Die ‚Corruption Defence‘ des Gaststaats in internationalen Investitionsschiedsverfahren

2021 ◽  
Author(s):  
Alexander Bothe
Keyword(s):  
Zero Tolerance ◽  
International Investment ◽  
Supply Side ◽  
Demand Side ◽  
Government Officials ◽  
Host State ◽  
Tolerance Strategy ◽  
Investment Arbitration ◽  
Legal Consequences

The study examines the legal consequences in the context of international investment arbitration proceedings if it is proven that the investment at issue was procured by corruption. The study critically examines the prevailing zero tolerance strategy of arbitral tribunals, according to which claims in connection with corrupt investments will always be dismissed. The author argues for the admissibility of claims in corruption cases in order to enable arbitrators to render awards that not only take account of the supply side of corruption but also of the demand side on the part of government officials of the host state.

scholarly journals Promises Unfulfilled: How Investment Arbitration Tribunals Mishandle Corruption Claims and Undermine International Development

2019 ◽  
pp. 117-147
Author(s):  
Andrew Bulovsky
Keyword(s):  
International Development ◽  
International Investment ◽  
International Treaties ◽  
Host State ◽  
Perverse Incentive ◽  
Investment Arbitration ◽  
Private Investments ◽  
The Cost

In recent years, the investment-arbitration and anti-corruption regimes have been in tension. Investment tribunals have jurisdiction to arbitrate disputes between investors and host states under international treaties that provide substantive protections for private investments. But these tribunals will typically decline to exercise jurisdiction over a dispute if the host state asserts that corruption tainted the investment. When tribunals close their doors to ag-grieved investors, tribunals increase the risks for investors and thus raise the cost of international investment. At the same time, the decision to decline jurisdiction creates a perverse incentive for host states to turn a blind eye to corruption. Together, these distorted incentives hinder developmental goals and undermine the fight against corruption. To correct these problems, this Note proposes a framework to guide arbitral tribunals when faced with a corruption-tainted dispute. Specifically, this Note argues that when both parties participate in corruption, arbitral tribunals should invoke equitable estoppel to accept jurisdiction over the dispute. When considering the corruption claims, investment tribunals should use a contributory-fault approach that evaluates each party’s role in the corrupt act to determine the final award. This framework not only helps align the investment-arbitration and anticorruption regimes but also advances developmental objectives.

scholarly journals Re-thinking the requirement of making an investment in accordance with domestic laws as a substantive right and a cause of action for host states under the BITs

Iuris Dictio ◽  
2018 ◽  
Author(s):  
Félix Antolín Martínez
Keyword(s):  
International Investment ◽  
Host State ◽  
Investment Arbitration

This paper challenges one of the most traditional notions in international investment arbitration, which is that host states don’t have any substantive rights under the BIT’s framework. This work’s thesis is that the current BIT framework actually grants the host state a substantive right, and therefore a cause of action in the investment arbitration system. This right emanates from the requirement that the investment must be in accordance with the host state’s law. The paper explains that there’s a line of both BITs and ICSID cases that hold the requirement of compliance with the host state’s laws as autonomous, and that this autonomy imports a substantive right for the host states grounded solely in the BITs. This idea is also supported by the spirit and objectives of both the ICSID Convention and the BITs.

The over- and under-enforcement of anti-corruption law in investment disputes and international development

2020 ◽  
Vol 9 (2) ◽  
pp. 264-293
Author(s):  
Andrew T Bulovsky
Keyword(s):  
International Development ◽  
International Investment ◽  
The State ◽  
Supply Side ◽  
Demand Side ◽  
Local Courts ◽  
Multiple Jurisdictions

Since the early 2000s, anti-corruption enforcement has become increasingly entangled with international investment. This entanglement has created a paradox: the simultaneous over- and under-enforcement of anti-corruption law. Over-enforcement occurs when authorities from multiple jurisdictions subject companies to duplicative enforcement actions and disproportionate penalties for the same underlying conduct. Under-enforcement occurs when local courts and arbitral tribunals insulate the demand side of corruption from liability by failing to exercise jurisdiction over corruption-tainted disputes. Both over- and under-enforcement result in part from unilateralism, whereby States pursue their own interests at the expense of international legal objectives. The over- and under-enforcement of international anti-corruption law undermines anti-corruption law itself, makes investment riskier in developing States and inhibits developmental objectives. To correct for over-enforcement, this article proposes formal commitments from States that the State with the strongest jurisdictional ties to a corruption scandal retains investigative priority. To correct for under-enforcement, this article suggests that local courts and arbitral tribunals invoke equitable estoppel to accept jurisdiction over corruption-tainted disputes and use a contributory-fault approach to hold both the supply side and the demand side of corruption accountable. These solutions would likely prove efficacious in agreements between States and contracts between States and potential investors. Ultimately, this article frames anti-corruption enforcement trends in the context of unilateralism and discusses practicable solutions for a more proportional anti-corruption law regime.

Human Rights and International Investment Arbitration

2020 ◽  
pp. 149-185
Author(s):  
Ursula Kriebaum
Keyword(s):  
Human Rights ◽  
International Investment ◽  
Human Rights Law ◽  
Academic World ◽  
Applicable Law ◽  
Host State ◽  
Investment Protection ◽  
Investment Arbitration ◽  
Rights Issues

This chapter assesses the role of human rights in international investment arbitration. The treatment of human rights issues by investment tribunals has received increased attention in recent years, especially from the academic world. This is particularly so because tribunals have adopted varying approaches when confronted with human rights-based arguments. Some have responded in a negative way, declining to exercise jurisdiction when human rights were concerned. Others declined to discuss human rights arguments, noting that investment protection provisions were more favourable to investors than human rights law. Others applied human rights law where it composed part of the applicable law by virtue of the host State being a party to a human rights treaty. And some, when interpreting investment protection treaties, drew inspiration from approaches used by human rights courts, despite the decisive human rights treaty not being in force in the host state in the case at hand. The chapter then reflects upon the requirements for the application of human rights law in investment disputes.

International Investment Arbitration and Corruption Claims: An Analysis of World Duty Free v. Kenya

2011 ◽  
Vol 4 (3) ◽  
Author(s):  
Ibironke T. Odumosu
Keyword(s):  
Foreign Investment ◽  
International Investment ◽  
Political Climate ◽  
Public Officials ◽  
Foreign Investors ◽  
Host State ◽  
Investment Arbitration ◽  
Public Nature ◽  
The World ◽  
The Republic

In some recent investment arbitration cases, tribunals have been presented with facts that suggest that foreign investors and public officials in the host state have engaged in corrupt practices. In its analysis of the extension of the anti-corruption campaign to investment arbitration, this article examines the legal measures adopted to combat corruption before investor-state arbitral tribunals in light of a study of World Duty Free Co. Ltd. v. The Republic of Kenya. An examination of the background to the World Duty Free v. Kenya dispute, the broader circumstances that surrounded the dispute, and Kenya’s political climate that was not within the tribunal’s purview, demonstrate that investment arbitration tribunals are not sufficiently equipped to exhaustively tackle corruption. Given the intricate political and public nature of corruption, responses to foreign investment-related corruption also have to be multi-faceted.

scholarly journals To Settle or to Fight to the End? Case-level Determinants of Early Settlement of Investor-State Disputes

2020 ◽  
Vol 0 (0) ◽  
Author(s):  
Duy Vu
Keyword(s):  
Dispute Resolution ◽  
International Investment ◽  
Third Party ◽  
Host State ◽  
Investment Arbitration ◽  
Legal Literature ◽  
Early Settlement ◽  
Regulatory Measures ◽  
Dispute Resolution Mechanism ◽  
Third Party Dispute Resolution

AbstractInternational investment arbitration is a third-party dispute resolution mechanism aimed mainly at depoliticizing investment disputes and maintaining efficient investment flows among countries. Almost one-third of treaty-based investor-state disputes brought before this system are settled before the tribunal’s final ruling. Given the classical “Against Settlement” debate in the legal literature, we build an original database of treaty-based arbitrations from 1996 to 2016 to empirically test the determinants of early settlement. We find that the probability of settlement increases if the host state has no experience of resolving those kinds of disputes but decrease if it anticipates a favorable outcome. The nature of the regulatory measures applied by the host state and the identity of foreign investors are additional important determinants of settlement. Interestingly, we find strong evidence of a Dutch effect in dispute resolution.

scholarly journals ‘The Making of an Investment’ in the Context of the Temporal Scope of Investment Treaty Protection. Does the Indian Metals & Ferro Alloys Ltd v. Republic of Indonesia Award of 29 March 2019 Constitute a Breakthrough?

2021 ◽  
Vol 10 (1) ◽  
pp. 9-42
Author(s):  
Michał Pyka
Keyword(s):  
Legal Framework ◽  
International Investment ◽  
Arbitral Tribunal ◽  
Host State ◽  
Investment Treaty ◽  
Investment Arbitration ◽  
The Future ◽  
Legitimate Expectations ◽  
Investment Treaties ◽  
Legal Character

This contribution deals with the question of the legal character of investment treaty claims, brought to international investment arbitration, when alleged breaches of investment treaty obligations towards an investor occurred after the entry into force of an investment treaty but before the making of an investment by an investor. The analysis of the existing legal framework allows for the conclusion that the said acts of a host state are generally excluded from the scope of investment treaty protection. An arbitral tribunal neither has jurisdiction over these acts nor is it allowed to apply substantive treaty provisions thereto. This conclusion stems from the principle of intertemporal law and numerous provisions of investment treaties constituting the implementation or modification of this principle. Nevertheless, an arbitral tribunal is not fully deprived of the possibility of considering the acts of a host state preceding the making of an investmentand undertaken before any activity of the future investor took place. It can consider them as evidence of the intent of a host state, acts creating legitimate expectations of an investor or acts constituting elements of what is termed a continuing act.

Adverse Inferences and Penalty Default Rules in International Investment Arbitration: A Policy Approach to the Production of Evidence

2019 ◽  
Vol 10 (3) ◽  
pp. 423-442
Author(s):  
Aikaterini Florou
Keyword(s):  
Dispute Settlement ◽  
Transaction Cost Economics ◽  
International Investment ◽  
Necessary Condition ◽  
Investment Arbitration ◽  
Valuable Complement ◽  
Default Rules ◽  
Material Information ◽  
Material Evidence ◽  
Legal Consequences

Abstract Investor-state dispute settlement relies heavily on the production of evidence. Evidence is certainly a necessary condition for a fair trial, but is it sufficient? Instances of ‘guerrilla tactics’ and non-substantiated claims are increasingly common. In a world of costly litigation, the availability of appropriate and reliable evidence is crucial for avoiding accusations of ideologically-driven decisions and achieving a ‘fair and equitable’ resolution of a dispute. Against this background, the present article uses an interdisciplinary analysis drawn from contract theory and transaction cost economics to explore the potential of two evidentiary tools for the disclosure of material information: adverse inferences and penalty default rules. The article shows that penalty default rules can be a valuable complement to adverse inferences, as they allow for the strategic interpretation of inherently incomplete treaty standards, thus attaching concrete legal consequences to the denial of a party to disclose material evidence to the tribunal.

Apportioning Fault for Performance Corruption in Investment Arbitration

2021 ◽  
Author(s):  
Diana A A Reisman
Keyword(s):  
International Investment ◽  
The State ◽  
Government Official ◽  
Foreign Investor ◽  
Host State ◽  
Investment Arbitration ◽  
Three Factor

Abstract International investment tribunals are frequently presented with the host state’s allegation that the foreign investor bribed a government official. In most of the disputes to date, the state portrays itself as victim and the corrupt act is alleged to have occurred during the making of the initial investment. If bribery is proved, the case is terminated without going into the merits. However, in a growing number of cases, corruption is alleged to have occurred during performance of the investment. If it is proved and whether or not an element of coercion on the part of the host state is proved, the tribunal is confronted with the question of whether the corruption automatically terminates the case, or whether the facts warrant the apportionment of fault and the determination of damages accordingly. When presented with an act of performance corruption, this Article asks if and how a tribunal should apportion fault between the host state and the foreign investor. The Article proposes that the State and the investor share the fault. An equitable outcome—and one that deters and reduces the occurrence of corruption—must sanction and disincentivize both parties to the corrupt act. This Article advocates for the contributory fault approach to performance corruption and proposes a three-factor test by which a tribunal may assess fault and apportion damages.

Jurisdiction and Admissibility in International Investment Law

2017 ◽  
Vol 16 (1) ◽  
pp. 21-43 ◽  
Author(s):  
August Reinisch
Keyword(s):  
Dispute Settlement ◽  
International Investment ◽  
State Law ◽  
International Investment Law ◽  
Host State ◽  
National Courts ◽  
Investment Arbitration ◽  
Investment Law ◽  
Waiting Periods

The distinction between jurisdictional and admissibility issues in investment arbitration is becoming more and more relevant. This results from an emerging jurisprudence emphasizing that a tribunal that lacks jurisdiction will have to dismiss a case brought before it, while it has discretion whether to dismiss a claim for reasons of inadmissibility, in particular, because the latter defects may be curable. Conceptually this difference is rooted in the idea that “jurisdiction is an attribute of a tribunal and not of a claim, whereas admissibility is an attribute of a claim but not of a tribunal”,1 with the consequence that “[t]he concept of ‘admissibility’ refers to the varied reasons that a tribunal, although it has jurisdiction, may decline to hear a case or a claim.”2 This overview article will briefly outline a number of issues in regard to which investment tribunals have disagreed whether to qualify them as jurisdictional or admissibility-related. These range from so-called waiting periods, requiring investors to first seek amicable dispute settlement or to litigate before national courts, to express or implied “in accordance with host state law”-clauses. This article argues that the outcomes of many of these cases, which often appear to be inconsistent, may be explained on the basis of different conceptual qualifications as jurisdictional or admissibility-related issues.

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