Host State’s Unilateral Representations as a Basis of Legitimate Expectations Claim in International Investment Treaty Arbitration: Analysis into Its Juridical Roots, Nature and Implications on Ethiopia

Abstract

The trend of using host states‟ unilateral representations as a basis of doctrine of legitimate expectation is flourishing within the jurisprudence of investment tribunals as a remedy to the investors when states‟ statements/conducts creates legitimate expectations that the investors relied on and subsequently frustrated, causing damages to the investment. The role of this doctrine is vital in these days where developing countries like Ethiopia are making huge investment representations within a box of attracting FDI. However, the juridical roots of using this doctrine and representations as its basis and nature of representations giving rise to liability per the jurisprudence of investment tribunals is not certain. Hence, the objective of this research is to examine the juridical roots and the current jurisprudential place of representations as a basis of legitimate expectations claim in international investment treaty arbitration and the fate of representations by the Ethiopian government in light with this concept. As a means of achieving this aim, doctrinal research method, which is devoted to analysis of laws and cases using both primary and secondary data, is adopted. This paper argues that doctrine of legitimate expectation and representations as its basis is justified under general principle of laws, and host states investment representation, excluding other basis of legitimate expectation claim, is also justified under binding effect of unilateral acts under international law. The jurisprudence of investment tribunals suggest incomprehensiveness of the concept and possibility of abusing the concept unless controlled with standard criteria and limitations to save the international investment arbitration regime from crisis. It also argues that with the current trend of huge unwarranted investment representations the Ethiopian government is engaging in, the country‟s potential liability under this concept is huge. Finally, the paper recommends that the investment tribunals should justify the use of this doctrine under general principle of law, not as a part of good faith or minimum standard of treatment, and representations alone as its basis can also be justified under binding effect of unilateral acts, especially helpful if the applicable instrument is devoid of FET. And its use should be subject to limitations. It also recommends that the Ethiopian government should reconsider what it is representing to the investors.