Source: https://www.international-arbitration-attorney.com/legitimate-expectations-in-investment-arbitration/
Timestamp: 2019-04-18 20:57:24+00:00

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However, it is essential to note that, as such, the doctrine of legitimate expectations only serves as a pertinent factor in assessing the breach of BIT provisions and does not give rise to an independent standard of treatment “different from those contained in or enforceable under the BIT.” This position is in line with the one adopted by International Court of Justice in its above-mentioned judgment.
In the following paragraphs we will review the basic contours of the notion of legitimate expectations as used in investment arbitration.
Besides specific representations, foreign investors’ legitimate expectations can be rooted in the general legislative and regulatory framework existing at the moment of the making of their investment. However, this does not imply that the host State’s legislation is deemed frozen as of the time of the making of the foreign investor’s investment. As stated in the Impregilo case, “[T]he legitimate expectations of foreign investors cannot be that the State will never modify the legal framework, especially in times of crisis […].”.
Thus emerges a thorny question regarding “the right balance between the stability and legitimate expectations on the one hand, and the host State’s right to amend the regulatory framework on the other”. To resolve this dilemma, especially in the absence of any stabilization clause in a BIT, arbitral tribunals have held that although each State disposes of an undeniable right to exercise its legislative and regulatory powers, changes in such framework would be tantamount to a violation of foreign investors’ legitimate expectations “in case of a drastic or discriminatory change” or “unreasonable modifications”.
 Obligation to Negotiate Access to the Pacific Ocean (Bolivia v. Chile), ICJ, Judgment, 1 October 2018, ¶ 162.
 El Paso Energy International Company v. The Argentine Republic, ICSID Case No. ARB/03/15, Award, 31 October 2011, p. 119, ¶ 339. See also Gavrilovic v. The Republic of Croatia, ICSID Case No. ARB/12/39, Award, 26 July 2018, p. 258, ¶ 954.
 MDT Equity v. The Republic of Chile, ICSID Case No. ARB/01/7, Decision on Annulment, 21 March 2007, p. 28, ¶ 67.
Tecnicas Medioambientales Tecmed v. Mexico, ICSID Case No. ARB(AF)/00/2, Award, 29 May 2003, p. 61, ¶ 154.
 Eureko B.V. v. The Republic of Poland, Ad hoc, Partial Award, 19 August 2005, p. 76, ¶ 235.
 White Industries Australia Limited v. The Republic of India, UNCITRAL, Award, 30 November 2011, p. 93, ¶ 10.3.6.
 Z. Douglas, Nothing if Not Critical for Investment Treaty Arbitration: Occidental, Eureko and Methanex, 22(1) Arb. Intl. 27, p. 28.
 El Paso Energy International Company v. The Argentine Republic, ICSID Case No. ARB/03/15, Award, 31 October 2011, p. 134-135, ¶ 375.
 Impregilo v. The Argentine Republic, ICSID Case No. ARB/07/17, Award, 21 June 2011, p. 68, ¶ 291.
 M. Potestà, Legitimate Expectations in Investment Treaty Law: Understanding the Roots and the Limits of a Controversial Concept, 28(1) ICSID Rev. – FILJ 88, p. 113.
 Toto Costruzioni Generali v. The Republic of Lebanon, ICSID Case No. ARB/07/12, Award, 7 June 2012, p. 62, ¶ 244.

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