Fair and Equitable Treatment in the NAFTA

The increasing use of the fair and equitable treatment standard has become a trend in the field of international investment law. Not only has this standard been incorporated extensively in many international investment agreements, it also plays a significant role in modern investment arbitration practice. However, what constitutes the actual content of this standard raises a heated debate. Among others, a number of arbitral awards rendered under the North American Free Trade Agreement (hereinafter ‘NAFTA’) Chapter 11, concerning the relationship between the standard and customary international law and its substantive content, have attracted significant attention and are therefore worthy of detailed research. The first section of this paper begins with a brief overview of the fair and equitable treatment standard. It examines the origins of the standard and its current use in international investment instruments. The second part reviews the relationship between the fair and equitable treatment standard and the customary international minimum standard, which is the most controversial issue under NAFTA Chapter 11. In the following section, this paper considers the notion of the standard in a general context, including its concept, nature and function. The following section of this paper examines the jurisprudence in the NAFTA investment arbitration practice concerning the normative elements of the standard. The final part of this paper concludes by summarising the key features of the standard as well as identifying its development in the NAFTA arbitral practice.