Abstract
This chapter aims to demonstrate that full protection and security and fair and equitable treatment are two different standards that don’t apply under the same circumstances and have different legal status. After a historical overview (Sect. 1) intended to show how the conflation between the two has emerged over the centuries, emphasis is put on the nature and the scope of application of the full protection and security standard when compared to the fair and equitable treatment standard (Sects. 2 and 3). The next section of the current chapter introduces the idea that full protection and security is to be read in light of another provision often found in international investment agreements: compensation for losses due to war or other conflict (Sect. 4). This chapter concludes with the necessity to respect the specific nature, purpose and scope of application of the different rules contained in international investment agreements (Sect. 5).
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Notes
- 1.
Grotius (1625).
- 2.
Vattel (1858), p. 100.
- 3.
This distinction between the admission phase and the post-admission phase is well known nowadays in investment law. But in Vattel’s view, foreigners’ properties abroad remained part of the wealth of their home nation. As a result, the host State’s mistreatment of foreigners’ property was an injury to the foreigners’ home State. This view led to the development of the diplomatic protection rule. Newcombe and Paradell (2009), p. 4.
- 4.
Sambiaggio (Italy v Venezuela), 10 R.I.A.A., p. 499, 524 (Mixed Claims Commission 1903).
- 5.
“If it had been the contract between Italy and Venezuela, understood and consented by both, that the latter should be held liable for the acts of revolutionists -something in derogation of the general principles of international law - this agreement would naturally have found direct expression in the protocol itself an would not have been left to doubtful interpretation”, Sambiaggio (Italy v Venezuela), 10 R.I.A.A., p. 521.
- 6.
Neer has been cited in a number of investor-State cases, including Pope & Talbot v Canada, LG &E v Argentina, Thunderbird v Mexico, Waste Management II v Mexico, GAMI v Mexico, Mondev v United States, ADF v United States, Glamis Gold v United States, and Merrill & Ring Forestry v Canada.
- 7.
For instance, see Schreuer (2010), p. 14.
- 8.
AWG Group Ltd. v Argentina, UNCITRAL, Award (30 July 2010), para. 173.
- 9.
By hypothesis the protection standard often presented as included in the treatment standard.
- 10.
“The fact that the Argentina-France BIT employs the fair and equitable treatment standard and the full protection and security standard in two distinct articles and refers to them as separate and distinct standards leads to the conclusion that the Contracting Parties must have intended them to mean two different things. Thus, in interpreting these two standards of investment treatment, it is desirable to give effect to that intention by giving the two concepts distinct meanings and fields of application.”, Suez, Sociedad General de Aguas de Barcelona S.A. and al. v Argentina, ICSID Case No ARB/03/10, Award (30 July 2010), para. 166.See also Jan de Nul N.V. v Egypt, ICSID Case No ARB/04/13, Award (6 November 2008), para. 269.
- 11.
Ulysseas Inc. v Ecuador, PCA No 2009-19, UNCITRAL, Award (12 June 2012), para. 272.
- 12.
Dolzer and Stevens (1995), p. 61.
- 13.
Case Concerning Elettronica Sicula S.p.A. (ELSI) (United States of America v Italy) ICJ Rep. 15, Judgment, 20 July 1989, para. 108.
- 14.
Tecmed v Mexico, ICSID Case No. ARB(AF)/00/2, Award (29 May 2003), para. 177.
- 15.
Saluka Investments B.V. v The Czech Republic, UNCITRAL, Partial Award (17 March 2006), para. 483–484.
- 16.
Ampal-American Israel Corp. and others v Egypt, ICSID Case No. ARB/12/11, Award (21 February 2017), para. 241.
- 17.
Malik (2011), p. 11: “While fair and equitable treatment requires States not to act in an unfair or inequitable manner, the full protection and security imposes upon States a duty to act in a manner that protects the investment from adverse interference”.
- 18.
Article 8.10.2 of the Comprehensive Economic and Trade Agreement (CETA) concluded between Canada and European union may be seen as the up to date understanding of the FET rule:
2. A Party breaches the obligation of fair and equitable treatment referenced in para. 1 if a measure or series of measures constitutes:
-
a
denial of justice in criminal, civil or administrative proceedings;
-
b
fundamental breach of due process, including a fundamental breach of transparency, in judicial and administrative proceedings;
-
c
manifest arbitrariness;
-
d
targeted discrimination on manifestly wrongful grounds, such as gender, race or religious belief;
-
e
abusive treatment of investors, such as coercion, duress and harassment; or
-
f
a breach of any further elements of the fair and equitable treatment obligation adopted by the Parties in accordance with para. 3 of this Article.
-
a
- 19.
Asian Agricultural Products Ltd v Sri Lanka, ICSID Case No. ARB/87/3, Award (27 June 1990), para. 77. See also Hesham Talaat M. Al-Warraq v Indonesia, UNCITRAL, Award (15 December 2014), para. 625. As it has been summarized in a comprehensive study, the standard obliges the host State to adopt all reasonable measures to protect assets and property from threats or attacks which may target particularly foreigners or certain group of foreigners (OECD (2004), pp. 26–28).
- 20.
Pantechniki S.A. Contractors & Engineers v Albania, ICSID Case No. ARB/07/21, Award (30 July 2009), para. 77: “A failure of protection and security is to the contrary likely to arise in an unpredictable instance of civil disorder which could have been readily controlled by a powerful State but which overwhelms the limited capacities of one which is poor and fragile. There is no issue of incentives or disincentives with regard to unforeseen breakdowns of public order; it seems difficult to maintain that a government incurs international responsibility for failure to plan for unprecedented trouble of unprecedented magnitude in unprecedented places. The case for an element of proportionality in applying the international standard is stronger than with respect to claims of denial of justice.”
- 21.
Ulysseas Inc. v Ecuador, PCA No 2009-19, UNCITRAL, Award (12 June 2012), para. 272.
- 22.
See American Manufacturing & Trading, Inc. (AMT) v Republic of Zaire, ICSID Case No. ARB/93/1, Award (21 February 1997) (lack of protection against loss of investment caused by widespread looting); Tecmed v Mexico, ICSID Case No. ARB(AF)/00/2, para. 175–177 (alleged lack of the host State’s protection against interference with the investor’s investment by adverse social demonstrations); Saluka Investments B.V. v The Czech Republic, UNCITRAL, Partial Award (17 March 2006), para. 483–484 (oppressive use by the Respondent of public powers, post-forced administration, with a view to depriving the investor of any residual economic benefit or use of its investment and by harassing its officers and employees).
- 23.
See for instance Renée Rose Lévy de Levi v Peru, ICSID case No ARB/10/17, Award (26 February 2014), para. 406: “The Tribunal fully agrees with the description made by the claimant that the standard of full protection and security has gone from referring to mere physical security and has evolved to include, more generally, the rights of investors”.
- 24.
See for instance Frontier Petroleum v Czech Republic, UNCITRAL, Award (12 November 2010), para. 261, “The wording of these full protection and security clauses suggests that the host State is under an obligation to take active measures to protect the investment from adverse effects that stem from private parties or from the host State and its organs”. See also Biwater Gauff (Tanzania) Ltd.vTanzania, ICSID Case No ARB/05/22, Award (24 July 2008), para. 730.
- 25.
Schreuer (2010), p. 14.
- 26.
In Ampal, the Tribunal held that “the focus is on the acts or omissions of the State in addressing the unrest that gives rise to the damages” but that “the operation of the standard does not depend upon whether the acts that give rise to the damage to the claimants’ investment are committed by agents of State (which are thus directly attributable to the State) or by third parties”. Ampal-American Israel Corp. and othersvEgypt, ICSID Case No. ARB/12/11, Award (21 February 2017), para. 245.
- 27.
Schreuer (2010), p. 14.
- 28.
Frontier Petroleum v Check Republic, UNCITRAL Award, 12 November 2010, § 273.
- 29.
Paragraph 5 of CETA Article 8.10 (Treatment of investors and covered investments) provides as follows:
For greater certainty, “full protection and security” refers to the Party’s obligations relating to the physical security of investors and covered investments.
Exactly the same provision may be found in the TTIP (Transatlantic Trade and Investment Partnership) draft, Chapter 2 (Investment), Article 3 (Treatment of investors and covered investments), para. 5.
- 30.
Suez, Sociedad General de Aguas de Barcelona S.A. and al. v Argentina, ICSID Case No. ARB/03/10, Award (30 July 2010), para. 168.
- 31.
Article 31.4 of the 1969 Vienna Convention on the Law of Treaties provides: “A special meaning shall be given to a term if it is established that the parties so intended”.
- 32.
L.E.S.I S.p.A. and Astaldi S.p.A. v Algeria, ICSID Case No ARB/05/3, Award (12 November 2008), para. 174–175, the Tribunal relying on the dissenting opinion of S. Asante in Asian Agricultural Products Ltd v Sri Lanka, ICSID Case No ARB/87/3, Award (27 June 1990).
- 33.
British Claims in the Spanish Zone of Morocco, 2 R.I.A.A. (U.K.-Spain, 1925), at 709–710.
- 34.
Mamidoil Jetoil Greek Petroleum Products Société S.A. v Albania, ICSID Case No ARB/11/24, Award (30 March 2015), para. 819–820: “The obligation to provide constant protection and security must not be confounded with the obligation to provide fair and equitable treatment […] It would violate the principles of treaty interpretation under the Vienna Convention on the Law of Treaties to confuse the meaning of protection and security with that of a fair and equitable treatment […] The Tribunal concludes therefore that both claims have to be examined separately. The fact that the Tribunal rejected the FET claim does not imply the rejection of the claim for a violation of protection and security”.
- 35.
Franck Charles Arif v Moldova, ICSID Case No ARB/11/23, Award (8 April 2013), para. 505: “The Tribunal is not persuaded by claimant’s argument that if a State breaches the FET standard, it is ipso faction breach of the FPS standard. The standard of FPS is clearly addressed in a separate article in the BIT. The Tribunal therefore finds that FPS is a separate and independent standard to that of FET. By the same token, claimant’s general argument that all of Moldova’s acts and omissions in breach of FET also constitute breaches of Moldova’s obligation to grant FPS is rejected”.
References
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Grotius H (1625) De Jure Belli Ac Pacis Libri Tres. In: Scott JB (ed) F. W. Kelsey trans. Clarendon Press, 1925, Book II, Chapter II, XXII. Humphrey Milford. Oxford University Press, Oxford
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Manciaux, S. (2019). The Full Protection and Security Standard in Investment Law: A Specific Obligation?. In: Fach Gómez, K., Gourgourinis, A., Titi, C. (eds) International Investment Law and the Law of Armed Conflict. European Yearbook of International Economic Law(). Springer, Cham. https://doi.org/10.1007/978-3-030-10746-8_11
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