Reflections on Legitimate Expectations of Foreign Investors in Ethiopia

Abstract

An investor`s legitimate expectations have emerged as an essential element of the Fair and Equitable Treatment (FET) standard in international investment. Although the principle is traditionally related to transparency, it is often considered as a further development of the concepts of stability, predictability, and consistency of the investment environment. This article investigates the extent to which Ethiopia has protected foreign investors’ legitimate expectations by focusing on the practice of Addis Ababa City vis-à-vis the legal regime. In so doing, the article brings the issue of legitimate expectations of foreign investors into the attention of policymakers so that measures that can promote legitimate expectations and thus positively impact the inflow of FDI are taken. The study was conducted based on interviews, observation and document analysis and employed qualitative method of study. The study shows that there is an arbitrary exercise of power by public officials which is against the legitimate expectations of foreign investors.