legitimate expectation

Scope note

In international investment law, the principle of legitimate expectations is a praetorian creation: to interpret one of the — laconic — standards of investment protection, the standard of fair and equitable treatment, arbitral tribunals referred to the legitimate expectations of the investors, elevating them to the rank of criterion of the said standard. There is a frustration of the legitimate expectations of investors — and a breach of fair and equitable treatment —, where the host State does not respect a promise made to the investor who, on this basis, made its decision to invest. The arbitral tribunal in the case of Parkerings v. Lithuania [ICSID No. ARB/05/8, award (11/09/2007)] explained the principle of legitimate expectations in the following way: "The expectation is legitimate if the investor received an explicit promise or guarantee from the host-State, or if implicitly the host-State made assurances or representation that the investor took into account in making the investment. Finally, in the situation where the host-State made no assurance or representation, the circumstances surrounding the conclusion of the agreement are decisive to determine if the expectation of the investor was legitimate. In order to determine the legitimate expectation of an investor, it is also necessary to analyse the conduct of the State at the time of the investment." In CSR matters, the principle of legitimate expectations may be used as an instrument of dispute, in order to decide whether compensation is really due to an investor who brings such a claim. In this regard, the legitimacy of the expectation would be measured according to the breaches by the host State, but also according to those of the investor.

Legal sources
  • Alex Genin, Eastern Credit Limited, Inc. and A.S. Baltoil v. Estonia, ICSID No. ARB/99/2, sentence (25/06/2001)
  • Generation Ukraine, Inc. v. Ukraine, ICSID No. ARB/00/9, sentence (16/09/2003)
  • William Nagel v. The Czech Republic, SCC Case No. 049/2002, sentence (09/09/2003)
  • Parkerings-Compagniet AS v. Lithuania, ICSID No. ARB/05/8, sentence (11/09/07)
  • El Paso Energy International Company v. Argentina, ICSID No. ARB/03/15, sentence (31/10/2011)
  • Joseph Charles Lemire v. Ukraine, ICSID No. ARB/06/18, sentence (28/03/2011)
  • M. Franck Charles Arif v. Moldova, ICSID No. ARB/11/23, sentence (08/04/2013)
  • CJEC, 1 March 1987, 265/85, Van den Bergh en Jurgens v. Commission : Rec. 1987 p. 1155.
Bibliographic note
  • D. Barak-Erez, “The doctrine of Legitimate Expectations and the Distinction between the Reliance and Expectation Interests” : European Public Law, Vol. 11, no. 4, 2005, p. 583-601.
  • J. Cazala, « Protection des attentes légitimes : l'exigence d'un engagement spécifique » : Les Cahiers de l'Arbitrage, n° 2012-4, p. 940-947.
  • B. Fauvarque Cosson, « La confiance légitime et l’estoppel » : Electronic Journal of Comparative Law, Vol. 11, no.3, 2007, p.1-47.
  • S. Fietta, “Expropriation and the ‘Fair and Equitable’ Standard – The Developing Role of Investors’ “Expectations” in International Investment Arbitration” : Journal of International Arbitration, vol.23, no.5 2006, p.  375-399.
  • E. Gaillard, « L’interdiction de se contredire au détriment d’autrui comme principe général du commerce international » : Revue de l’Arbitrage, 1985, p. 241-259.
  • N. Monebhurrun, La fonction du développement dans le droit international des investissements, Thèse, École de Droit de la Sorbonne, Paris 1, 2013, p. 232-252.
  • E. Snodgrass, « Protecting Investors’ Legitimate Expectations: Recognizing and Delimiting a General Principle » : ICSID Review, FILJ, Vol. 21, N° 1,2006, p.1-57.

legitimate expectation

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