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Mr Anže Arko

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Denial of Justice in FET

I. Definition

1.

This Note focusses on denial of justice as a breach of fair and equitable treatment (FET). This should be distinguished from denial of justice under customary international law and from lack of effective means to assert claims and enforce rights (see Section III below).

2.

Denial of justice was developed as an international delict to protect foreigners against acts of the judiciary of a foreign State1 and forms part of customary international law. In the context of investment protection treaties, it is usually regarded as evidence of the FET violation.2 It is commonly understood to encompass (i) a denial of access to courts; (ii) excessive length of proceedings; (iii) serious procedural defects in proceedings (e.g. violations of equal treatment of the parties, the right to be heard) and (iv) irrational or abusive outcome going beyond mere misapplication of the law.3 It has also been applied to administrative proceedings.4

II. Treaty practice

3.

Most investment protection treaties do not specifically refer to a prohibition of denial of justice. However, it is generally accepted that the standard is encompassed by the fair and equitable treatment (FET)5 obligation and some recent treaties specifically list the denial of justice as an example of breach of the FET6 or the minimum standard of treatment (MST).7

III. Relationship to other standards of protection

4.

Some tribunals have considered that the denial of justice under the FET standard is neither broader nor narrower than the protection against denial of justice under customary international law.8 The Tribunal in Arif v Moldova emphasized that the concepts remain distinct and subject to different requirements.9

5.

The factual predicates of the denial of justice are sometimes examined in the context of other treaty standards, such as expropriation,10 prohibition of arbitrary or discriminatory measures11 and full protection and security.12 The standard of effective means to assert claims and enforce rights was considered either as a more general guarantee against a denial of justice13 or as “lex specialis”, subject to a less stringent test for a finding of a violation than it applies to a denial of justice.14 

6.

The prohibition of denial of justice encompasses Due process.15 Due process is also sometimes considered as a separate element of FET and some recent treaties list denial of justice and Due process separately as different aspects of the FET obligation (see examples in Section II above).

IV. Requirement of the exhaustion of local remedies

7.

It is generally accepted that a claim for denial of justice requires a prior exhaustion of local remedies, unless this would be evidently futile or unreasonable,16 such as when the claim relates to excessive delays in judicial proceedings17 or when there is evidence of a manifestly defective judicial or administrative system.18 Some tribunals have emphasized that the exhaustion of local remedies is a substantive, rather than a jurisdictional or an admissibility requirement.19

V. A threshold to find a violation

8.

It is generally accepted that tribunals will not act as courts of appeal when deciding on claims for denial of justice and that the standard of review is limited.20

9.

The test for establishing a denial of justice sets a high threshold,21 sometimes labelled as “a wilful disregard of due process of law, an act which shocks, or at least surprises, a sense of juridical propriety”,22 “administer[ing] justice in a seriously inadequate way”23 or “fundamentally unfair proceedings and outrageously wrong, final and binding decisions”.24 Specifically:

  1. mere error in law would not suffice to find a violation;25
  2. courts do not need to deal with every argument presented by parties to reach a conclusion;26
  3. the complexity of the case, behaviour of litigants involved, significance of interests at stake and behaviour of courts themselves are factors to be considered in the assessment whether a delay in proceedings amounts to denial of justice;27
  4. the refusal to exercise jurisdiction based on rules of immunity would not per se amount to a denial of justice.28

10.

Case law has occasionally distinguished between procedural (e.g. violation of the right to be heard, delays) and substantive denial of justice (e.g. extreme misapplication of national substantive law),29 but this division has been questioned.30 It has been argued that denial of justice is always procedural31 and that the substantive outcome of the case can be relevant as an indication of lack of due process or major procedural errors.32 

11.

Some tribunals have considered that the level of due process required in administrative proceedings is lower than in judicial proceedings.33 For example, in Thunderbird v Mexico, the fact that the disputed administrative order was signed by an official who did not attend the hearing did not constitute denial of justice, because the investor was given a full opportunity to be heard and to present evidence at the hearing.34 Apotex v United States demonstrates that the requirement of notice and hearings before the adoption of a regulatory decision may be dispensed with when a delay would pose a risk to public health and if further administrative remedies against the decision exist.35

Bibliography

Dolzer, R. and Schreuer, C., Principles of International Investment Law, Oxford University Press, 2012, pp. 154-156 and 178-182.

Douglas, Z., International Responsibility for Domestic Adjudication: Denial of Justice Deconstructed, International and Comparative Law Quarterly, Vol. 63, 2014, pp. 867-900.

Francioni, F., Access to Justice, Denial of Justice and International Investment Law, European Journal of International Law, Vol. 20, Issue 3, 2009, pp. 729–747.

Gharavi, H.G., Discord Over Judicial Expropriation, ICSID Review - Foreign Investment Law Journal, Vol. 33, Issue 2, Spring 2018, pp. 349–357.

Kriebaum, U., Investment Arbitration - Rule of Law Demands of the Domestic Judiciary (Denial of Justice, Judicial Expropriation, Effective Means), 2020.

Mourre, A. and Vagenheim, A., Some Comments on Denial of Justice in Public and Private International Law After Loewen and Saipem, in Fernández-Ballesteros, M.A., Arias, D. (eds.), Liber Amicorum Bernardo Cremades, 2010, pp. 843-866.

Paparinskis, M., Franck Charles Arif v Republic of Moldova: Courts Behaving Nicely and What to Do About It?, ICSID Review - Foreign Investment Law Journal, Vol. 31, Issue 1, 2016, pp. 122–128.

Paulsson, J., Denial of Justice in International Law, Cambridge University Press, 2005.

Sattorova, M., Denial of Justice Disguised? Investment Arbitration and the Protection of Foreign Investors from Judicial Misconduct, International and Comparative Law Quarterly, Vol. 61, 2012, pp. 223-246.

Stevens, M. and Bishop, R.D., Chapter 21: Fair and Equitable Treatment: Denial of Justice, in Kinnear, M., Fischer, G.R., et al. (eds.), Building International Investment Law: The First 50 Years of ICSID, 2015, pp. 295-306.

UNCTAD, Fair and Equitable Treatment, UNCTAD Series on Issues in International Investment Agreements II, 2012, pp. 29-31, 80-81.

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