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Mrs. Ben Mansour Affef

Counsel & Arbitrator

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Investor Conduct

I. Difficulties in taking into account the investor's conduct


Investment treaties were designed to protect investors and their investments. It is therefore not surprising that investment protection agreements impose few, if any, explicit obligations on investors. Such agreements generally include only substantive provisions requiring host States to provide a certain standard of treatment to foreign investors and their investments. Although recent international instruments have included wordings related to Corporate Social Responsibility,1 it is still very rare that BITs or investment laws contain specific commitments for investors.2


Moreover, investment treaty arbitration is fundamentally unbalanced. In most cases, its initiation is a prerogative of the investors only.3 Notwithstanding such inherent imbalance, and despite theoretical and practical difficulties, taking into account the investors’ conduct by arbitral tribunals has helped to rebalance this dispute resolution mechanism. Investor-State arbitral tribunals have been able to achieve this result by resorting to various methods, both procedural and substantive.

II. Procedural mechanisms


In some cases, tribunals have relied on jurisdictional and admissibility grounds, as well as procedural techniques and mechanisms, to block or circumscribe the investors’ substantive claims. For instance, tribunals have invoked —abuse of process—to discourage undue manipulation of the investment and misuse of the arbitral procedure.4 International tribunals have relied on abuse of process to decline jurisdiction or declare claims inadmissible when the claimant restructured the investment after the dispute had arisen or at a time when the dispute was foreseeable.5 See further Abuse of process, Sections III, IV and V.

III. Costs and counterclaims


Ordering the investor to pay the costs of the arbitration and other costs or reducing an award of damages to penalize frivolous claims, recklessness, bad faith or inefficiency (thus unjustifiably increasing the cost of arbitration) is another technique of rebalancing the dispute settlement mechanism.6 Notably, however, the Respondent State may also be penalized for its conduct in the course of or prior to the proceedings.7 See further Allocation of costs. Furthermore, despite the mechanism’s conceptually one-sided nature, arbitral tribunals may address and allow counterclaims of the Respondent State, when applicable.8

IV. Substantive obligations of investors 


On another level, investors’ substantive obligations may be provided for either explicitly—in the relevant underlying instrument(s)9 – or implicitly, as interpreted by arbitral tribunals. Concerning the latter case, tribunals have assessed the investors’ compliance with the domestic legal framework at the time the investment was made10 and thereafter.11 Failure to observe domestic legal regime, depending on the timing and the degree of the subject violations, has led to arbitral sanctions ranging from declining jurisdiction12 to a dismissal of the claims on the merits.13 See further Legality of investment.


Investors are also required either explicitly or implicitly to act in good faith and not to engage in corruption. As such, investment tribunals have viewed corruption as a serious and dangerous phenomenon and have (consistently) penalized or refused to entertain investors’ claims in cases where corruption was established.14


Recent practice faced an increasing number of cases where investors’ conduct has caused environmental damages or violation of fundamental human and social rights of the host State population.15 Absent an express obligation in the BITs or the investment law for the investors to comply with human, social and environmental rights and/or a possibility for the host State to counterclaim (See Human rights counterclaims; Social rights; Environmental issues in ISDS), host States have referred, as a defence, to human, social and environment rights included in their domestic law (see above) or in the international treaties or conventions they are parties. While the host State’s domestic law is opposable to the investor and its investment, international treaties or conventions do not contain international obligations for non-State actors. Though more and more BITs, model BITs and investment laws include human rights, social and environmental obligations towards investors,16 the practice is not yet uniform.


El Hayek, I., La prise en compte du comportement de l’investisseur dans le cadre de l’arbitrage fondé sur les traités d’investissement, Thèse, Université Paris 1 Panthéon-Sorbonne, 2016

Brabandere (De), E., Human Rights Considerations in International Investment Arbitration, in Fitzmaurice, M. and Merkouris, P. (eds), The Interpretation and Application of the European Convention of Human Rights: Legal and Practical Implications, Leiden, Nijhoff, 2013.

Brabandere (De), E., 'Good Faith' 'Abuse of Process' and the Initiation of Investment Treaty Claims, Journal of International Dispute Settlement, Vol. 3, No. 3, 2012, pp. 609-636.

Dumberry, P. and Dumas-Aubin, G., How to Impose Human Rights Obligations on Corporations under Investment Treaties? Pragmatic Guidelines for the Amendment of BITs, Journal of World Investment and Trade 13(3), 2012, 349-372.

Peterson, L.E. and Gray, K., International Human Rights in Bilateral Investment Treaties and Investment Treaty Arbitration, Working Paper for the Swiss Ministry for Foreign Affairs, 2003, p. 16.

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Leinhardt, S., Some Thoughts on Foreign Investors’ Responsibilities to Respect Human Rights, Transnational Dispute Management, 2013

Reiner, C. and Shreuer, C., Human Rights and International Investment Arbitration, in Dupuy, P. M., Francioni, F. and Petersmann, E.U. (eds), Human Rights in International Investment Law and Arbitration, Oxford, Oxford University Press, 2009, pp. 82-96.

Brabandere (De), E., Human Rights Counterclaims in Investment Treaty Arbitration, Grotius Centre Working Paper, 2018.

Krajewski, M., Human rights in international investment law: Recent trends in arbitration and treaty making Practice, School of law, University of Erlangen-Nurnberg Germany.

Bruno, S., Foreign Investment Arbitration: A Place for Human Rights?, The International and Comparative Law Quarterly 60, 2011, pp. 573-596.

Anderson, R.J., Reimagining Human Rights Law: Toward Global Regulation of Transnational Corporations, Denver University Law Review, 2010, pp. 183-236.

Manciaux, S., Investissements étrangers et arbitrage entre États et ressortissants d‘autres États Trente années d‘activité du CIRDI, Paris, Litec, 2004, p. XIII-727

Balcerzak, F., Jurisdiction of Tribunals in Investor-State Arbitration and the Issue of Human Rights, ICSID Review – Foreign Investment Law Journal, 2014, pp. 216-230

Bjorklund, A., The Role of Counterclaims in Rebalancing Investment Law, Lewis and Clark Law Review, 2013, pp. 461-480.

Braun, T.R., Globalization-driven innovation: the investor as a partial subject in public international law: an inquiry into the nature and limits of investor rights, Jean Monnet Working Paper 04/13, New York University School of Law, 2013, p. 63.

Franck, S.D., Rationalizing Costs in Investment Treaty Arbitration, Washington University Law Review, Vol. 88, Issue 4, 2011, pp. 769-852.

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