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Mona Pinchis
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Hi Todd, Thanks for your comments, always appreciated. I think it makes a big difference whether states anticipated i) the application of FET in an investment dispute, and ii) claims of compensation by private investors for breaches of FET. Based on my archival review, I would say that there was no expectation in either circumstance. There was a limited acknowledgment by the US in their post-1950 FCN treaties that there could be extreme circumstances where a contracting state could complain about possible FET breaches, but there was never any discussion as to whether compensation would attach. While not speaking directly of FET, in 1952, the State Department rejected a proposal to attach compensation to a proscription of ‘unreasonable’ measures, explaining that the US would not pay compensation for all ‘losses’ which a government may cause. Put simple, I saw no evidence that the US foresaw an FET clause as leading to a heavily-used basis for complaint (whether inter-State or investor-State), but I think that’s where the clause is today. In contrast, Japan raised serious concerns with the clause, and that is why the US-Japan FCN treaty does not contain an Article I commitment to fair or equitable treatment. We’ve seen an explosion of elements of FET over the past thirty or so years. Certainty, the advent of ISA and the hundreds of cases involving FET claims have seen the FET clause grow away from its original purposes. If that’s the case, governments should think about that evolution and consider what the value of FET is in investment treaties going forward.
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Apr 24, 2016