Allegations of Illegality in Investor-State Arbitration and the Presumption of Innocence
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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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Allegations of Illegality in Investor-State Arbitration and the Presumption of Innocence
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