Mapping the good faith principle in international investment arbitration: Assessment of its substantive and procedural value

Djajic Sanja

doi:10.5937/zrpfns46-3011

Abstract

International investment cases show the frequent use of good faith arguments by both investors and respondent states. These cases also illustrate how parties and tribunals tend to conceptualize the good faith principle which has become an important rule of international investment law. This article will explore recent trends in order to assess the importance of this argument for both parties and at different stages of the proceeding. This article will also provide an overview of responses given by the tribunals faced with good faith arguments. Whereas claimants have traditionally relied on this concept to argue the breach of fair and equitable treatment and legitimate expectations, recent cases such as Inceysa, Phoenix and TSA Spectrum, indicate a new defense strategy for respondent states. Given the fact that investment tribunals have shown willingness to treat the good faith principle as autonomous and as a self-standing standard, the possibilities for respondent states have increased. Respondent states can rely on good faith to deny the right of claimants to seize the tribunal (Article 41(5) of the ICSID Rules), to challenge the jurisdiction of the tribunal or admissibility, to contest the right of the claimant to have a decision in its favor, or to challenge the right to compensation.

Highlights

The principle of good faith hardly needs an introduction for international lawyers, even less so the proof of its entrenchment in international law
Respondent states can rely on good faith to deny the right of claimants to seize the tribunal (Article 41(5) of the ICSID Rules), to challenge the jurisdiction of the tribunal or admissibility, to contest the right of the claimant to have a decision in its favour, or to challenge the right to compensation
In the case that followed the ICJ took the position that good faith “is not in itself a source of obligation where none would otherwise exist.“8 according to the ICJ the good faith principle has no teeth in the absence of another valid legal obligation and cannot be treated as a self-standing clause of international law equipped with its own remedy

Summary

INTRODUCTION

The principle of good faith hardly needs an introduction for international lawyers, even less so the proof of its entrenchment in international law. When it comes to its application in the course of an arbitral proceeding several issues may arise. The principle which is strongly rooted in the international legal scholarship can sometimes be too broad or too vague to gain significant value in deciding the case. The aim of this article is to assess the substantive and procedural value of the principle of good faith and thereby to map the good faith principle in international investment arbitration

THE GOOD FAITH PRINCIPLE IN GENERAL INTERNATIONAL LAW

THE GOOD FAITH PRINCIPLE AND INTERNATIONAL INVESTMENT LAW

31 See generally

CONCLUSION