Originally from Investment Treaty Arbitration and International Law - Volume 2

Of all the notions, categories, and concepts used in public international law, the “law of aliens,”1 which has comprised for years the notion of “fair and equitable treatment,” is among the oldest. Before there were international human rights, treaty disarmament obligations, free trade, and discounted cash flow theories, before bilateral investment treaties (BITs) were even conceived or existed, nations had already agreed that foreign aliens and their property were subject to a specific treatment and protection under general international law. Yet the very notion of fair and equitable treatment remains the topic of frequent debate among practitioners and is not easier to define now than three centuries ago when it started to be used.2

Most of the over two thousand bilateral investment treaties in force these days contain a provision by which the States party to the BIT agree to accord “fair and equitable treatment” to investments made in their territory by nationals (both individuals and corporations) of the other contracting State.3 The exact language in that provision may vary, but the very fact that the provision be included in this recent form of investment protection, is not mere coincidence. Rather, it is the consequence of the evolution of principles of international law. This paper will provide an overview of this evolution.