THE“FET”PROTECTION PROVIDED FOR FOREIGN INVESTMENT UNDER INTERNATIONAL INVESTMENT LAW AND THE CONTENTS OF ETHIOPIAN BIT’s

International Investment Law FET

Introduction International Investment Law FET

BIT’s are Investment agreements. That are entered into by two Sovereign states in a way.Tthat is not detrimental or injurious to investments by investors from the other contracting State. They are regarded as a means of drumming up investor confidence by signaling that the legal and political structures are not injurious to foreign investors and investments, thus providing a welcoming climate for FDI.⁶⁰

The Development of International Investment Law FET with BIT

The development of BIT’s was primarily a response to the fears and insufficiencies of the customary international law of state responsibility for injuries to foreigners and their property.⁶¹ Further, the developed states required to obtain better market access assurance from developing states for their investors and to obtain advanced development in the standards of investment protection.⁶²

The first IIA was between Pakistan and Germany in 1959 for the promotion and protection of investments. It had many provisions that have become common in current BIT’s. The efforts by Germany to conclude BIT’s were followed by Switzerland and Tunisia in 1961, Netherlands and Tunisia in 1963, Italy and Guinea in 1964, Sweden and Denmark in 1965, UK and Egypt in 1975.⁶³

Features

The features of these treaties during this period were majorly based on the OECD draft Convention.⁶⁴ Since then more than 3,000 such agreements have been concluded in the world.⁶⁵

One of the factors that has motivated developing states to enter into investment treaties is due to the ambition for them by OECD and UNCTAD. This was on the premise that they added security to foreign investors which would offshoot increase in foreign investment. ⁶⁶ The other factor which is put forth by intergovernmental institution such as International Finance Corporation is that, investment treaties are seen as risk management tools. Finally, globalization has increased the spread of investment treaties.⁶⁷

History with The Developed Countries

The developed countries have ready capital to invest in developing countries thus the majority of the BIT’s are concluded between developed and developing countries. The underlying principle behind BIT’s is that, by granting foreign investor’s enhanced security and protection beyond that which is provided by the laws of the host state, will increase and attract foreign investment.⁶⁸

As discussed below, except for three Ethiopia’s BIT concluded with UAE, Brazil & Qatar, in all other Ethiopia BITs⁶⁹ the Fair & Equitable Treatment clause included are unqualified type. This will expose Ethiopia to potential, unnecessary litigation before the arbitral tribunals. If Ethiopian government body takes a measure contrary to the obligations contained in an investment treaty, that action can engender high liability for the government. This could potentially require the payment of millions of dollars in compensation, damage the state’s reputation as a decent place to invest, and limit the state’s ability to attract foreign investment in the future.

Terminology of “FET” in International Investment Law FET

The manner in which the notion of fairness and equity to be granted to the investor is represented in a treaty may vary. There are a number of agreements that refer to the standard as “just and equitable treatment” or simply “equitable treatment.” For example Ethiopia Malaysia⁷⁰ BIT on article 2(2) states that “Once an investment is admitted investors of each Contracting Party shall at all times be accorded “equitable treatment” and shall enjoy full and adequate protection and security in the territory of the other Contracting Party”. The French model and various BIT’s involving Switzerland⁷¹ also refer solely to “just and equitable treatment”.

The United States signed Friendship, Commerce and Navigation (FCN) Treaties with Belgium, Luxembourg⁷², Greece⁷³, Ireland⁷⁴, Israel⁷⁵, and Pakistan⁷⁶ all of which referred to the standard as “equitable treatment.” On the other hand, FCN’s agreed upon with Ethiopia ⁷⁷ , Germany ⁷⁸ , Oman⁷⁹, and the Netherlands⁸⁰ referred to “FET”.

Definition of “FET”

 Therefore, the concepts of fair and equitable are, to a large extent, interchangeable. In addition, equity suggests a balancing process, weighing up of what is right in all the circumstances. It is a word related to the idea of equilibrium defined as “a state of physical balance

What is FET Clauses on International Investment Law FET

“FET” clauses typically refer to “treatment” of investments. “Treatment” is an expansive term, defined as “conduct, action or behavior towards a person”.⁸⁵ Essentially, any action or omission attributable to the host State can become a subject of “FET” claim.⁸⁶ While historic cases on the international minimum standard and denial of justice were typically concerned with alleged failures in the judicial system of the host State, modern “FET” claims cover, in addition, all types of administrative and legislative decisions, as well as the conduct of anybody or entity if this conduct is attributable to the State.

FET Standards

Fair & Equitable Treatment Standard definition depends on the circumstances of each case. 

The practice of FET

The actual practice of application of. FET” clauses by arbitral tribunals has drawn a distinction solely between “FET” as an unqualified standard and the. FET” obligation linked to the minimum standard of treatment of aliens under customary international law. Where an IIA ties the “FET” obligation to the. Customary international law minimum standard of treatment of aliens. The threshold of liability as applied by arbitral tribunals has been generally higher: the. State’s conduct needs to be egregious or outrageous in accordance with the. Neer case. Indeed, the minimum standard of treatment of aliens is an international lowest common divisor or a floor for. The assessment of governmental conduct. Generally, a reference in “FET” clause to the minimum standard of treatment of aliens .

In disparity, arbitral tribunals applying unqualified “FET” clauses have not limited. Themselves to the most serious breaches and have found violations of the “FET” . Standard where they considered the State’s conduct in question to be simply unfair towards the claimant. ⁹⁴ In other words tribunals have generally interpreted unqualified. “FET” as encompassing a wide range of procedural and substantial rights, beyond the minimum standard of customary international law.⁹⁵

The Common Elements

The elements commonly associated with the “FET” standard are, in addition to those included in the minimum standard of treatment:. The protection of legitimate expectations, non-discrimination, transparency and protections against bad faith, coercion, threats, and harassment.⁹⁶

There seem to be emerging elements of Fair & Equitable . The rationale behind of various elements is vague and to some extent overlapping. For example.

Reference

1. Christoph Schreuer, Investments, International Protection, (Max Planck Encyclopedia of Public International Law, 2013)
2. Ex aeco et bono means according to what is equitable and good, on the merit of the case. See Merriam-Webister, https://www.merriam-webister.com/legal/ex%20aequo%20et%20bono
3. Understanding Indirect Expropriation in Ethiopian BITs https://lawyerhasen.org/indirect-expropriation-in-ethiopian-bits/
4. INDIRECT EXPROPRIATION AND NON COMPENSABLE REGULATORY STATE ACT IN ETHIOPIAN BIT’s AND INVESTMENT LAWS https://lawyerhasenmh.blogspot.com/2025/05/indirect-expropriation-and-non.html
5. How to Register Your E-Commerce Business in Africa”