Legal Status of the Legitimate Expectation Doctrine in International Investment Law: An Inquiry into its Legitimacy and Clarity

Abstract

This article examines the doctrine of legitimate expectation in international investment law, with specific emphasis on how the doctrine has been interpreted and applied by arbitral tribunals in international investment disputes. It discusses the origins of the doctrine and traces it to domestic administrative law regimes, particularly under English law, and other common and civil law jurisdictions. It is argued that domestic administrative law jurisprudence has impacted the interpretation of the fair and equitable treatment (FET) in international investment law, resulting in the transposition of the doctrine of legitimate expectation from national law into international investment law. The article examines the doctrinal requirements that have emerged from decisions of arbitral tribunals on legitimate expectation – i.e. representation, clarity, reliance, reasonableness, detriment, timing, balancing, and good faith – and it highlights the inconsistencies discernible in their application. The legal status of the doctrine of legitimate expectation remains quite contested (as a rule) in public international law but could be more accurately considered as a norm under international investment law. Some criticisms that the article examines with respect to the legal status of legitimate expectations include legal uncertainty, sovereignty, democratic legitimacy, and fragmentation. For clarity and legal certainty to be achieved regarding the interpretation and application of legitimate expectation in international investment law, there is the need for reform through treaty drafting, proportionality analysis in arbitral decisions, and integration with broader principles such as good faith and estoppel. The future of the doctrine thus lies in its clarification with a view to ensuring predictability for both foreign investors and host states.