Legitimate Expectations and Political Risk: Lessons from Investment Arbitration for Energy Investors

摘要

Energy investors are exposed to a number of risks, not least political risk, i.e. the risk associated with change of the legal and regulatory regime by host states. In claims brought by foreign investors for violation of investors' legitimate expectations under the FET standard of investment treaties, the recent trend by investment tribunals emphasising the evolution of the laws of host states, while also underlying the need for stabilisation clauses in investment contracts, underscores the importance of incorporating these clauses early at the contract negotiation stage of energy investment contracts, if the impact of political risk is to be mitigated effectively.