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 the lack of effective means to assert claims and enforce rights (see Section III below).
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.2 In the context of investment protection treaties, it is usually regarded as evidence of the FET violation.3 It is commonly understood to encompass;4
II. Treaty practice
Most investment protection treaties do not specifically refer to a prohibition of denial of justice although some recent treaties specifically list denial of justice as an example of breach of the fair and equitable treatment standard.11 However, it is generally accepted that the standard is encompassed by the fair and equitable treatment (FET)12 obligation or the minimum standard of treatment (MST).13
III. Relationship to other standards of protection
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.14 The Tribunal in Arif v Moldova emphasized that the concepts remain distinct and subject to different requirements.15
The factual predicates of the denial of justice are sometimes examined in the context of other treaty standards, such as expropriation,16 prohibition of arbitrary or discriminatory measures17 and full protection and security.18 The standard of effective means to assert claims and enforce rights was considered either as a more general guarantee against a denial of justice19 or as “lex specialis”, subject to a less stringent test for a finding of a violation than it applies to a denial of justice.20
IV. Burden of proof
As a matter of standing, some tribunals have found that only an investor who was a party to the national procedure can pursue a denial of justice specific claim under customary international law, whereas indirect investors can pursue a denial of justice claim as part of the fair and equitable treatment standard.23
VI. Temporal application
Tribunals refused to find jurisdiction ratione temporis when the dispute originated before the treaty entered into force or over judicial acts occurring before that.25 However, some tribunals considered that such acts may be relevant in establishing a breach of the treaty obligation through acts continuing after the entry into force of the treaty.26
VII. Requirement of the exhaustion of local remedies
However, this precondition is not required when this would be evidently futile or unreasonable,30 such as when the claim relates to excessive delays in judicial proceedings31 or when there is evidence of a manifestly defective judicial or administrative system32 (including no available or inadequate remedy).33
VIII. Threshold applied by tribunals to find a violation
A. High threshold applied by tribunals
The test for establishing a denial of justice sets a high threshold,37 sometimes labelled as “a wilful disregard of due process of law, an act which shocks, or at least surprises, a sense of juridical propriety”,38 “administer[ing] justice in a seriously inadequate way”,39 “fundamentally unfair proceedings and outrageously wrong, final and binding decisions”,40 a fundamental “failure of a national system as a whole”41 or an “extremely gross” misconduct.42
B. Cases in which arbitral tribunals rejected denial of justice claims
Specifically, tribunals found that:
C. Cases in which arbitral tribunals accepted denial of justice claims
Tribunals found that a denial of justice could be characterized in the following situations:
IX. Distinction between procedural and substantive denial of justice
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),69 but this division has been questioned.70 It has been argued that denial of justice is always procedural71 and that the substantive outcome of the case can be relevant as an indication of lack of due process or major procedural errors.72
X. Distinction between administrative and judicial proceedings
Some tribunals have considered that the level of due process required in administrative proceedings is lower than in judicial proceedings.75 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.76 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.77
Dolzer, R. and Schreuer, C., Principles of International Investment Law, Oxford University Press, 2012, pp. 154-156 and 178-182.
Gharavi, H.G., Discord Over Judicial Expropriation, ICSID Review - Foreign Investment Law Journal, Vol. 33, Issue 2, Spring 2018, pp. 349–357.
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.
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