Here are some articulations of the FET standard in the Mesa NAFTA Chapter 11 award:
The claimant:
484. ... For Mesa, Article 1105 consists of several components including the duty to act in good faith; fairness and reasonableness; treatment free from arbitrary conduct; transparency; protection against abuse of rights; procedural fairness; legitimate expectations; treatment free from political motivation; and treatment free from discriminatory conduct.
The respondent:
488. ... According to the Respondent, the threshold for demonstrating a violation of Article 1105 is high. To breach Article 1105, the impugned state conduct must be “sufficiently egregious and shocking, such as a complete lack of due process, evident discrimination or a manifest lack of reasons.”
The majority opinion:
502. On this basis, the Tribunal considers that the following components can be said to form part of Article 1105: arbitrariness; “gross” unfairness; discrimination; “complete” lack of transparency and candor in an administrative process; lack of due process “leading to an outcome which offends judicial propriety”; and “manifest failure” of natural justice in judicial proceedings. Further, the Tribunal shares the view held by a majority of NAFTA tribunals that the failure to respect an investor's legitimate expectations in and of itself does not constitute a breach of Article 1105, but is an element to take into account when assessing whether other components of the standard are breached.
Judge Brower's concurring/dissenting opinion:
3. I agree with the Award’s formulation of the applicable standard under NAFTA Article 1105. That formulation was set out by the tribunal in Waste Management II and has been adopted by a number of other tribunals, including most recently the Bilcon tribunal. It provides that:
the minimum standard of treatment of fair and equitable treatment is infringed by conduct attributable to the State and harmful to the claimant if the conduct is arbitrary, grossly unfair, unjust or idiosyncratic, is discriminatory and exposes the claimant to sectional or racial prejudice, or involves a lack of due process leading to an outcome which offends judicial propriety – as might be the case with a manifest failure of natural justice in judicial proceedings or a complete lack of transparency and candour in an administrative process. In applying this standard it is relevant that the treatment is in breach of representations made by the host State which were reasonably relied on by the claimant.
Some questions:
-- How much of a distinction is there between the respondent's formulation and the others?
-- For governments who seem to be trying to narrow the scope of this obligation, what's a specific real world example of the behavior you would like to see captured here?
-- What percentage of government actions violate these standards? For what percentage could a foreign investor bring a non-frivolous claim of violation?
