Reconstruction of the Evaluation of Legitimate Expectations within Investor–State Dispute Settlement: A Vantage Point from Fuller’s Interactional Theory

Abstract This paper addresses the persistent ambiguity in the evaluation of legitimate expectations within investor–state dispute settlement (ISDS), critically examining this through Fuller’s interactional theory. Traditional approaches fail to adequately capture the evolving socio-economic contexts and the dynamic nature of investor–state interactions. This paper introduces a novel analytical model that integrates Fuller’s principles, emphasizing continuous dialogue and mutual understanding between investors and host states. By shifting focus from static legal interpretations to interaction-based assessments, this framework provides a more equitable and context-sensitive method for adjudicating legitimate expectations. The research offers significant academic contributions by redefining the foundational principles of legitimate expectations in ISDS, highlighting the necessity of procedural fairness and shared understanding. Practically, it proposes actionable guidelines for tribunals and policymakers to enhance the legitimacy and predictability of investment arbitration. This includes revising bilateral investment treaties (BITs) for explicit policy disclosure and fostering ongoing communication between parties. The adoption of Fuller’s interactional theory in ISDS not only clarifies legal ambiguities but also promotes a more cooperative and transparent investment climate, ultimately benefiting both investors and host states.