Where Advocacy Meets Business

The Illegality Objection in Investor-State Arbitration


January 2021 — Chaffetz Lindsey partner Caline Mouawad and Jessica Beess und Chrostin of Covington have published an article entitled “The Illegality Objection in Investor-State Arbitration” in Arbitration International. While working on a case together a few years ago, Caline and Jessica noticed that much was written on corruption in investment arbitration but much less was written on other forms of illegality allegedly committed by investors who sought to avail themselves of investment treaty protection.

“We pulled from multiple sources and cases to synthesize a legal framework for the tribunal’s analysis,” Caline noted, “and this exercise sparked our idea to do a comprehensive, methodical review of investment awards that involved an illegality objection.”

“We wanted to delve into the different facets of this very rich topic,” Jessica added, “and through this process, we identified both established principles and emerging trends, as well as gaps that are yet to be filled.”

The article explores the contours of the illegality objection in investor-state arbitration, its typology, the analytical framework tribunals apply, the evolving and competing applicable legal standards, the scenarios when illegality is fatal to jurisdiction or admissibility (or not), and the relevance of the State’s conduct in perhaps overcoming that death knell. Read the full article on Arbitration International here.

Arbitration International, published by Oxford Academic, is the official journal of the London Court of International Arbitration (LCIA) and provides quarterly coverage for national and international developments in the world of arbitration.

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