The Tension Between Investors’ Criminal Misconduct Under Host State Law and Investment Treaty Protection: An Unsettled Challenge for Investment Arbitral Tribunals

Contemporary Asia Arbitration Journal, Vol. 14, No. 1, pp. 83-120, May 2021

38 Pages Posted: 1 Jun 2021

See all articles by Tsai-yu Lin

Tsai-yu Lin

National Taiwan University, College of Law, Taiwan

Ching-wen Hsueh

National Chengchi University (NCCU) - Department of International Business; National Chengchi University

Mao-Wei Lo

Stanford University, School of Law

Date Written: May 28, 2021

Abstract

The main focus of investment treaties is protecting investors rights and interests. With few exceptions, investment treaties fundamentally do not impose direct obligations on investors. Investor conduct is generally subject to host state laws and jurisdiction. Nevertheless, illegal conduct by an investor under host state laws, including criminal offenses, are not a purely domestic legal issue. Instead, such conduct would constitute a unique problem to be decided by an investor-state tribunal with regard to investment disputes. How the issue to be considered by the arbitral tribunal would further implicate investment treaty protection. As a result, the rights of investors afforded under investment treaties could be partially or completely nullified.

This paper focuses on investor-state tribunals’ handling of investor criminal misconduct under host state laws in the context of investment treaties. The overlap of such domestic criminal misconduct and investment treaty protection may be a particular challenge for arbitral tribunals. Applying domestic law to specific factual cases with deference to domestic judicial authority and balancing such considerations against the interests of investment treaty protection constitutes a persistent and unsettled question for tribunals. In this context, safeguarding the rights of foreign investors and enhancing procedural equality between disputing parties are major concerns.

Keywords: investor-state disputes, investor misconduct, criminal law, legality clause, general principles of law, fair and equitable treatment, counterclaims, domestic law, domestic court, burden of proof

Suggested Citation

Lin, Tsai-yu and Hsueh, Ching-wen and Hsueh, Ching-wen and Lo, Mao-Wei, The Tension Between Investors’ Criminal Misconduct Under Host State Law and Investment Treaty Protection: An Unsettled Challenge for Investment Arbitral Tribunals (May 28, 2021). Contemporary Asia Arbitration Journal, Vol. 14, No. 1, pp. 83-120, May 2021, Available at SSRN: https://ssrn.com/abstract=3855988

Tsai-yu Lin (Contact Author)

National Taiwan University, College of Law, Taiwan ( email )

Taiwan

Ching-wen Hsueh

National Chengchi University ( email )

No. 64,Sec. 2,Zhinan Rd.
Taipei City, 11605
Taiwan

National Chengchi University (NCCU) - Department of International Business ( email )

Taipei City
Taiwan

Mao-Wei Lo

Stanford University, School of Law ( email )

Stanford, CA
United States

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