Ever since the North American Free Trade Agreement (“NAFTA”) came into force, Chapter Eleven, which provides for investor or investment protections within the broader framework of a multilateral trade agreement, has always been the object of animated debate. The points of view expressed by the proponents of these pro-State and proinvestor positions have shaped the evolution of NAFTA Article 1105, and the nature and scope of investor protections generally.
Indeed, Article 1105 has been the object of various and varied interpretations. In 2001, presumably in order to clarify which interpretation of Article 1105 should prevail, the Free Trade Commission (“FTC”) issued a Note of Interpretation (“NOI”) in which it provided binding directions as to how to interpret Article 1105.
The FTC’s initiative was not well received by many but, as demonstrated below, the NOI achieved the FTC’s goal of providing more certainty to contracting States and investors with respect to the protection provided by Article 1105. In the meantime, it has led to what Professor Schreuer called “[b]y far the most intensive discussion of the relationship of the fair and equitable treatment standard to customary international law”.2