Denial of Justice Claims under the Fair and Equitable Standard: Scope and Limitations

Abstract

The cause of action for denial of justice claims lies either on the procedural irregularities of a case or systematic shortcomings of the host state’s judicial system which could result in losses for the investor. The evolution of denial of justice claims began in the mid-1990s along with the rise of investor - state arbitration. Within the period of 2000 - 2019, nineteen denial of justice claims have been brought before the ICSID tribunal under the ambit of Fair and Equitable Standard (FET). Among those, the claimant was successful only in three claims. Approximately 84% of the claims were unsuccessful. This raises an interesting question to examine how the principle of denial of justice has been utilized in arbitral awards to afford protection for foreign investors under the FET standard. Pursuant to the arbitral awards analyzed for this study, key aspects that decide the scope and limitation of denial of justice claims are related to the standard to evaluate denial of justice claims, the application of the local remedy rule and the role of the arbitration tribunal.