Reforming fair & equitable treatment provisions in Bangladesh's bilateral investment treaties: a path towards balancing national sovereignty with foreign investors' commercial interests

This thesis provides a comprehensive examination of the Fair and Equitable Treatment (FET) provisions within Bangladeshi Bilateral Investment Treaties (BITs) and their implications for foreign investment. It critically assesses the effectiveness of current FET provisions in striking a balance between Bangladesh's national sovereignty and the commercial interests of foreign investors. Through an extensive literature review, analyses of discrepancies in the wording and levels of protections in existing FET provisions, case study analyses and comparative examinations of other countries’ FET provisions in BITs, this thesis exposes the vulnerability of Bangladesh's current BIT framework.

Ambiguous FET provisions and weak BIT practises have led to a sharp rise in the number of investment disputes filed by foreign investors against Bangladesh in recent years. Notable cases including Saipem, Niko, Chevron, Scimitar and NEPC reveal how weakly protected FET provisions and ineffective BIT practises have allowed foreign investors to file cases against Bangladesh for substantial claims. This has been worsened by Bangladesh's casual BIT signings, lacking proper negotiation and foresight on foreign investment claim ramifications. These claims are not only having a damaging impact on Bangladesh’s economy but are limiting its regulatory freedom. Balancing fewer arbitration cases with the need for foreign investment is crucial for the country's economy and sustainable growth.

Comparing India and the US's FET strategies in BITs, this thesis argues that adopting India's approach of removing FET provisions entirely could be detrimental for Bangladesh's foreign investment attraction. The US model, which balances national and foreign investors' interests through institutional strengthening and safeguarding FET provisions, is more suitable. However, this requires the establishment of a robust institution with a reviewing council in Bangladesh tasked with developing, monitoring and reviewing their BIT framework in line with international standards.

Drawing upon all findings from the analyses of the discrepancies in FET provisions, exploratory case studies and comparative analysis, a series of pragmatic recommendations are proposed to tackle the legitimacy crisis of current FET provisions within Bangladeshi BITs. These specifically encompass the formation of an independent institution with council, developing a model BIT with safeguarded FET provisions and reforming domestic laws on foreign investment. These recommendations take Bangladesh’s developing status into account and address the full spectrum of issues previously raised.

This thesis provides the first in-depth academic examination of FET issues within Bangladeshi BITs. While it offers foundational principles for the reformation of Bangladesh's foreign investment framework, it also calls for broader, global research to ascertain the most effective FET standards for other developing nations. The findings and recommendations laid out herein not only offer a roadmap for Bangladesh but also serve as inspiration for other developing countries grappling with similar challenges in the evolving landscape of foreign investment and international arbitration.