The most significant foreign investment operations are often the ones that are solicited by the host state itself, whether in the energy sector, for instance, or for the purpose of exploiting natural resources, etc.1 In this context, the investor will have entered into agreements with the host state, which will regulate the conditions for the performance of the project. From a legal standpoint, these agreements, just like any other state contract, raise concerns regarding the sovereign character of one of the parties and the risks associated thereto. Where an investment protection treaty is applicable to the investment operation, the question may reasonably be asked if the expectations that the investor derives from the stipulations in these contracts are covered under the state’s obligation to provide fair and equitable treatment under the treaty.
The purpose of this paper is to analyze this issue, which is done first, against the background of the doctrinal discussions surrounding the internationalization of state contracts and second, in light of the treaty versus contract claims dichotomy in international investment law. The argument brought forward is that the fair and equitable standard cannot be construed so as to cover contractual expectations. Such claims should be brought under the umbrella clause. However, where the treaty contains no umbrella clause, or where the latter is inapplicable, the fair and equitable treatment should not be interpreted as a means to fill this void.
The question of the internationalization of state contracts is discussed in Section 1. The dichotomy between contract and treaty claims is the object of Section 2. Section 3 provides reasons as to why, in accordance with our argument, contractual expectations are not protected under the fair and equitable treatment standard.