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Application of International Investment Agreements by Domestic Courts

Clinic: Graduate Institute, Spring 2011
Beneficiary: UNCTAD

Executive Summary

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This is an abstract of a Memorandum to UNCTAD by Bahakal Yimer, Nicolas Cisneros, Laura Bisiani, Rahul Donde.

This memorandum is the outcome of the research topic submitted by the United Nations Conference for Trade and Development in the framework of the Investment and Trade Law Clinic at the Graduate Institute of International and Developmental Studies. Our project, as requested by UNCTAD, was to explore whether domestic courts in various countries are in a position to apply international investment treaties. This question has to be considered in a context in which more and more states and actors are calling for an increased role of host-State courts in settling investment disputes.

Some countries have recently revised their policy relating to the conclusion of IIAs by excluding investor-State arbitration for the settlement of disputes (Australia), calling for a greater involvement of the host country domestic courts. This has occurred as an attempt to protect their public policies from investor’s claims (South Africa) or by denunciating the ICSID convention (Ecuador and Bolivia). Investors are reluctant to submit their disputes to host-State courts on the assumption that they are biased, lack expertise in the area of international investment law, or that they will only apply national laws.

In this context, this paper seeks to explore the current role and future potential of domestic courts in investment dispute resolution. Consequently, our paper has sought to identify any existing practice on international treaty application (IIA and non-investment related) by domestic courts. Where direct IIA application was not present, there was an attempt to explore the feasibility and permissibility by analyzing general direct treaty application.

In order to assess the possibility of domestic courts applying IIAs, the research has gone through the legal structure, BIT framework, and legal practice of nine countries selected to offer a diverse view at different legal regimes. Our first finding is that so far, there has been little practice in regards to application and interpretation of IIAs by domestic courts. Indeed, few countries have been faced with questions of interpretation and/or application of IIAs and their domestic court