Abstract: A sovereign debt restructuring procedure initiated by a debtor may trigger a violation of its treaty obligations under the fair and equitable treatment of an international investment agreement. In accordance with the criterion of loose judgement of the arbitral tribunal, when a host country launches a sovereign debt restructuring procedure, it may almost invariably incur international responsibility due to the breach of fair and impartial treatment. Fair and equitable treatment allows the arbitral tribunal to strike a comprehensive judicial balance between the legitimate interests of the investor and the host country. There is a possibility that the debtor might breach fair and equitable treatment, and there is also room for exemption from liability. Abaclat v. Argentina's bond holders argued that Argentina's debt restructuring was in violation of the Italian-Argentine Bilateral Investment Treaty under the fair and equitable terms of the treaty's terms and conditions. The arbitral tribunal's decision on the case will be the first to determine the responsibility of international law for the restructuring of sovereign debt.