Unclean hands

The "unclean hands", or alternatively the "dirty hands"¹ or "clean hands"² doctrine provides that a court will not lend its aid if a claimant's cause of action is based on an unlawful act.³ It is derived from the English courts of equity⁴ and then developed in the Anglo-American legal tradition.⁵ As at today, it is found in most, if not all, legal traditions.⁶

There is no generally accepted definition of this doctrine in international law and its status as a principle of international law remains debated.⁷ This is due to different types of circumstances in which this doctrine has been used in practice, the varying nomenclature given to the underlying concept, the lack of consensus regarding the source of the obligation and the different consequences of having “unclean hands”.

The source of the obligation can be traced to general principles of law or public policy, either international or transnational.⁸ However, other tribunals take an opposite view.⁹

Some tribunals consider the principle as part of the applicable law¹⁰ or treaty.¹¹

However, due to the controversy surrounding the doctrine’s nature, some courts and tribunals prefer avoiding the question altogether, basing their reasoning on the special provisions of the applicable law.¹²

Tribunals and courts have noted that this doctrine is to the “good faith” of the parties.¹³

Tribunals¹⁴ and parties¹⁵ have also associated the unclean hands doctrine to Latin maxims reflecting equitable principles and good faith, such as nemo auditur propriam turpitudinem allegans, ex iniuria ius non oritur, or ex dolo malo non oritur action.

Certain decisions attempt to distinguish between the different formulations of the principle.¹⁶

Despite the lack of a singular definition, scholars have often defined the clean hands principle as a bar to claims introduced by parties involved in illegal activities.¹⁷ As such, commentators have expressed the view that the legality requirement is an expression of the clean hands doctrine.¹⁸ See further Legality of investment.

Similarly, arbitral tribunals may refer to this doctrine when dealing with the “legality requirement”,¹⁹ without explicitly distinguishing the two notions.²⁰ Some tribunals have however seemed to suggest that there is a difference.²¹

Furthermore, tribunals have considered corruption as one of the facets of the unclean hands doctrine.²²

Different tribunals have considered different factors to identify the existence of “unclean hands”.

1. Some arbitral and international tribunals require “reciprocal and ongoing violations”,²³ provided this does not contradict the purpose of the substantive obligation subject to the dispute.²⁴
2. Other arbitral and international tribunals consider that parties whose claims are founded on their own unlawful activity had “unclean hands”, holding that “an unlawful act cannot be the basis of an action at law”.²⁵
3. It has sometimes been required that the investor deceive the State²⁶ or violate fundamental principles of the States’ legal order²⁷ for the doctrine to apply.
4. Alternatively, claimants may be considered to have “unclean hands” when they provoked the breach for which they are seeking reparations,²⁸ irrespective of the illegal nature of claimant’s original actions.²⁹ However, a causal link between the two actions is not always required. Any unlawful conduct related to the subject matter of the dispute could make the claimant’s hands unclean per se, or as a component of equity.³⁰ Tribunals have required varying degrees of proximity to the dispute in question,³¹ and gravity.³²

Other decisions avoid naming the principle, referring instead to the notions of contributory fault,³³ “equity”,³⁴ “proper administration of justice” or international public policy.³⁵

Having “unclean hands” can influence an adjudicative body's jurisdiction,³⁶ a claim’s admissibility,³⁷ the substantive solution of the dispute³⁸ and any post-award proceedings.

As to jurisdiction, tribunals have found that a claimant’s unclean hands can deprive them of their competence to rule on a legal dispute.³⁹

As to the inadmissibility of claims invoked by respondent States,⁴⁰ tribunals have considered that, although competent, claimant’s actions barred it from requesting a legal remedy.⁴¹ However, tribunals have required that such objections be timely.⁴²

Other tribunals have considered that claimant’s actions do not bar its legal action, nor deprive the tribunal of their competence to rule, but affected the substantive solution,⁴³ including the way damages are accorded.⁴⁴

Finally, with regards to post-award remedies, unclean hands would bar a party from demanding the stay or continued stay of enforcement of an award.⁴⁵ See further Stay of enforcement of ICSID awards and Stay of enforcement of non-ICSID awards.

Born, G., International Commercial Arbitration, Vol. I, 2009, p. 411-516.

Brekoulakis, S., Law Applicable to Arbitrability: Revisiting the Revisited Lex Fori, Kluwer, 2009, p. 99-119.

Cheng, B., General Principles of Law as Applied by International Courts and Tribunals, 2006, p. 155-158.

Crawford, J., Brownlie’s Principles of Public International Law, 8^th ed., 2012, p. 701.

Dumberry, P., State of Confusion: The Doctrine of ‘Clean Hands’ in Investment Arbitration After the Yukos Award, The Journal of World Investment & Trade, Vol. 17, 2016, p. 229-259.

Fadlallah, I., L’ordre public dans les sentences arbitrales, Collected Courses of the Hague Academy of International Law, Vol. 249, 1994.

Fitzmaurice, G., The General Principles of International Law Considered from the Standpoint of the Rule of Law, Collected Courses of the Hague Academy of International Law, Vol. 92, 1958, p. 119-165.

Fouchard, P., Gaillard, E. and Goldman, B., Traité de l’arbitrage commercial international, 1996, p. 367-369 and p. 825-840.

Halsbury's Laws of England, Vol. 47, 2014, Principles of Equitable Jurisdiction, Section 8, para. 112.

Kosheri, A.S. and Leboulanger, P., L’arbitre face à la corruption et aux traffics d’influence, Revue de l’arbitrage, 1984, p. 3.

Lagerwall, A., Le principe ex injuria jus non oritur en droit international, 2016.

Pomson, O., The Clean Hands Doctrine in the Yukos Awards: A Response to Patrick Dumberry, The Journal of World Investment & Trade, Vol. 18, 2017, p. 712-734.

Seraglini, C., Lois de police et justice arbitrale internationale, 2001.

Seraglini, C. and Ortscheidt, J., Droit de l’arbitrage interne et international, 2013, p. 535-573.