Originally from Investment Treaty Arbitration and International Law - Volume 6

Of all the obligations incorporated into international investment agreements (IIAs) — either chapters of free trade agreements (FTAs) or bilateral investment treaties (BITs) — fair and equitable treatment (FET) stirs a great deal of debate among scholars, negotiators, and practitioners over its content and applicable standard. The Free Trade Commission’s (FTC) July 31, 2001 Note of Interpretation of the North-American Free Trade Agreement (NAFTA) has been relevant in the discussion of various issues concerning FET. These issues include, among others, the content of FET, whether FET has two standards (one, the customary international law standard, and the other, the autonomous or international law standard), whether an authoritative interpretation by a body created by a treaty is legitimate under the rules of international treaty interpretation, and whether this authoritative interpretation is (or should be) distinct from the power to supplement and amend the treaty.

Mindful of the above issues linked to the FTC’s July 31, 2001 note of interpretation of the NAFTA (the Note of Interpretation), the chairs of the 2012 Juris Sixth Annual Investment Treaty Arbitration Conference graciously invited the author of this chapter to address the issue of whether authoritative interpretation by the NAFTA parties has perverted the treatment standard in the treaty. As part of the Juris Conference, the chairs also assigned the author a specific position to advocate during the conference and develop in this chapter: