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11 J. World Investment & Trade 435 (2010)
Fair and Equitable Treatment: A Look at the Theoretical Underpinnings of Legitimacy and Fairness

handle is hein.journals/jworldit11 and id is 437 raw text is: Fair and Equitable Treatment: A Look at the
Theoretical Underpinnings of Legitimacy and Fairness
Roland KLAGER*
A. INTRODUCTION
For some years now, the standard of fair and equitable treatment of foreign investors
remains one of the most controversial issues in international investment law. Due to the
indeterminacy of its language and some far reaching arbitral decisions, it has become a
prominent cause of action, which is said to be ubiquitous in investor-state arbitration.1
The general terms of fair and equitable treatment seem to invite the advancement of an
almost infinite range of arguments which claim some kind of unfairness towards a foreign
investor. Accordingly, fair and equitable treatment often appears as an all-purpose tool in
order to cover the gaps left by more specific standards of investment protection or to
buttress the claimant's argumentation related to any of the other standards. The growing
body of case law and scholarly writing2 on fair and equitable treatment is beginning to
display certain fact-situations in which arbitral tribunals have established a violation of fair
and equitable treatment. The different fact-situations or sub-elements of fair and
equitable treatment are consisting of recurring patterns of argumentation, providing
arguments upon which a specific case is decided. Such categorisation has certainly helped
to perceive the content of fair and equitable treatment more clearly. However, the
concrete meaning of fair and equitable treatment and the legitimacy of the pertaining case
law remain subjects of considerable uncertainty. Moreover, the underlying rationale of
fairness and equity guiding the application of the standard is still very much an enigmia
which has yet to be properly addressed.
* Roland Kliger, First Legal State Exam (Freiburg), is a Doctoral Candidate at the University of Ttibingen
and a Trainee Lawyer in Frankfurt. He was a Research Fellow at the Institute for Public Law (Section 1: European
and Public International Law), University of Freiburg, and a Visiting Fellow at the Lauterpacht Centre for
International Law, University of Cambridge (United Kingdom). The author would like to thank Tillmann Rudolf
Braun and Christine Lbhr for their invaluable comments on an earlier draft, as well as Lewis Enim for language
advice. This article is based on a larger study on fair and equitable treatment (forthcoming with Cambridge
University Press). The author can be contacted at rolandklaeger@web.de.
I See, for example, Dolzer, Fair and Equitable Treatment, Int'l Law. 39 (2005), p. 87.
2 Confer the following selection: Vasciannie, The Fair and Equitable Treatment Standard in International
Investment Law and Practice, BYIL 70 (1999), p. 99; UNCTAD, Fair and Equitable Treatment, UNCTAD/ITE/Ilr/11
(Vol. IIi), New York 1999; Yannaca-Small, Fair and Equitable Treatment in International Investment Law, OECD
Working Papers on International Investment, No. 2004/3; Schreuer, Fair and Equitable Treatment in Arbitral Practice,
JWIT 6 (2005), p. 357; Schill, Fair and Equitable Treatment under Investment Treaties as an Embodiment of the Rule of
Law, Tom 3 (2006), issue #5; Muchlinski, 'Caveat Investor'? The Relevance of the Conduct of the Investor under the Fair
and Equitable Treatment Standard, ICLQ 55 (2006), p. 527; Westcott, Recent Practice on Fair and Equitable Treatment,
JwiT 8 (2007), p. 409; Mayeda, Playing Fair: The Meaning ofFair and Equitable Treatment in Bilateral Investment Treaties,
JwT 41 (2007), 273; Orakhelashvili, The Normative Basis of Fair and Equitable Treatment, ArchVR 46 (2008), p. 74;
Tudor, The Fair and Equitable Treatment Standard in the International Law of Foreign Investment, Oxford 2008.

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