The literal meaning of exhaustion of local remedies is the satisfaction by individuals of a requirement to resort to all available and effective local remedies that exist in a domestic legal order. This requirement has two appearances in international law and more specifically in international investment law: a procedural prerequisite prior to submitting an international claim (referred to in this note as the local remedies rule), and a substantive requirement for the completeness of the breach in the context of certain internationally wrongful acts.
II. Procedural Prerequisite (Local Remedies Rule)
A. Local remedies rule under customary international law
As envisaged in Article 14 of the International Law Commission (ILC)’s Articles on Diplomatic Protection (ADP)1 and ILC’s Commentary to ADP,2 the local remedies rule is a “rule of customary international law requiring the exhaustion of local remedies as a prerequisite for the exercise of diplomatic protection”.3 The customary international law nature of the local remedies rule has also been recognised in the judgments of the International Court of Justice in the context of diplomatic protection cases.4
B. Local remedies rule in other fields of international law
The local remedies rule does not in principle directly find application in the context of international treaties allowing individuals with direct access to international courts or tribunals. Indeed, the local remedies rule requirement was often dispensed with in the first half of the twentieth century in international mechanisms granting procedural status to individuals.5 However, similarly to ILC’s ADP, both the Convention for the Protection of Human Rights and Fundamental Freedoms, Article 35(1), and the International Covenant on Civil and Political Rights, Article 41(1)(c) require all domestic remedies to be exhausted before bringing a claim under the Convention.
C. Local remedies rule in ICSID arbitration
In investment treaty arbitration, the local remedies rule does not usually find application unless it is specifically required in the applicable international investment agreement. The Convention on the Settlement of Investment Disputes Between States and Nationals of other States, Article 26, confirms that the local remedies rule is reversed in the field of investment arbitration.
D. Local remedies rule in investment arbitration other than ICSID arbitration
III. Substantive requirement for the completeness of the breach
A. Difference between the procedural and substantive requirements
The main rationale for the procedural local remedies rule is to ensure that “the State where the violation occurred should have an opportunity to redress it by its own means, within the framework of its own domestic system”.7 Accordingly, the procedural requirement is rooted in customary international law, grounded on practical and political considerations,8 and serves simply as an established “comity” rule in public international law in favour of the host state.9 However, non-compliance with the substantive requirement to exhaust the local remedies makes an internationally wrongful act inchoate, incomplete, or “not consummated”,10 such that as a result of the failure of an element of the wrongful act there would be no breach of international law.11
B. Substantive requirement to exhaust local remedies in denial of justice claims
A number of tribunals considered exhaustion of local remedies as a substantive requirement for the occurrence of denial of justice.12 Indeed, the obligation on States under international law to protect individuals from the occurrence of denial of justice requires States “to create and maintain a system of justice”.13 For that reason, denial of justice does not occur until the entire judicial system is deemed to have failed to render justice. Accordingly, State responsibility for denial of justice would not be engaged in principle unless the judiciary has rendered its final and binding decision.14
Loewen Group, Inc. and Raymond L. Loewen v. United States of America, ICSID Case No. ARB(AF)/98/3, Award, 26 June 2003, para. 153; Jan de Nul N.V. and Dredging International N.V. v. Arab Republic of Egypt, ICSID Case No. ARB/04/13, Award, 6 November 2008, para. 260; Jan Oostergetel and Theodora Laurentius v. The Slovak Republic, Final Award, 23 April 2012, para. 225; Mr. Franck Charles Arif v. Republic of Moldova, ICSID Case No. ARB/11/23, Award, 8 April 2013, paras. 442-443; Apotex Inc. v. United States of America, ICSID Case No. UNCT/10/2, Award on Jurisdiction and Admissibility, 14 June 2013, paras. 281-282; Flughafen Zürich A.G. and Gestión e Ingenería IDC S.A. v. Bolivarian Republic of Venezuela, ICSID Case No. ARB/10/19, Award, 18 November 2014, para. 392; Corona Materials, LLC v. Dominican Republic, ICSID Case No. ARB(AF)/14/3, Award on the Respondent's expedited preliminary objections in accordance with Article 10.20.5 of the DR-CAFTA, 31 May 2016, para. 256.
C. Substantive requirement to exhaust local remedies in claims asserting the breach of the effective means standard
An analysis of the case law on the effective means standard suggests that tribunals are divided as to whether the effective means standard corresponds completely to the protection against denial of justice,15 or alternatively, whether it affords a broader protection than the customary international law obligation to provide a functioning system of justice.16 The investment tribunal in Chevron v Ecuador I distinguished the substantive requirement to exhaust local remedies for a breach of the effective means standard to be completed, from the strict prior exhaustion requirement applied to denial of justice. The Tribunal stated that the former is a “qualified” requirement of exhaustion of local remedies.17 This approach is followed by the Tribunal in White Industries v India.18
Amerasinghe, C. F., Local Remedies in International Law, Second ed., 2004
Cançado Trindade, A.A., Exhaustion of Local Remedies in International Law Experiments Granting Procedural Status to Individuals in the First Half of the Twentieth Century, Netherlands International Law Review, 1977, pp. 373-392
Cançado Trindade, A.A., Denial of Justice and its Relationship to Exhaustion of Local Remedies, Philippine Law Journal, 1978, p. 404
Cançado Trindade, A.A. The Application of the Rule of Exhaustion of Local Remedies in International Law: Its Rationale in the International Protection of Individual Rights, 1983
Fawcett, J.E.S., The Exhaustion of Local Remedies: Substance or Procedure?, British Year Book of International Law, 1954, p. 452
Paulsson, J., Denial of Justice in International Law, 2005