
The concept of legitimate expectation has been widely used in different jurisprudential contexts.
Evolving from domestic jurisprudence,' it has been applied across broad spectrums of issues
in domestic law such as the balancing expectations of the constitutional rights to privacy vis-a-
vis the responsibility of the police to conduct searches to prevent and combat crimes as well as
expectations of citizens that administrative officers will do their job in accordance with the
Professor of International Economic Law, The University of Manchester School of Law.
LLB Nig, BL, LLM Manchester (Distinction), PhD Manchester, Faculty of Law, University of Nigeria. We are
grateful for the useful comments on an earlier draft of this paper from Dominic Dagbanja, Tarcisio Gazzini and
David Collins. However, any error in the paper is ours.
1 See Schmidt v. Secretary of State for Home Affairs [196912 Ch. 149. See also Ridge v. Baldwin [1964] App. Cas.
40 (1963). Note also that the concept of legitimate expectation originated from the law of private contract before its
permeation to other disciplines of law. See L. Harold Levinson, 'The Legitimate Expectation that Public Officials
Will Act Consistently', American Journal of Comparative Law, 1998, 46 (Suppl. 1): 549-75.
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