"Each Party shall accord to covered investments treatment in accordance with the customary international law minimum standard of treatment of aliens, including fair and equitable treatment and full protection and security. The concepts of 'fair and equitable treatment' and 'full protection and security' do not require treatment in addition to or beyond that which is required by the customary international law minimum standard of treatment of aliens."
This language makes clear – as the Majority recognises – that the standard of protection which has been granted to the investor is the Minimum Standard of Treatment ('MST'), the one that exists in customary international law. The standard to be applied by the Tribunal is not the Fair and Equitable Treatment ('FET') standard, one that is to be found and applied in other investment protection agreements. The parties to the FTA have reinforced the distinction between the two different standards by the authoritative interpretation of Article 805 and MST adopted in 2017 by the Joint Commission established under the FTA; this confirms that the investor has "the burden to prove a rule of customary international law invoked under Article 805".4
"The terms 'fair and equitable treatment' envisage conduct which goes far beyond the minimum standard and afford protection to a greater extent and according to a much more objective standard than any previously employed form of words. A tribunal would not be concerned with a minimum, maximum or average standard. It will have to decide whether in all circumstances the conduct in issue is fair and equitable or unfair and inequitable. No standard defined by other words is likely to be material. The terms are to be understood and applied independently and autonomously."6
Dr Mann's conclusion, which is as pertinent today as when it was written, does not mean that the law on MST is set in stone, or is static. It does mean, however, that there is a cardinal distinction between the two standards, and in carrying out its task the duty of a tribunal is bound to take that distinction and apply it to the facts of the case. A failure to do so amounts to a departure from the intentions of the drafters of the FTA. As the Joint Commission has made clear, the burden is on the Claimant to prove the content of the customary rule, and that the standard it sets forth has not been met. A tribunal that melds the two terms, or which misapplies one standard (MST) by applying the conditions of the other (FET), or which fails to satisfy itself that the Claimant has met its requisite burdens of proof, or which fails to give effect to the intentions of the drafters, risks adopting an approach which might be said to manifestly exceed its powers.
"(i) [T]he retroactive application of a new regulation is only justified when the prospective application of that regulation would not achieve the specific public purpose sought, and (ii) the importance of that specific public purpose must manifestly outweigh the prejudice suffered by the individuals affected by the retroactive application of the regulation."37
Although in the context of an FET claim, the analysis in Cairn Energy is premised on the proposition that it is not correct to assume that retroactive measures are strictly prohibited. This is consistent with international case law and the practise of many domestic legal systems, which do not support the idea of a general principle of law (understood in the sense of Article 38 of the ICJ Statute) prohibiting retroactive measures. The better view is that of the tribunal in Cairn Energy – that retroactive measures are permissible if taken for the public interest and in accordance with the principle of proportionality. The fact that a measure may have retroactive effects cannot be sufficient for a tribunal to conclude that the facts of a case bring it within the "rare circumstances" so that Annex 811 does not apply. Tribunals must instead consider whether contested retroactive measures were taken in the public interest, and whether they are proportionate. This ties in with the analysis in the Decision, as stated in paras 623-699, to the effect that the measures were taken in the public interest and were proportionate.
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