Abstract

When a state imposes a tax measure, it is usual for the investor to claim that the state's tax measure violates its expectation of legal and business stability under the FET clause of an investment treaty. Legitimate expectation operates like estoppel in contract law in the sense that where a state has made an assurance to stabilise the legal and fiscal framework of an investment, either in a stabilisation clause of a state contract, law or undertaking, that assurance is state conduct that has generated the investor's reasonable expectation of legal stability. So, the state cannot resile ...