1 Kyoto Protocol to the United Nations Framework Convention on Climate Change, Kyoto, 11 December 1997, United Nations, Treaty Series, vol. 2303, 162.

2 Directive 2001/77/EC of the European Parliament and of the Council of 27 September 2001 on the promotion of electricity produced from renewable energy sources in the internal electricity market, OJ L 283, 27.10.2001, 33–40 (no longer in force).

3 Directive 2009/28/EC of the European Parliament and of the Council of 23 April 2009 on the promotion of the use of energy from renewable sources and amending and subsequently repealing Directives 2001/77/EC and 2003/30/EC, OJ L 140, 5.6.2009, 16–62.

4 For many EU member states, the primary mode of support renewable energy under the current Directive has come through feed-in tariff, feed-in premium, and green certificate programs. A feed-in tariff program aims at offsetting the higher cost of renewable technologies in relation to fossil fuels. The electricity generated from renewable installations is paid at a fixed minimum price, generally set higher than the market price. On the contrary, a feed-in premium is paid in addition to the market price. It is considered to be more market-friendly than the feed-in tariff because the producer is to a certain extent exposed to market price risk. Other forms of incentives are tax and export subsidies, as well as power purchase agreements, i.e., long-term contracts between governments and renewable energy producers. On the different forms of incentives to promote renewable energies see De Maio, G., ‘Politiche di incentivazione fiscale ed energie rinnovabili’, in Chieffi, L. and Pinto, F. (eds.), Il governo dell’energia dopo Fukushima (2013), 315–34Google Scholar.

5 As far as the legal nature of the FET is concerned, P. Juillard argues that it is a principle of general international law, albeit of minimum substance (noyau minimum). Juillard, P., ‘L’évolution des sources du droit des investissements’, (1994) 250 Recueil des Cours 131–3Google Scholar. According to Gazzini, the FET standard is arguably the most important standard in investment disputes. State practice and opinio juris militate in favour of the development of a corresponding customary rule. See Gazzini, T., ‘General Principles of Law in the Field of Foreign Investment’, (2009) Journal of World Investment & Trade 116Google Scholar, in the footnote. Contra the arbitral tribunal in ADF: ‘It may be that, in their current state, neither concordant State practice nor judicial or arbitral case-law provides convincing substantiation (or, for that matter, refutation) of the Investor’s position [the claimant had held that a general requirement exists in customary international law to accord FET to foreign investments].’ ADF Group Inc. v. United States of America, ICSID Case No. ARB (AF)/00/1, Award of 9 January 2003, para. 183. But the more recent arbitral award in Blusun recognizes that FET is a customary norm. See Blusun S.A., Jean-Pierre Lecorcier and Michael Stein v. Italian Republic, ICSID Case No. ARB/14/3, Award of 27 December 2016, para. 319 (3).

Whether or not FET forms part of customary law is nonetheless of limited relevance since it is part of most BITs and multilateral agreements (such as, as we will see, Art. 10 Energy Charter Treaty, Art. 1105 North America Free Trade Agreement, Art. 8(10) Comprehensive Economic and Trade Agreement between Canada and the European Union, CETA).

6 Energy Charter Treaty, 17 December 1994, 2080 U.N.T.S. 100 (entered into force on 16 April 1998) (hereinafter ECT). The ECT was concluded the same year of the collapse of the Soviet Union (1991), with the aim to integrate the former Soviet Union’s resource-rich energy sectors into the European market. At the time of the ECT negotiations, in the early 1990s, climate concerns were still relatively low and the renewable energy market was not as developed as today. Therefore, the ECT does not provide for a specific protection of renewable energy investments as opposed to investments in other forms of energy. The ECT nonetheless recalls in its Preamble to the United Nations Framework Convention on Climate Change, and its Art. 19 para. 1(d) foresees that its contracting parties shall have particular regard to developing and using renewable energy sources. Environmental concerns are also expressed in the annexed Protocol on Energy Efficiency and Related Environmental Aspects.

7 As an example of treaty provision which specifies the FET into more specific rules, see Art. 8.10(2) of the EU-Canada CETA and, among arbitral awards, Rumeli Telekom A.S. v. Kazakhstan, ICSID ARB/05/16, Award, 29 July 2008, para. 609.

8 Ex multis, Mondev International Ltd. v. United States of America, ICSID Case No. ARB(AF)/99/2, 11 October 2002, para. 118; Waste Management, Inc. v. United Mexican States (“Number 2”), ICSID Case No. ARB(AF)/00/3, 30 April 2004, para. 99. See Schreuer, C., ‘Fair and Equitable Treatment in Arbitral Practice’, (2005) 3 Journal of World Investment and Trade, 364Google Scholar; Kalicki, J. and Medeiros, S., ‘Fair, Equitable and Ambiguous: What is Fair and Equitable Treatment In International Investment Law?’, (2007) ICSID Review 26Google Scholar.

9 In the international literature, and even in arbitral practice, the terms of ‘rule’ and ‘principle’ are often used interchangeably. See Compañia del Desarrollo de Santa Elena S.A. v. Republic of Costa Rica, ICSID Case No. ARB/96/1, Award of 17 February 2000, para. 64; Ragazzi, M., The Concept of International Obligations Erga Omnes (1997), 136Google Scholar. However, one may still distinguish between the two terms. In the words of Fitzmaurice a principle ‘underlies a rule, and explains or provides the reason for it’. Fitzmaurice, G. G., ‘The General Principles of International Law Considered from the Standpoint of the Rule of Law’, (1957) 92 Recueil des Cours II, 7Google Scholar. Mosler suggests an additional difference between the two terms: ‘principles’ have a ‘wider meaning’ and give rise to a ‘wider variety of means of application and execution’, while ‘rules’ define rights and obligations ‘in a clearer way’. Mosler, H., The International Society as a Legal Community (1980), 73Google Scholar; Koskenniemi, M., ‘General Principles: Reflections on Constructivist Thinking in International Law’, in Koskenniemi, M. (ed.), Sources of International Law (2000), 359–99Google Scholar. In the Gentini case the umpire recalls the definitions of ‘rule’ and ‘principle’ offered by Bourguignon and Bergerol’s Dictionnaire des Synonymes: a ‘règle est essentiellement pratique et, de plus, obligatoire; il est des règles de l’art comme des règles de gouvernement’ [a rule is essentially practical and, moreover, mandatory; There are rules of the art as rules of government], while principle (principe) ‘exprime une vérité générale, d’après laquelle on dirige ses actions, qui sert de base théorique aux divers actes de la vie, et dont l’application à la réalité amène telle ou telle consequence’ [expresses a general truth, from which one directs its actions, which serves as a theoretical basis for the various acts of life, and whose application to reality brings about a certain consequence or another one]. Gentini case, 1903, in RIAA X, at 556.

10 ‘The standard of “fair and equitable treatment” is therefore closely tied to the notion of legitimate expectations which is the dominant element of that standard.’ Saluka Investments B.V. v. The Czech Republic, UNCITRAL, Partial Award, 17 March 2006, para. 302; ‘The case law also confirms that to comply with the standard [of FET], the State must respect the investor’s reasonable and legitimate expectations.’ See Rumeli, supra note 7, para. 609; see also Tecnicas Medioambientales Tecmed S.A. v. United Mexican States, ARB (AF)/00/2, Award, 29 May 2003, para. 154; El Paso Energy Int’l Co. v. Argentina, ICSID Case No. ARB 03/15, Award, 31 October 2011, para. 348; Electrabel S.A. v. Hungary, ICSID Case No. ARB/07/19, Decision on Jurisdiction, Applicable Law and Liability, 30 November 2012, para. 7.75; RREEF Infrastructure (G.P.) Limited and RREEF Pan-European Infrastructure Two Lux S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/30, Decision on responsibility, 30 November 2018, para. 260. According to some isolated dissenting arbitrators, the inclusion in the FET of an obligation to satisfy, or at least not to frustrate, the legitimate expectations of investors does not correspond, in any language, to the ordinary meaning to be given to the terms ‘fair and equitable’. Therefore, prima facie, such a conception of FET is at odds with the rule of interpretation expressed in Art. 31, para. 1 of the Vienna Convention on the Law of Treaties: see Suez, Sociedad General de Aguas de Barcelona, S.A. and Vivendi Universal, S.A. v. Argentine Republic, ICSID Case No. ARB/03/19, Decision on liability, 30 July 2010, separate opinion of arbitrator P. Nikken, para. 3.

11 Tecmed, supra note 10, para. 154; Charanne and Construction Investments v. Spain, SCC Case No. V 062/2012, Award, 21 January 2016, para. 486. R. Kolb argues that the principle of good faith operates in protecting the legitimate expectations which a legal-factual relationship among two or more subjects has generated. See R. Kolb, ‘Principles as Sources of International Law (With Special Reference to Good Faith)’, (2006) Netherlands International Law Review 20. See also Dolzer, R., ‘Fair and Equitable Treatment: A Key Standard in Investment Treaties’, (2005) The International Lawyer 91Google Scholar.

12 CMS Gas Transmission Company v. Argentina, ICSID Case No. ARB/01/8, Award, 12 May 2005, para. 274; Occidental Exploration & Production Co. v. Ecuador, LCIA Case No. UN3467, Final Award, 1 July 2004, para. 183; Enron Corporation and Ponderosa Assets, L.P. v. Argentine Republic, ICSID Case No. ARB/01/3, Award, 22 May 2007, para. 260.

13 The Gold Reserve award refers to the principle of Vertrauensschutz as the basic rationale of the protection of legitimate expectations. Gold Reserve Inc. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/09/1, Award, 22 September 2014, para. 576. See Tanzi, A., ‘The Relevance of the Foreign Investor’s Good Faith’, in Gattini, A.et al. (eds.), General Principles of Law and International Investment Arbitration (2018), 209Google Scholar.

Other arbitral tribunals and authors use the legitimate expectations principle as a further general principle that is used in order to interpret and apply the FET standard. But, to try to give some substance to a general principle by resorting to another general principle of law seems largely superfluous. This only shifts the terms of the question. Contra, the Tribunal in the Total case decided to interpret the FET standard looking also at other general principles of international law, and based the principle of legitimate expectations on a comparative analysis of legitimate expectations in domestic jurisdictions. See Total S.A. v. The Argentine Republic, ICSID Case No. ARB/04/01, Decision on Liability, 27 December 2010, paras. 126–8. For an overview on this issue see J. Ostransky, ‘An Exercise in Equivocation: A Critique of Legitimate Expectations as a General Principle of Law under the Fair and Equitable Treatment Standard’, in Gattini et al., ibid., at 344–77.

14 CMS, supra note 12, para. 280; Mondev, supra note 8, para. 116; Loewen Group, Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB(AF)/98/3, 26 June 2003, para. 132; Enron, supra note 12, para. 263.

15 Waste Management, supra note 8, para. 138.

16 I cite here the evocative words of M. Luciani: ‘è particolarmente odioso che lo Stato, dismesso lo scettro e imboccata la strada del diritto premiale, si riappropri delle sue prerogative una volta ottenuto l’effetto sperato’. Luciani, M., Il dissolvimento della retroattività. Una questione fondamentale del diritto intertemporale nella prospettiva delle vicende delle leggi di incentivazione economica, (2007)Google ScholarGiurisprudenza italiana 2091. In this regard, in his partial dissenting opinion in RREEF, Judge R. Volterra refers to what is colloquially known as ‘bait-and-switch’. R. Volterra, partial dissenting opinion to RREEF, supra note 10, para. 26.

17 See EDF (Services) Ltd. v. Romania, ICSID Case No. ARB05/13, Award, 8 October 2009, para. 217 (noting that otherwise investors could ‘rely on a bilateral investment treaty as a kind of insurance policy against the risk of any changes in the host State’s legal and economic framework’); Enron, supra note 12, para. 261; Saluka, supra note 10, para. 305; Charanne, supra note 11, para. 503; El Paso, supra note 10, para. 352; ‘The fair and equitable treatment standard does not give a right to regulatory stability per se.’ Eiser Infrastructure Limited and Energía Solar Luxembourg S.à r.l. v. Kingdom of Spain, ICSID Case No. ARB/13/36, Award, 4 May 2017, para. 362 recalling Ioan Micula, Viorel Micula, S.C. European Food S.A, S.C. Starmill S.R.L. and S.C. Multipack S.R.L. v. Romania, ICSID Case No. ARB/05/20, Award, 11 December 2013, para. 666; Toto Costruzioni Generali S.p.A. v. The Republic of Lebanon, ICSID Case No. ARB/07/12, Award, 7 June 2012, para. 165; Total S.A., supra note 13, para. 115.

18 In the Charanne case, for instance, the Tribunal found that ‘in the absence of a specific commitment [with respect to the stability of the incentives regime], an investor cannot have a legitimate expectation that existing rules will not be modified’. Charanne, supra note 11, at para. 499. ‘In the absence of a specific commitment, the State has no obligation to grant subsidies such as feed-in tariffs, or to maintain them unchanged once granted.’ Blusun, supra note 5, para. 319. ‘Absent explicit undertakings directly extended to investors and guaranteeing that States will not change their laws or regulations, investment treaties do not eliminate States’ right to modify their regulatory regimes to meet evolving circumstances and public needs.’ Eiser, supra note 17, para. 362; RREEF, supra note 10, para. 321.

19 Art. 14, para. 3 (Fair and Equitable Treatment), Investment Agreement for the Common Market for Eastern and Southern Africa Common Investment Area.

20 On the issue of the autonomy of the FET standard in respect to the minimum standard of treatment see Schreuer, supra note 8, at 357–86.

21 NAFTA Free Trade Commission, Notes of Interpretation of Certain Chapter 11 Provisions, 31 July 2001. Such decision is a ‘subsequent agreement between the parties regarding the interpretation of the treaty or the application of its provisions’, under the terms of Art. 31 para. 3 (a) of the Vienna Convention on the Law of Treaties. See Herdegen, M., ‘Interpretation in International Law’, Max Planck Encyclopedia of Public International Law (2013), paras. 34–5Google Scholar.

22 Glamis Gold Ltd. v. United States of America, UNCITRAL, Award, 8 June 2009, paras. 766, 799, 802. On this point see Dumberry, P., ‘The Protection of Investors’ Legitimate Expectations and the Fair and Equitable Treatment Standard under NAFTA Article 1105’, (2014) Journal of International Arbitration 67Google Scholar; Schreuer, supra note 8, at 363–4.

23 Mesa Power Group LLC v. Government of Canada, PCA Case No. 2012-17, Award of 24 March 2016, para. 502.

24 Art. 10(1) ECT [emphasis added].

25 This is suggested by a number of arbitral awards. See ex multis Eiser, supra note 17, paras. 378–9; Antin Infrastructure Services Luxembourg S.à.r.l. and Antin Energia Termosolar B.V. v. Kingdom of Spain, ICSID Case No. ARB/13/31, Award, 15 June 2018, para. 533. See, then, the following passage of the RREEF award, applying the ECT: ‘The FET principle includes, but goes beyond, the traditional “minimum standard” as conceived in the Neer Case.’ RREEF, supra note 10, para. 263.

26 Continental Casualty Company v. The Argentine Republic, ICSID Case No. ARB/03/9, 5 September 2008, para. 261.

27 In virtue of Art. 26(3), states may opt out of the ‘umbrella clause’ contained in Art. 10(1) of the ECT (to date only four states have refused the application of the umbrella clause). A ‘reverse umbrella clause’ is also conceivable, transforming breaches of domestic law by the investor into treaty breaches. See, as an example, Art. 11 of the Model Text for the Indian Bilateral Investment Treaty requiring investors’ compliance with ‘all laws, regulations, administrative guidelines and policies of a Party concerning the establishment, acquisition, management, operation and disposition of investments’.

28 The feared side-effect of such interpretation is the opening of floodgates, which, however, is mitigated when the substantive rule of the umbrella clause is read in combination with the jurisdictional rule contemplated under Art. 26(3)(b)(i) of the ECT. Under such provision, state parties may opt to rule out subsequent access to arbitration where the investor has previously submitted the dispute to the host state’s courts or administrative tribunals, or to any previously agreed dispute settlement procedure. This exception is known as the ‘fork in the road’. For a list of state parties which have conditioned their consent to arbitration in such a way see ECT, Annex ID. Arbitral tribunals, however, usually take a narrow view of this provision, requiring continuity in the identity of the parties, cause of action, and object of the dispute (the so-called ‘triple identity test’). See, e.g., Hulley Enterprises Ltd. (Cyprus) v. Russian Federation – PCA Case No. AA 226, Award, 18 July 2014, 402–6; Charanne, supra note 11, paras. 405–8.

It is nonetheless submitted that the choice to take the dispute to the national courts does not preclude the investor from bringing an international claim for breach of FET, if the national procedure fails to meet the minimum due process standard demanded by that principle. In such a case, it is not the underlying investment dispute that founds the international case, but the very fact that the national procedures charged with its resolution have failed to meet international treaty standards. In this sense see also Muchlinski, P. T., Multinational Enterprises & The Law (2007), 646CrossRefGoogle Scholar. Muchlinski further maintains that investors should have a duty to use local remedies as an aspect of good corporate citizenship and good management practice, in return for the host country providing proper and effective means of redress, with international dispute settlement remaining available as an option of last resort. See Muchlinski, P. T., ‘Caveat Investor - The Relevance of the Conduct of the Investor under the Fair and Equitable Treatment Standard’, (2006) International & Comparative Law Quarterly 555–6Google Scholar.

29 Wälde, T. W., ‘The Umbrella Clause In Investment Arbitration: A Comment on Original Intentions and Recent Cases’, (2005) Journal of World Investment & Trade 235Google Scholar.

30 Potestà, M., ‘Legitimate Expectations in Investment Treaty Law: Understanding the Roots and the Limits of a Controversial Concept’, (2013) 28 ICSID Review 1CrossRefGoogle Scholar, at 103.

31 Continental Casualty Company, supra note 26, para. 261. According to the Tribunal in Blusun, tribunals have so far declined to sanctify laws as promises. Blusun, supra note 5, para. 367. See also Total S.A., supra note 13, para. 122. The Tribunal, however, further admits that a claim to stability can be based on the inherently prospective nature of a regulation aimed at providing a defined framework for future operations.

32 Continental Casualty Company, supra note 26, para. 261.

33 In this sense, see also R. Dolzer, supra note 11, at 104.

34 As far as incentive law is concerned, ‘la legge deve rispettare un impegno (che ben può definirsi) sostanzialmente contrattuale, assunto dal legislatore’, M. Luciani, supra note 16, at 2090–1.

35 In his Dissenting Opinion, G. Born points to both Czech legislation and Czech official statements to demonstrate that the breach of the undertaking to maintain fixed minimum FiTs for 15 (later 20) years was a violation of the Treaties’ guarantees of FET. Dissenting Opinion of G. Born in Antaris Solar GmbH and Dr. Michael Göde v. Czech Republic, PCA Case No. 2014-01, 2 May 2018, para. 29. Legitimate expectations of compliance are often inferred from a presumably existent right under domestic law: ‘That legislative guarantee, which was, as also discussed above, repeatedly reaffirmed in governmental statements, provided investors with an enforceable right to, and legitimate expectation of, stabilised FiTs for 15 (later 20) years.’ Dissenting Opinion of G. Born, ibid., para. 57; ‘they [contractual undertakings by governments] generate as a rule legal rights and therefore expectations of compliance’, Continental Casualty Company, supra note 26, para. 261.

36 See Art. 1103 of the French Civil Code and Art. 1372 of the Italian Civil Code.

37 According to CETA, in the absence of any specific commitment under law or contract to issue, renew, or maintain a subsidy, a Party’s decision not to issue, renew, or maintain that subsidy does not constitute a breach of the CETA. Art. 8.9, para. 3.

38 ADC Affiliate Limited and ADC & ADMC Management Limited v. The Republic of Hungary, ICSID Case No. ARB/03/16, Award of 2 October 2006, para. 424.

39 According to G. Born, the fact that a state makes an undertaking to investors in general legislation does not ‘limit’ the legitimate expectations of investors nor grant the state a margin of appreciation to refuse to honour the commitments it has made. Dissenting opinion of G. Born in Antaris, supra note 35, paras. 42, 44.

40 ‘It is possible that under Egyptian law certain acts of Egyptian officials, including even Presidential Decree No. 475, may be considered legally non-existent or null and void or susceptible to invalidation. However, these acts were cloaked with the mantle of Governmental authority and communicated as such to foreign investors who relied on them in making their investments … These acts, which are now alleged to have been in violation of the Egyptian municipal legal system, created expectations protected by established principles of international law.’ Southern Pacific Properties (Middle East) Limited v. Arab Republic of Egypt, ICSID Case No. ARB/84/3, Award of 20 May 1992, paras. 82–3.

41 The Tribunal in the Isolux case excluded that Spain had undertaken a commitment towards the investors precisely because of the general character of the applicable rules. Isolux Netherlands, BV v. Kingdom of Spain, SCC Case V2013/153, Award of 17 July 2016, para. 775.

42 Charanne, supra note 11, para. 490.

43 Heckmann, D., Geltungskraft und Geltungsverlust von Rechtsnormen, Tübingen, 1997, 243Google Scholar; M. Luciani, supra note 16, at 2090. Contra the Tribunal in Blusun excluded that the frustration of the investor’s expectation that the tariffs set by the Third Energy Account would remain in place for its duration according to its terms, thus until 31 December 2013, was in breach of Art. 10 ECT. This is because ‘there is still a clear distinction between a law, i.e. a norm of greater or lesser generality creating rights and obligations while it remains in force, and a promise or contractual commitment’. Blusun, supra note 5, paras. 367, 371, 374.

44 In this sense see also Ortino, F., ‘The Obligation of Regulatory Stability in the Fair and Equitable Treatment Standard: How Far Have We Come?’, (2018) 21 Journal of International Economic Law, 853CrossRefGoogle Scholar.

45 On the notion of proper and improper retroactivity see infra, Section 5, para. 5.

46 D. Heckmann, supra note 43, at 249.

47 In particular, a host state can successfully invoke the defence of necessity if the wellknown requirements listed by Art. 25 of the Draft articles on Responsibility of States for Internationally Wrongful Acts are met. Among them, the rule that the state cannot invoke necessity if it has contributed to that state of necessity is emphasized by the Tribunal in the Sempra Energy International case as the expression of a general principle of law devised to prevent a party from taking legal advantage of its own fault. Sempra Energy International v. The Argentine Republic, ICSID Case No. ARB/02/16, Award of 28 September 2007, paras. 353–4. In Lg&E, Argentina succeeded in invoking the necessity defence between December 2001 and April 2003. See LG&E Energy Corp., LG&E Capital Corp., and LG&E International, Inc. v. Argentine Republic, ICSID Case No. ARB/02/1, Decision on liability of 3 October 2006.

48 ‘The Tribunal accepts that promises or representations to investors may be inferred from domestic legislation in the context of its background, including official statements. It is not essential that the official statements have legal force.’ Antaris, supra note 35, para. 366. The Tribunal in Total v. Argentina noted that the legal regime in force at the time of making the investment does not per se constitute a guarantee of stability unless the state has explicitly assumed a specific legal obligation for the future, such as by contracts, concessions- or stabilization clauses, but it added that ‘the situation is similar when public authorities of the host country have made the private investor believe that such an obligation existed through conduct or by a declaration’ (emphasis added). Total S.A., supra note 13, paras. 117–18. Contra, in El Paso v. Argentine Republic, the claimant relied on a joint general message to Congress by Argentina’s President and the Minister of Economics about the ‘legal certainty’ the enactment of the Electricity Law would achieve. The Tribunal observed that a ‘declaration made by the President of the Republic clearly must be viewed by everyone as a political statement, and this Tribunal is aware, as is every individual, of the limited confidence that can be given to such political statements in all countries of the world’. El Paso, supra note 10, para. 395. The Tribunal admitted that such statements may have induced investors to decide to invest in the country. But it is one thing to be induced to make an economic decision by political proposals, and another to be able to rely on these proposals in order to claim legal guarantees. Such political declaration did not equate to specific commitments to foreign investors ‘not to modify the existing framework, which was designed to attract them’. Ibid., para. 396.

49 In the El Paso case, the Tribunal argued that ‘no reasonable investor can have such an expectation unless very specific commitments have been made towards it or unless the alteration of the legal framework is total’ (emphasis added). El Paso, supra note 10, para. 374; ‘In the absence of a stabilisation clause or similar commitment, which were not granted in the present case, changes in the regulatory framework would be considered as breaches of the duty to grant full protection and fair and equitable treatment only in case of a drastic or discriminatory change in the essential features of the transaction’ (emphasis added). Toto, supra note 17, para. 244. ‘However, Article 10(1) of the ECT entitled them to expect that Spain would not drastically and abruptly revise the regime, on which their investment depended, in a way that destroyed its value (emphasis added).’ Eiser, supra note 17, para. 387. The Tribunal further specified that the previous legal regime was ‘replaced with an unprecedented and wholly different regulatory approach, based on wholly different premises’ and had the effect of stripping investors of virtually all of the value of their investment, with the consequence that a breach of FET occurred. Ibid., para. 365. ‘The Tribunal will, thus, have to assess … if subsequent legislation by the Respondent radically altered the essential characteristics of the legislation in a manner that violates the FET standard’ (emphasis added). Novenergia–II - Energy & Environment (SCA) (Grand Duchy of Luxembourg), SICAR v. The Kingdom of Spain, SCC Case No. 2015/063, 15 February 2018, para. 656.

50 In Impregilo v. Argentina, the Tribunal issued the following statement: ‘The legitimate expectations of foreign investors cannot be that the State will never modify the legal framework, especially in times of crisis, but certainly investors must be protected from unreasonable modifications of that legal framework’ (emphasis added). Impregilo S.p.A. v. Argentine Republic, ICSID Case No. ARB/07/17, Award of 21 June 2011, para. 291. In Partkerings v. Lithuania, the Tribunal affirmed that ‘as a matter of fact, any businessman or investor knows that laws will evolve over time. What is prohibited however is for a State to act unfairly, unreasonably or inequitably in the exercise of its legislative power’. Parkerings-Compagniet AS v. Republic of Lithuania, ICSID Case No. ARB/05/8, Award of 11 September 2007, para. 332.

51 The Tribunal in Blusun v. Italian Republic solely relied on the proportionality test. Blusun, supra note 5, paras. 318, 319, 372.

52 ‘Nevertheless, the ECT did protect Claimants against the total and unreasonable change that they experienced here.’ Eiser, supra note 17, para. 363. ‘The answer depends … on whether or not the changes can be held as being reasonable and proportionate.’ RREEF, supra note 10, paras. 324, 462–3.

53 Charanne, supra note 11, para. 517, recalled in Eiser, supra note 17, para. 370; Antin, supra note 25, paras. 531–2; RREEF, supra note 10, para. 460.

54 Novenergia, supra note 49, para. 695.

55 Electrabel, supra note 10, para. 7.77; see also Saluka, supra note 10, para. 305; BG Group Plc v. The Republic of Argentina, Final Award, 24 December 2007, para. 298; El Paso, supra note 10, para. 433; Philip Morris Products S.A. and Abal Hermanos S.A. v. Oriental Republic of Uruguay, ICSID Case No. ARB/10/7, Award, 8 July 2016, para. 423; Charanne, supra note 11, para. 500; Antaris, supra note 35, para. 360. The 2012 UNCTAD Study on FET notes that, according to a significant number of awards, FET does not prevent host states from acting in the public interest, even if such acts adversely affect investments. United Nations Conference on Trade and Development, Fair and Equitable Treatment, Series on Issues in International Investment Agreements II, New York-Geneva, 2012, 72–3.

56 Eiser, supra note 17, para. 371; the UNCTAD Study further specifies that ‘investors can expect, however, that such changes will be implemented in good faith and in a non-abusive manner and that public-interest arguments will not be used as a disguise for arbitrary and discriminatory measures’. UNCTAD, supra note 55, at 77.

57 Charanne, supra note 11, para. 514; which paragraph is recalled in Eiser, supra note 17, para. 370.

58 Charanne, ibid., paras. 534, 536.

59 The reference to an ‘acceptable margin of change’ is quite recurrent in arbitral practice. See Antaris, supra note 35, para. 360; Philip Morris Brands S.à r.l., supra note 55, para. 423; El Paso, supra note 10, para. 402.

60 Dissenting Opinion of G. Born in Antaris, supra note 35, para. 55; Partial Dissenting Opinion of Arbitrator Tawil in Charanne, supra note 11, para. 11.

61 A distinction of perspective was drawn in the literature between person-oriented principles of justice (such as human rights) in contrast to state-centred principles of justice (such as FET). V. Kube and E. U. Petersmann, ‘Human Rights Law in International Investment Arbitration’, in Gattini et al., supra note 13, at 221.

62 In Parkerings v. Lithuania, the Tribunal expressly noted that Lithuania was in transition from its Soviet past to being a candidate for European Union membership. Thus, legislative changes, far from being unpredictable, were to be regarded as likely. According to the Tribunal, investors could and, with hindsight, should have sought to protect legitimate expectations through a stabilization clause. Parkerings-Compagniet, supra note 50, paras. 335–6; ‘a legitimate investor expectation cannot be induced by a regulatory framework when the investor’s actual information allowed him to foresee and anticipate the unfavorable development of this regulatory framework before making the investment. In order to breach the legitimate expectations of the investor, the new regulatory measures should not have been foreseeable, either by a prudent investor or by an investor who, by reason of his personal situation, had specific elements to foresee those measures’. Isolux, supra note 41, para. 781.

63 ‘C’est en réalité le droit objectif, qu’il résulte du droit international général ou des traités de protection des investissements, et non la subjectivité de l’investisseur, qui permet de départager le comportements licites ou illicites de l’Etat.’ Gaillard, E., ‘Centre international pour le règlement des différends relatifs aux investissements (CIRDI), chronique des sentences arbitrales’, (2008) Journal de droit international 332–3Google Scholar. Contra, it was argued that such relativization appears to be an almost inevitable consequence of resorting to a concept – the expectation – that bears a certain level of subjectivity. See Potestà, supra note 30, at 122.

64 In the light of these remarks, see Isolux, supra note 41, para. 788.

65 ‘L’attente n’est légitime que si elle suppose de la part de l’Etat un comportement conforme au droit international et aux engagements spécifiques qu’il est susceptible d’avoir pris à son égard. Plus juste, la notion apparaît alors passablement circulaire. Aussi gagnerait-on probablement à éviter le détour rhétorique par la notion d’attente légitime de l’investisseur pour s’attacher à définir ce que sont les obligations d’un Etat respecteux du droit international.’ E. Gaillard, supra note 63, at 333.

66 Pizzorusso, A., ‘Certezza del diritto. Profili applicativi’, in Enciclopedia giuridica (1988), 2Google Scholar.

67 If operators have already received an una tantum incentive, and a new regulatory measure withdraws or reduces the incentive, such measure clearly affects a ‘consolidated’ legal position, an acquired right, because it applies to cases which entirely belong to the past and are therefore exhausted. In virtue of the principle of legal certainty, the greatest possible protection should arguably be accorded to such acquired rights. The same applies with reference to past periods when a regulatory change affects contracts which are still pending. This is the so-called proper retroactivity (retroattività propria, echte Rückwirkung). Think of state aid, which, once granted, is qualified as incompatible with the single market by the EU Commission, and therefore recovered.

68 The majority of renewable energy arbitrations precisely deal with laws which are improperly retroactive, although arbitrators wrongly qualify them as non-retroactive. The Czech regulatory modifications to the support scheme and tax measures at stake in Antaris and Göde v. Czech Republic, for instance, were deemed non-retroactive by the Tribunal. This position was supported by reference to an assumed consistent decision of the Czech Constitutional Court. Antaris, supra note 35, para. 430. Unlike suggested by the Tribunal, however, the Czech Constitutional Court had not concluded in its decision that the regulatory modifications at stake were non-retroactive, but that they were quasi-retroactive. See Czech Constitutional Court, Judgment Pl. ÚS 17/11, para. 48.

69 In this sense, the Tribunal in the RREEF case, which accepts the retroactivity argument because the ‘New Regime applies only for future remuneration, but it subtracts past remuneration (remuneration that was due under the previous regime) from the future remunerations’. See further RREEF, supra note 10, paras. 328–9. Contra the Tribunal in the Charanne case refused to see any retroactivity, assuming that there can be no retroactivity when a norm only applies to the future effects of past events. Charanne, supra note 11, para. 548.

70 See supra, Section 4, para. 4; see supra note 62.

71 Although redundant, ‘for greater certainty’, ‘the mere fact that a Party regulates, including through a modification to its laws, in a manner which negatively affects an investment or interferes with an investor’s expectations, including its expectations of profits, does not amount to a breach of an obligation under this Section’ is explicitly contemplated by the EU-Canada CETA. Art. 8.9 (Investment and Regulatory Measures), para. 2.

72 Blusun, supra note 5, paras. 342, 364.

73 The European Court of Justice held that, in the absence of an overriding public interest, the Commission infringed on a superior rule of law by failing to couple the repeal of a set of rules with transitional measures for the protection of the expectations a trader might legitimately have derived from the Community rules. See Judgment of the Court (Second Chamber) of 22 June 2006. Kingdom of Belgium (C-182/03) and Forum 187 ASBL (C-217/03) v. Commission of the European Communities. Joined cases C-182/03 and C-217/03. Reports of Cases, 2006 I-05479, paras. 147–9. On the contrary, the system of adjustment of monetary compensatory amounts is intended to prevent speculation and abuse which might occur during the period between the discussions within the Council, and the date when the new representative rates take effect. It is therefore consistent with the objective pursued to choose the date on which the Council’s intention to alter the representative rates was made public as the date to be taken into consideration for the adjustment of amounts fixed in advance. Judgment of the Court (Fifth Chamber) of 21 April 1988. Fratelli Pardini SpA v. Ministero del Commercio con l’Estero and Banca Toscana. Case 338/85, Reports of Cases 1988 02041, para. 24. For an analysis of the relevant European Court of Justice case law, see Lorello, L., La tutela del legittimo affidamento tra diritto interno e diritto comunitario (1998), 153–214Google Scholar; Bastianon, S., La tutela del legittimo affidamento nel diritto dell’Unione Europea (2012), 89–96Google Scholar.

74 Total S.A., supra note 13, para. 122.

75 Ibid., para. 333.

76 In arbitral practice this criterion is followed, even if not univocally, in the calculation of damages: ‘it is only to the extent that the modifications would have exceeded the limits of what is reasonable that compensation would be due and should be calculated’. RREEF Infrastructure (G.P.) Limited and RREEF, supra note 10, paras. 515, 517.

77 For a detailed survey of that Italian regulatory change see Cirimbilla, V. and Scappini, L., ‘Quale futuro per gli investimenti nel settore fotovoltaico alla luce del D.Lgs. n. 28/2011?’, (2011) Il Fisco 2340–4Google Scholar.

78 The described regulatory change triggered the Blusun arbitration, supra note 5.

79 In his dissenting opinion on the Charanne case, Arbitrator Tawil finds that legitimate expectations can also derive from a host state’s legal regime in force at the time of the investment. Dissenting Opinion of Arbitrator Tawil in Charanne, supra note 11, paras. 5, 12.

80 ‘Fair and equitable treatment is an absolute standard that provides a fixed reference point.’ Schreuer, supra note 8, at 367. This, of course, unless the contrary is established in the treaty concerned. See, as an example, the already recalled Investment Agreement for the Common Market for Eastern and Southern Africa Common Investment Area, which allows an element of flexibility in the interpretation of the FET standard based on the level of development of the host state.

81 Potestà, supra note 30, at 118. In similar terms, T. W. Wälde maintains that a differentiated approach would draw support from the recognition in other international legal instruments (the WTO, environmental treaties) that developing countries require a differentiated set of legal obligations reflecting their particular level of development. Wälde, T. W., ‘Energy Charter Treaty-Based Investment Arbitration: Controversial Issues’, (2004) Journal of World Investment & Trade 386Google Scholar. This supporting argument is nonetheless quite peculiar because an international instrument cannot be used to interpret a treaty except in case the stringent requirements contemplated by Art. 31 of the Vienna Convention on the Law of Treaties are met, which is certainly excluded for the international instruments recalled by the author. It is true that Art. 31, para. 3(c) obliges to take into account for interpretative purposes, together with the context, ‘any relevant rules of international law applicable in the relations between the Parties’. But even admitting that environmental treaties sometimes contain differentiated sets of obligations depending on the level of development of state parties, and assuming that such rules are applicable between the parties to an investment treaty, they are not relevant, and can thus not be used in order to interpret such investment treaty.

82 One author has rightly questioned whether taking into account these variables (the investor’s expectations or the level of the development of the host state) might undermine one of the most basic premises underlying FET, i.e., its absolute (non-relative) nature. See Kinnear, M., ‘The Continuing Development of the Fair and Equitable Treatment Standard’, in Bjorklund, A. K., Laird, I. A. and Ripinsky, S. (eds.), Investment Treaty Law: Current Issues (2009), 236Google Scholar.

83 Wälde, supra note 29, at 220.