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M. Gavin Dingley

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Estoppel

I. Definition

1.

An estoppel is a legal doctrine that prevents a party from relying upon certain legal rights or facts where such reliance may be unconscionable.1 It is a flexible doctrine, both in terms of the circumstances, which may fall within its purview, and the breadth of relief a tribunal or court may award to satisfy any equity that might arise.

2.

It has been given wide international recognition2 and its principles are similarly applicable in the realm of international law where it is considered that sovereign States and private parties ought to be consistent in their attitude to a given factual or legal situation irrespective of its truth.3

II. Origins of the concept and distinction with other notions

3.

Historically, the principle of estoppel was borne out of a common law desire to prevent an unjust departure by a party from an assumption adopted by another as the basis of some act or omission which, unless the assumption is adopted, would operate to that party’s detriment.4 "Whether a departure by a party from the assumption should be considered unjust and inadmissible depends on the part taken by him in occasioning its adoption by the other party."5

4.

In the context of investment arbitration, scholars and tribunals have both underlined the relationship entertained by the principle of estoppel with other notions of international law and standards of treatment. Links between the notions of estoppel and legitimate expectations have been underlined.6 Similarly, it has been implied that claims under the doctrine of estoppel could overlap with those raised under the standard of fair and equitable treatment.7 

5.

Estoppel is to be distinguished from the doctrine of collateral estoppel, similarly derived from common law.8 Collateral estoppel, while associated with the notion of res judicata,9 prevents parties from litigating an issue already effectively decided in a previous proceeding.10 (See further res judicata

III. Context of application of the concept by tribunals

6.

An estoppel may arise when a dispute involves one of the parties making some form of representation by words or by conduct acknowledging a state of affairs. The party is thereby precluded (or “estopped”) from asserting that the opposite position was true in law or in fact, whether or not it actually was.

7.

Similarly, in the international investment law context, estoppel could be characterised as a legal response to prevent inconsistent behaviour,11 but not to create rights.12 It is recognized under international law through four doctrinal concepts: recognition, acquiescence, waiver and estoppel.13 These are rooted in the concept of good faith.14 The interferences between the two notions (estoppel and bona fide) have led to the clear finding that the party against whom estoppel is raised ought to have acted in bad faith for the doctrine to apply.15 

IV. Jurisdiction and admissibility

8.

Whether estoppel is a question of jurisdiction, admissibility or merits is unsettled,16 as it depends on whether the defence is raised as a preliminary issue or as an issue of substantive rights.17

9.

In cases where parties relied on estoppel to bar or enlarge the tribunal’s jurisdiction, it was dealt with as a jurisdictional question.18 For instance, tribunals barred parties from bringing jurisdictional objections where they asserted throughout the proceedings that they would refrain from doing so.19 Tribunals also refused to allow estoppel to create jurisdiction,20 particularly where the requirements of article 25 of the Washington Convention were not met.21

10.

Similarly, where the defence was raised as an inadmissibility argument, it was dealt with as such.22

11.

Some tribunals have decided to consider an estoppel defence – even raised as a preliminary issue – as part of the merits, where the argument requires looking at evidence.23

V. Burden and standard of proof

12.

The burden of proving that the requirements for estoppel are met lies on the party raising the defence.24 The standard of proof is high.25 

VI. Conditions for estoppel

13.

There is a debate on whether a “strict” or “broad” approach is more appropriate to apply the doctrine of estoppel.26

A. The "strict view"

14.

The “strict view” purports that an estoppel arises where:27

  1. One party makes a clear and unambiguous statement,28 which can take various forms.29 However, for a party’s conduct to give rise to an estoppel defence, the said conduct must be unequivocal30 but not necessarily wrongful or illegal.31 Tribunals have been reluctant to take into consideration conduct arising during the arbitral proceedings, in the context of negotiations,32 or as part of an argumentation.33
  2. The statement is made voluntarily, unconditionally and is duly authorised by the maker.34
  3. The party in receipt of the said statement thereafter relies in good faith upon that statement to its detriment or to the advantage of the party making the representation.35 
15.

Although less frequently, it has also been recognized that the estopped party must have had full knowledge of the material facts existing at the time of his statement or conduct relevant for the purposes of estoppel, for the doctrine to apply.36

16.

One of the first expressions of the doctrine of estoppel can be found in early ICSID cases such as Amco v Indonesia37 which adopted this strict approach. Subsequently, it has been largely premised upon tribunals’ application of the issue.38 This is also the prevailing view in public international law.39

B. The "broad view"

18.

The bona fide criterion have also been disregarded by the International Court of Justice as well as public international law scholars.40 

18.

The “broad view” is largely founded upon the same framework although dispenses with the additional requirement of reliance by a party to its detriment.

19.

It has been argued that the “broad view” should be adopted because inconsistent behaviour is not to be tolerated and a “State [or party] cannot adopt inconsistent positions in respect of the same state of facts”.41 It has also been argued that the “broad view” encompasses public international law’s recognition of general conceptions of fairness42 and good faith.43 However, it remains that the “broad view” is not the prevailing position. The estoppel doctrine has always required some form of adherence to a particular framework and detriment of some description.

V. Conclusion

20.

In comparison to common law gestations of estoppel, the international law version of the doctrine is sometimes considered to be imprecise and variable. Additionally, while most tribunals have adopted the “strict view” approach, a few others have endorsed the “broad view” without citing any authority.44

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