Exploring the Approach Against Problem of Legitimate Expectations Under the Fair and Equitable Treatment Standard by Host States

Abstract

This essay discusses the challenges associated with the definition of legitimate expectations in host-state dispute settlement. The concept of legitimate expectations requires the government to respect citizens' expectations of policy continuity and stability based on legal principles and has become a self-standing doctrine in international investment contracts. However, the lack of clarity in interpretation and diligence on the part of the host nation has resulted in inconsistent outcomes in similar situations, undermining legal certainty. Additionally, the longstanding defense of legitimate expectations has weakened the host country's authority to regulate. The essay provides recommendations, including recognizing the factors that give rise to legitimate expectations, operating in an open and transparent manner, scrutinizing informal representations of governmental intent, and instituting a reasonable response program to avoid liability for necessary government actions.