The Protection of Investors’ Legitimate Expectations and the Fair and Equitable Treatment Standard under NAFTA Article 1105

Abstract

For the majority of NAFTA tribunals, the host state's failure to respect an investor's legitimate expectations does not constitute a breach of the fair and equitable treatment standard under Article 1105, but is rather a 'factor' to be taken into account when assessing whether or not other well-established elements of the standard have been breached. Tribunals have also repeatedly narrowly qualified the concept of legitimate expectations by requiring, for instance, that the investor's expectations be based on specific commitments made by the host state to have purposely induced its investment and denying that such expectations can be solely based on the host state's existing domestic legislation at the time of the investment.