International Court of Justice finds no principle of legitimate expectations in general international law

The International Court of Justice has issued a ruling commenting on the protection of legitimate expectations under international law, a matter frequently raised in investment treaty disputes.

In a judgment of October 1, 2018, the Court dismissed claims by the Plurinational State of Bolivia that its neighbour, the Republic of Chile, had an obligation in international law to negotiate with Bolivia on the land-locked country’s access to the Pacific Ocean.

Amongst many other arguments, Bolivia had contended that numerous statements by Chile over the years gave rise to a legitimate expectation on Bolivia’s part that Chile would restore Bolivia’s access to the sea. Instead, Bolivia said, Chile’s refusal to engage in negotiations frustrated the claimant’s legitimate expectations on this matter.

Bolivia added that the principle of legitimate expectations had been ‘widely applied by arbitral tribunals in the context of investment protection’, citing the Gold Reserve v. Venezuela tribunal’s review of various national laws and its conclusion that the principle existed in international law as well.

For its part, Chile rejected any general doctrine of legitimate expectations in international law, arguing that a state did not violate international law simply because its conduct did not meet the expectations of another state. In Chile’s view, Bolivia’s argument was simply an effort to avoid the requirement of ‘detrimental reliance’ in the concept of estoppel (also pleaded separately by Bolivia), since, for Chile, Bolivia was unable to show that it had detrimentally relied on Chile’s alleged representations.

ICJ distinguishes treaty-based discussions of legitimate expectations from general international law

The Court sided with Chile, dismissing Bolivia’s claims based on legitimate expectations. While ‘references to legitimate expectations may be found in arbitral awards concerning disputes between a foreign investor and the host State’, these awards applied ‘treaty clauses providing for fair and equitable treatment’. It did not follow from this, the Court said, that general international law contained any principle generating binding obligations arising purely from a state’s legitimate expectations.

(The Court did not comment on whether an obligation to protect the legitimate expectations of foreign investors might form part of the minimum standard of treatment in customary international law, rather than the treaty clauses that it cited.)

As we’ve reported (see here), the World Court may soon have other opportunities to comment on the fair and equitable treatment obligation, as well as other obligations commonly appearing in investment treaties. In two cases filed by the Islamic Republic of Iran against the United States of America under a 1955 Treaty of Amity, Iran has asked the Court to declare that the US has violated provisions on fair and equitable treatment, expropriation, non-discrimination, free transfers of capital and others.

The Court is scheduled to deliver a ruling on Iran’s request for provisional measures in one of those cases on October 3, 2018.