Legitimate expectations in investment treaty law: concept and scope of application

Legitimate expectation is a concept, or doctrine, that is frequently invoked by investors in claims against host-States before arbitral tribunals, for alleged breaches (by the host-State) that have impaired investors’ investments. What the concept of legitimate expectation itself entails is far from clear. It has been applied mainly as a component (or one of the substantive elements) of fair and equitable treatment (FET) standard, though some have surmised that it may have evolved into a stand-alone doctrine or, arguably, a general principle of international law. Its application has, arguably, provided more protection to investors, often to the disadvantage of host-States. In particular, developing host-States have sometimes found themselves held to expansive expectations they had not anticipated. Despite this, the legal basis for the application of the concept in international law is not fully examined. This chapter examines the concept of legitimate expectations, exploring its meaning and content, its legal basis in international investment law, the disadvantages it presents to host-States, how host-States may limit the application (and potential impact) of the concept, and the possibility of host-States creating for themselves and their citizens legitimate expectations required of investors.