The study clarifies how foreign investors’ legitimate expectations are interpreted in
environment-related investment disputes and what criteria are used to apply the legitimate expectations doctrine. Additionally, the study examines whether the application of legitimate expectations doctrine in environmental investment disputes differs from other disputes under international investment agreements and whether they should differ. As the protection of investor’s legitimate expectations is the product of arbitral tribunals’jurisprudence without actual textual support from the international investment agreements, the study has been conducted mainly based on the abundant case law on legitimate expectations. Although the focus is primarily on disputes with an environmental dimension,
to provide a full picture of the doctrine some of the most influential awards without any environmental aspects are analysed as well. The analysis is conducted based on three different categories of legitimate expectations; investor’s legitimate expectations that are based firstly on contractual relationship between the investor and the host state, secondly on specific representations given by the host state, and thirdly on the general legal framework.
The main conclusions of the study are that there exist significant inconsistencies in the application of the doctrine, and the outcome of a specific case depends largely on its details. Furthermore, there appears to be no differences in the application of the doctrine in environmental cases and others. Finally, the study examines briefly the future of the legitimate expectations doctrine in light of the so-called new generation investment agreements, which have stricter formulations of the FET standard compared to the older ones; despite these new agreements, the doctrine will continue to be relevant also in the future.
