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6 Indian J. Arb. L. 43 (2017-2018)
Allegations of Illegality in Investor-State Arbitration and the Presumption of Innocence

handle is hein.journals/ijal6 and id is 50 raw text is: 

INDIAN   JOURNAL OF ARBITRATION LAW


   ALLEGATIONS OF ILLEGALITY IN INVESTOR-STATE ARBITRATION AND THE PRESUMPTION
                                            OF  INNOCENCE
                                      Dany  Khaat  &  William Ahern

                                                Abstract
   A//egations of i/egaliy are raised relativey frequenty in investor-State arbitrations, often as efforts by respondent
   States to have claims dismissed, either for lack of jurisdiction or on the merits. On other occasions the claims of
   i//ega/iy are made against State officials, either by the State itse/f in an attempt to, for example, have a
   transaction declared void, or by the investor as part of its merits claims. These accusations of i//egality are often of a
   serious criminal nature and made where there has been no conviction, sometimes while criminalproceedings are
   ongoing. Under  international law (applicable in most investor-State disputes), however, State officials are
   prohibited from gidng the impression that they consider a person guily of a crime prior to any convction. This
   apparent conflct has been dealt with by a handful of investor-State tribunals. The prevailing rep onse has been
   that where the cause of action in the domestic proceedings (domestic criminal law) is different to that in the investor-
   State proceedings (an illegaliy clause in an investment treay, for instance), no issue arises. This article, making
   significant reference to decisions of the European Court of Human Rights, examines whether that response
   satisfactoriy disposes of the issue.

                                        I.        Introduction
   There  has been  no shortage  of instances in which  criminal proceedings  have intersected or been
   conducted   in parallel with investor-State arbitrations. Such intersections have taken many  forms.
   On   a  number   of  occasions   investors  have  sought   provisional  measures   to halt  criminal
   proceedings,  contending  that the proceedings   interfered with the arbitral proceedings  and were
   indeed  specifically motivated by them.'   Other  cases have involved  allegations by investors that
   the conduct  of  criminal proceedings  by States amounted   to  substantive breaches  of investment
   treaty standards,  such  as fair and  equitable  treatment.2 Criminal  proceedings   are also  often
   invoked  by respondent   States, either as a defence to the merits of claims or in order to deny the
   jurisdiction of an arbitral tribunal.'

   These  intersections between   criminal charges  - either against investors or State officials - and
   investor-State arbitrations, have given rise to concerns about both  the potential for the misuse of
   States' police powers  to gain tactical advantages  in proceedings'  as well as how  accusations  of
   criminal misconduct   should be  treated by investor-State arbitral tribunals. Specific questions that


   Dany  Khayat is admitted to the Paris Bar and is head of the Litigation and International Arbitration Practice of
   Mayer Brown in Paris and the co-head of the firm's Middle-East Dispute Practice. William Ahern is admitted to the
   Supreme  Court of Queensland (Australia) and the Paris Bar and is an associate in the International Arbitration
   Practice of Mayer Brown in Paris. The authors wish to thank Jose Caicedo, counsel in the International Arbitration
   Practice of Mayer Brown in Paris, for his valuable feedback and input into this article.
   See, e.g., Tokios Tokeles v. Ukraine, ICSID Case No. ARB/02/18, Procedural Order No. 3 (Jan. 18, 2005); Quiborax
   S.A., Non Metallic Minerals S.A. and Allan Fosk Kaplin v. Plurinational State of Bolivia, ICSID Case No.
   ARB/06/2,  Decision on Provisional Measures (Feb. 26, 2010).
2  See, e.g., Spyridon Roussalis v. Romania, ICSID Case No. ARB/06/1, Award (Dec. 7, 2011); Rompetrol Group N.V.
   v. Romania, ICSID Case No. ARB/06/03, Award (May 6, 2013); Hesham Talaat M. Al-Warraq v. The Republic of
   Indonesia, Final Award (Dec. 15, 2014) [hereinafter Hesham v. Indonesia].
3  See, e.g., Phoenix Action Ltd. v. The Czech Republic, ICSID Case No. ARB/06/5, Award (Apr. 15, 2009) [hereinafter
   Phoenix v. The  Czech  Republic]; Plama Consortium Limited v. Republic of Bulgaria, ICSID Case No.
   ARB/03/24,  Award  (Aug. 27, 2008); World Duty  Free Company   v. Republic of Kenya, ICSID  Case No.
   ARB/00/7,  Award (Oct. 4, 2006) [hereinafter World Duty Free Company v. Republic of Kenya].
4  Ruslan Mirzayev, International Investment Protection Regime and Criminal Investigations, 29 J. INT'L ARB. 71, 72 (2012).


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