When does a violation of the domestic law of the host state amount to a violation of a public international law principle in determining protection of investors' claims? - Chapter 1 - Energy Dispute Resolution: Investment Protection, Transit and the Energy Charter Treaty
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Virginie A. Colaiuta is a Partner with Pinsent Masons LLP in London. Ms. Colaiuta’s areas of concentration include International arbitration and litigation in energy and construction disputes. She has represented private and state companies in arbitration proceedings under the ICC, SCC, UNCITRAL and ICSID Rules and on the basis of bilateral investment treaties and the Energy Charter Treaty. She has also represented clients in judicial proceedings before French national courts.
WHEN DOES A VIOLATION OF THE DOMESTIC LAW OF THE HOST STATE AMOUNT TO A VIOLATION OF A PUBLIC INTERNATIONAL LAW PRINCIPLE IN DETERMINING PROTECTION OF INVESTORS’ CLAIMS?
This article will examine the extent to which an investment claim made in arbitration proceedings commenced on the basis of a bilateral or multilateral investment treaty may be challenged on the ground that the acquisition of the investment was tainted by illegality or bad faith.
In order to determine the relevance of the illegality of foreign investments, we will analyse the definition of foreign investments adopted by bilateral or multilateral investment treaties.
For our analysis, we will distinguish the hypothesis of Section (1), where the treaty explicitly refers to the law of the host State in defining protected investments, from that of Section (2) where the treaty does not contain a legality requirement in defining investments.
Such analysis will allow us to conclude in Section (3) below that only violations of domestic laws of the Host State, which amount to a violation of a public international law principle may affect the determination of protection of investors’ claims.