Fair and Equitable Treatment and Human Rights: A Moral and Legal Reconciliation

A central challenge to the legitimacy of international investment law is its failure to take account of a state’s commitments to its people under international human rights law—duties that stand on a special moral plane. The vortex of this challenge is the fair and equitable treatment standard, where tribunals protect the ‘legitimate expectations’ of investors but disregard these preeminent moral commitments. This article develops a new framework for integrating those commitments into fair and equitable treatment decision-making and treaty-drafting. Deploying an interdisciplinary approach that draws on political philosophy as well as extant law and doctrine, I argue that the current international political morality requires putting human rights on a higher plane than commitments to investors. As a result, tribunals should give great deference to state measures that negatively affect investors if the state justifies them based on its international human rights law obligations and lesser but still significant deference for measures based on encouragements or permissions in international human rights law. It operationalizes this approach for tribunals by recasting the doctrine of legitimate expectations and provides examples of how it would work in specific disputes. This article concludes with suggestions for integrating states’ human rights mandates into future investment agreements.