Sweden's National Board of Trade has a new report called "The Right to Regulate in the Trade Agreement between the EU and Canada - and its implications for the Agreement with the USA." There are lots of interesting parts, but I'm going to focus on something they said about fair and equitable treatment:
The article on “fair and equitable treatment” is intended to make the Parties to the agreement ensure that the exercise of public authority and court proceedings maintain a certain quality and that the state does not subject investors to manifestly arbitrary treatment or targeted discrimination. The analysis shows that in CETA, this article contains nothing beyond what is already included in Swedish law and, in several cases, in Swedish constitutional law. Examples include the right to a fair trial, protection against discrimination and protection against arbitrary treatment. As long as these provisions exist, and provided that the state upholds them, the article thus does not limit the Swedish state's “right to regulate”. Since the rules that are relevant to the article hold a unique position within Swedish legislation, it is unlikely that they will change in a way that would limit the state's “right to regulate”. The conclusion is therefore that the article on “fair and equitable treatment” in CETA will not impact on Sweden's “right to regulate”. For foreign investors in Sweden, the article does not provide any additional protection compared to Swedish law, other than guaranteeing a minimum standard of treatment from the state.
The wording of the articles on “fair and equitable treatment” differ in CETA and the US Model BIT. In the latter agreement, there is an illustrative list where the article applies, while CETA contains an exhaustive list. The fact that the list is exhaustive provides a greater level of control over the article's scope, and the article limits the state's “right to regulate” to a lesser extent than the corresponding article in the US Model BIT.
The ground for protection stipulated in the article on “fair and equitable treatment”, also referred to as “legitimate expectations”, has traditionally constituted a factor of uncertainty, as there has been some level of arbitrariness in terms of what arbitration tribunals have deemed to be included in this ground. In CETA, the stipulation regarding “legitimate expectations” has been so greatly limited that, in reality, it offers very little protection for investors.
That's from page 5; see also pages 13-25.
Overall, their take on FET in CETA is that its protections are no different than what is already in Swedish law. By contrast, they seem to imply that the U.S. FET standards might be broader.
One difficulty with these comparisons between domestic law and international investment law protections is that the legal texts are vague, and the actual application under both could vary. Ideally, we would have the exact same fact pattern examined under similar domestic law and international law standards, so that we could compare the result. That's unlikely to happen, but I what I think might be interesting is for the National Board of Trade (or someone else) to examine a controversial case, such as the recent Bilcon NAFTA Chapter 11 decision, and think about how Swedish law (or some other domestic law) would apply to those facts.
In addition, while we are looking at domestic law protections, it would be interesting to see which countries do not have these protections. The Swedes think they do. ("In Sweden, investors are protected from arbitrary conduct by Swedish authorities through the Instrument of Government, which guarantees freedom of trade. Furthermore, the principle of legality outlined in the Instrument of Government requires that all public authorities have legal grounds for their decisions, and the objectivity principle ensures the public authorities' obligation to consider everyone's equality before the law.") What is the situation elsewhere? Who are the countries that do not offer such protections? To me, the treatment of investors under domestic law is the best starting point for a debate about the need for additional protections.
