INVESTOR MISCONDUCT IN INTERNATIONAL INVESTMENT ARBITRATION: CAN THE UNCLEAN HANDS DOCTRINE BE A CURE?

Abstract

The vast majority of international investment treaties enable foreign investors to bring claims against their host states without having to exhaust local remedies or to seek espousal from their home states. These international agreements form the backbone of the modern investor-state dispute settlement (ISDS) system, which has been subject to harsh criticism by states due to its chronic issues such as contentious legitimacy, inconsistency and unpredictability. Along with its structural deficiencies, asymmetries and proinvestor bias in the ISDS system have contributed to the proliferation of investor misconduct in international investment arbitration proceedings. These wrongful conducts involve not only abuse of process but also illegal conduct such as corruption and fraud. This article, in the first part, identifies the characteristics of the functional types of investor misconduct. Second part discusses the unclean hands doctrine in the context of public international law, in particular its applicability in cases involving investor misconduct.