CRITICAL ANALYSIS ON THE IMPACT OF FAIR AND EQUITABLE TREATMENT OBLIGATIONS ON HOST STATE REGULATORY AUTONOMY IN INTERNATIONAL INVESTMENT LAW

Abstract

This study critically analyzes the impact of Fair and Equitable Treatment (FET) obligations on host state regulatory autonomy within international investment law. It examines how FET obligations, as articulated in international investment treaties and Bilateral Investment Treaties (BITs), influence states' ability to enact public interest regulations, particularly in environmental protection and public health. The research traces the evolution of FET, revealing a shift from a narrow focus on protecting investors from arbitrary treatment to a broader interpretation by arbitral tribunals. This expansion poses challenges for host states, often conflicting with their rights to regulate for the public good. The analysis discusses significant decisions of arbitral tribunals demonstrating the tension between investor expectations and state measures aimed at the protection of environment and public health. It indicates how recent treaty provisions that include exceptions for environmental and health regulations may help reconcile these conflicts. Especially, the study has determined that for enhancing the balance between investor protections and state regulatory powers, there should be clearer treaty language, the inclusion of public interest exceptions, and a more consistent approach in arbitral decisions to ensure that FET obligations do not hinder states' abilities to regulate effectively in critical areas like environmental and public health.