CYIL vol. 16 (2025)

CYIL 16 (2025) TRANSFORMING THE TREATIES SILENCE ON „LEGITIMATE EXPECTATIONS“… necessarily protect legitimate expectations to the extent of guaranteeing absolute stability of the commercial and legal framework. 23 For instance, in the case of Mobil Exploration and Development Inc. v. Argentine Republic , it argues that the FET standard requires good-faith, transparent, and reasonable treatment, free from arbitrariness and discrimination, but does not protect legitimate expectations to the extent of an absolute stability of the commercial and legal framework. 24 A violation of the principle of good faith can also occur even in the absence of intentional or manifestly damaging or fraudulent behavior, and that mere negligence or disregard of treaty provisions can suffice while one can imagine the opposing arguments that the principle of good faith in international law typically requires a higher threshold of proof, such as demonstrating intentional misconduct or bad faith actions by the state. 25 This is supported by the case of Frontier Petroleum Services Ltd. v. The Czech Republic , where it was argued that fair dealing, reasonableness, and fidelity are integral to the good faith exercise of public authority. 26 Is it legally permissible to argue that breaching the principle of good faith might occur without intentional or overtly damaging actions, suggesting that negligence or simple disregard for treaty provisions could suffice? While some may contend that international law traditionally demands a higher standard of proof—such as showing intentional misconduct or bad faith by a state—the case of Frontier Petroleum Services Ltd. v. The Czech Republic underscores that fairness, reasonableness, and integrity are core to exercising public authority in good faith. 27 In ELSI , the ICJ underscored the obligation of host states to treat foreign investments fairly and equitably, avoiding arbitrary or discriminatory measures. On the other hand, the Tecmed arbitral tribunal states that it would be absurd if measures later quashed by a higher authority or a superior court could, for that reason, be said to have been arbitrary in the sense of international law by referring to the decision made in the decision in ELSI and it finds that the actions by Italy could have ‘shock(ed), or at least surprise(d), a sense of juridical propriety’ regarding the requisition of Elettronica Sicula S.p.A. (ELSI) by the Italian Government. Even when the Tecmed tribunal refers to the judgement of the International Court of Justice (ICJ) in the case of Elettronica Sicula S.p.A. ( ELSI ) ( United States of America v. Italy ) 28 and its reasoning in sense that the ELSI case previously set significant legal precedent by clarifying the responsibilities and expectations concerning state behavior and investor treatment the International Court of Justice (ICJ) in the case ELSI ( United States of America v. Italy ) it explicitly addresses only the breach of specific regulations, deeming such actions unlawful, that could potentially lead to the host state’s arbitrariness. The 23 Casinos Austria International GmbH and Casinos Austria Aktiengesellschaft v. Argentine Republic , ICSID Case No. ARB/14/32, Award, 5 November 2021, paras. 210–214. 24 Mobil Exploration and Development Inc. Suc. Argentina and Mobil Argentina S.A. v. Argentine Republic , ICSID Case No. ARB/04/16, Decision on Jurisdiction and Liability, 10 April 2013, paras. 903–904. 25 Ibid. 24, paras. 901–903. 26 Frontier Petroleum Services Ltd. v. The Czech Republic , PCA Case No. 2008-09, Final Award, 12 November 2010, para. 278. 27 Frontier Petroleum Services Ltd. v. The Czech Republic , PCA Case No. 2008-09, Final Award, 12 November 2010, para. 279. 28 Elettronica Sicula S.p.A . ( ELSI ) (United States of America v. Italy ), Judgment, 19 July 1989.

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