Pakistan’s international investment policy: towards a new generation of fair and equitable treatment provisions

Fair and equitable treatment is the most invoked substantive protective standard which exists in the majority of Pakistan’s international investment agreements. The standard has gained prominence as a controversial provision available to foreign investors due to being regularly being invoked in investor state disputes.

The international investment agreements do not provide adequate protection for Pakistan. The main argument put forward by this thesis is that the present interpretation and application of fair and equitable treatment creates an imbalance in rights of foreign investors and the regulatory space of Pakistan as a host state.

This thesis therefore analyses the contemporary nature of fair and equitable treatment provisions in Pakistan’s International Investment Agreements prior to drawing a conclusion as to why they do not adequately protect the interests of Pakistan as a host state. This is undertaken by conducting doctrinal research of the fair and equitable treatment provisions and by using case studies of the mining and construction industries.

Given the lack of adequate protection provided by the international investment agreements for Pakistan, my thesis examines different jurisdictions to identify whether these jurisdictions can assist Pakistan in protecting the interests of Pakistan. Lastly, my thesis argues that a reform of fair and equitable treatment can protect Pakistan and accommodate the interests of foreign investors.

Fair and equitable treatment is an obligation on a host state to act fairly and equitably towards the investments of foreign investors. Fair and equitable treatment has gained popularity over the years as it is the most invoked substantive protective standard by foreign investors in investor-State dispute settlement (ISDS) cases. This is due to the lack of a definition of fair and equitable treatment in international investment agreements. Attempts to clarify the meaning and interpretation of fair and equitable treatment have exacerbated the application of the standard resulting in implications for host states. This has resulted in a rise of investor state dispute settlement cases against host states, in particular, developing countries have been affected the most. As a result, tribunals, arbitrators and organisations have established an ongoing reform of fair and equitable treatment in international investment law.