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Dr Erman Özgür

Counsel - AACNI (UK) Ltd.

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Due Process in the Fair and Equitable Treatment Standard

I. Due process in international law


Under international law, the due process of law is regarded as the embodiment of “minimum standards in the administration of justice”.1 It guarantees aliens the right to a fair trial and prohibits arbitrary and discriminatory conduct2 before judicial and other governmental agencies. 


Under international investment law, due process of law is often associated with notions of denial of fairness in the administration of justice3 and procedural fairness in the application of, for instance, administrative procedures by the host State.4

II. Due process in the FET standard


The interpretation and application of due process of law has been particularly distilled under the fair and equitable treatment (FET) standard.5 (See also Due process in Expropriation6 and Due process in Full Protection and Security7).


A number of international investment agreements (IIAs) make explicit references to the principle of due process as a component of the FET standard.8

III. Denial of fairness in the administration of justice


The principle of due process constitutes the procedural dimension of the FET standard.9 A failure to accord fairness to the foreign investor in the administration of justice may constitute a violation of the FET standard.10


Investor-State arbitration tribunals interpret the FET standard (including the Minimum Standard of Treatment11) so as to prohibit a refusal to hear a claim by subjecting it to “undue delay” or by administering “justice in a seriously inadequate way”.12


“Manifest injustice” that “lead[s] to an outcome which offends a sense of judicial propriety” is often adopted as the standard in determining a breach of due process in the administration of justice.13 


Examples of manifest error in judicial procedures include failing to notify an investor of hearings; rendering a decision in the absence of the investor; unreasonable delays; or undue influences by the host government.14 


On the other hand, problems of efficiency in the performance of courts or administrative organs, which do not offend procedural propriety, are not considered violations of the FET standard’s due process requirement.15 


At the same time, “bad faith or malicious intention” by the host State is not considered an “essential element” of due process under the FET.16 


States also have the duty to provide due process in the enforcement and execution of judgements and administrative decisions.17 Non-execution of judgments and administrative decisions may also amount to a denial of due process in the administration of justice.18

IV. Denial of fairness in governmental procedures


The due process requirement under the FET standard also necessitates that the host State accords fairness in governmental procedures.19 


Fairness in governmental procedures requires host States to act transparently,20 and free from coercion,21 inconsistency,22 and even handedness23 (see also Legitimate Expectations in FET).24


Non-adjudicatory governmental procedures may include procedures in the administration of seizures and auctioning of investments,25 approval of a construction permit,26 and regulation in energy markets.27


Adede, A.O., A Fresh Look at the Meaning of the Doctrine of Denial of Justice Under International Law, Canadian Yearbook of International Law/Annuaire Canadien de Droit International,1977, pp. 73-95.

Freeman, A.V., The International Responsibility of States for Denial of Justice, 1938.

Friedmann, W., The Uses of “General Principles” in the Development of International Law, American Journal of International Law, 1963, pp. 279-299.

Laird, I.A., Betrayal, Shock and Outrage-Recent Developments in NAFTA Article 1105, Asper Review of International Business and Trade Law, 2003, p. 185.

Paparinskis, M., The International Minimum Standard and Fair and Equitable Treatment, 2013.

Paulsson, J., Denial of Justice in International Law, 2005.

Tudor, I., The Fair and Equitable Treatment Standard in the International Law of Foreign Investment, 2008.

Vandevelde, K.J., A Unified Theory of Fair and Equitable Treatment, New York University Journal of International Law and Politics, 2010, pp. 43-106

Schill. S., Fair and Equitable Treatment, the Rule of Law, and Comparative Public Law, in Schill, S. (ed.), International Investment Law and Comparative Public Law, 2010.

Schreuer, C., and Dolzer, R., Principles of International Investment Law, 2008.

Schreurer, C., Fair and Equitable Treatment in Arbitral Practice, The Journal of World Investment & Trade, 2005, pp. vii-386, p. 357.

UNCTAD, Fair and Equitable Treatment, UNCTAD Series on issues in international investment agreements, 1999

Weiler, T., Metalclad v. Mexico: A Play in Three Parts, The Journal of World Investment & Trade, 2001, pp. 685-711

Weiler, T., Good Faith and Regulatory Transparency: The Story of Metalclad v. Mexico, in Weiler, T. (ed.), International Investment Law and Arbitration: Leading Cases from the ICSID, NAFTA, Bilateral Treaties and Customary International Law, 2005.

Weiler, T., The Interpretation of International Investment Law: Equality, Discrimination, and Minimum Standards of Treatment in Historical Context, 2013.

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