Emerging Practices of International Investment Arbitration Tribunals in Adjudicating Illegal Investments: Analyzing Selected Cases
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Date
2015-10
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Addis Ababa
Abstract
There is support in the investmel1l treaty cases for the proposition that the lawfulness of the
investment is a condition precedent for the conferral of adjudicative power upon tribunals or
for the availability of substantive protections at the merit phase.
This plea of legality is
justified by reference to arguments either: (i) an express provision of the treaty requires that
lawjii/ness of the investment; or (ii) the notion that investment treaties should give effect to
general principles of laws such as good faith or the maxim that a ciaimal1l should not be able
to profit from its own wrongs. However, in effect, the decision on when to address the plea of
illegal investmel1l has proved to have shown potentially significal1l consequences for the
respondent, the claimant and for the general outcomes of investment arbitrations. In this vein,
many legal scholars who have studied the trend of this discourse seemed to have supported
the idea that when an express provision of the applicable treaty requires the lawjitlness of the
invesll17ent, the tribunal must consider the plea of illegal investment as jurisdictional question.
Conversely, where there is no an express provision of the applicable treaty requires the
lawfii/ness of the investment, tribunals must consider the mailer as regards the merit of the
dispute either to affect the substantive protection or the amount of compensation due. This
thesis, however, defended that such conclusions are not amenable to be a consistent broad-
spectrum and unified interpretation as can be evidenced by examination of more inclusive
authoritative international investment cases, which instead proposed that adjudication to bemade by giving significant emphasis to the specificity of a given qualification in the lIA,
and/or of the circumstances of the aClllal case.