Judicial Acts and Investment Treaty Arbitration

By Berk Demirkol

Cambridge University Press, January 2018; 290 pages; ISBN: 978-1-107-19846-3

The ICC Institute of World Business Law, created over 35 years ago, acts as a think-tank and works closely with the ICC International Court of Arbitration. The Institute is composed of 39 Council members of 19 countries, all experienced professionals or academics in international business law or international commercial arbitration, as well as more than 180 members from around the world. It provides research, training and information to the legal profession concerned with the development of international business law. In line with its philosophy of excellence, it proposes publications, trainings and conferences on different topics related to international business law.¹

On 1 December 2017, in Paris, the ICC Institute Prize of World Business Law was awarded to this doctoral thesis – prior to its publication – on Judicial Acts and Investment Treaty Arbitration.²

The author, Berk Demirkol, is a lawyer specialised in international and investment arbitration law and lecturer at the University of Galatasaray in Turkey.

The subject of States’ international responsibility for wrongful judicial acts is traditionally examined on the assumption that the typical judicial misconduct for which a State responds is a ‘denial of justice’, in its various forms.

However, as the last decade of decisions by investment tribunals show, international law has recently developed the notion of ‘wrongful act’ committed by a national court and attributable to the State. The notion now comprises all kinds of decisions, judgments and other acts of domestic courts, including their failure to act properly in the course of the adjudicatory process of a dispute. This includes any form of miscarriage of justice, such as: (i) dilatory tactics, (ii) abusive failure to take decisions, (iii) decisions with effect of expropriating the investor's assets and rights, (iv) the refusal to afford the investor the ‘effective means’ to protect its rights, (v) judicial behaviours in breach of the duty of fair and equitable treatment (‘FET’), (vi) discriminatory measures; or (vii) an abuse in the exercise of judicial functions.

These are precisely the categories of judicial conduct that the author has studied in depth.

Whereas classic examples of denial of justice have already been studied extensively, this book focuses on the most recent international jurisprudence, which testifies of the new forms of judicial misbehaviour that amount to an international illicit conduct, thereby engaging the responsibility of the State.

As experienced international lawyers may well understand, the topic is not an easy one. Suffice it to consider how many years were needed for the International Law Commission of the United Nations (‘ILC’) to prepare a full report on State responsibility.³

The comprehensive and erudite manner by which the author handles the vast and complex subject matter shows, in our opinion, the author's full maturity and familiarity with the issue at hand.

The book commences with an introduction on international state responsibility for wrongful judicial acts and identifies two main categories of wrongful judicial acts: 1) denial of justice, and 2) breaches of other international obligations in the exercise of judicial functions.

Part of the research is devoted to the classic international law rule requiring the ‘exhaustion of local remedies’ before suing a State for wrongful judicial actions. The requirement to exhaust local remedies is generally viewed as a procedural requirement, but is widely accepted as a substantive requirement within allegations of denial of justice.

The author addresses this issue in light of the most important and recent decisions. The author first analyses the threshold tests which relate to the maturity of the misconduct and which include ‘rigorousness (severity), endurance (continuity), determinacy (finality) and efficacy (influence)’ of the wrongful conduct.⁴ He then draws a distinction between the completeness of the breach as an issue of substance and as a matter of exhaustion of local remedies. The author concludes that the latter rule is not a procedural condition but a substantive requirement in investment treaty arbitration.

However, the most significant contribution of the book to the development of international law, including business and investment law, is the number and relevance of the cases discussed by the author and on the basis of which he progressively clarifies the state of the law on wrongful judicial acts. The author provides a thoughtful and comprehensive analysis of an extensive list of cases, including landmark decisions in investment disputes, including Chevron v. Ecuador II, ATA v. Jordan, Saipem v. Bangladesh, White Industries v. India, Duke Energy v. Ecuador, Occidental v. Ecuador, Qasar de Valores v. Russia, and Víctor Pey Casado v. Chile, to name a few. These are all cases in which a State was sued by a foreign investor before an investment tribunal on the allegation that the domestic courts had breached, through different types of judicial misconducts and improprieties, the international law duties incumbent upon the State. The author examines and comments on each decision by critically assessing the approach and the reasoning of the tribunals, sometimes agreeing and sometimes disagreeing with the tribunals' conclusions, but at all times offering his own insightful views. The author expresses fresh ideas and puts forward sound ground arguments which provide an invaluable insight.

The book also examines the supervisory function of domestic courts over international commercial arbitration. This is followed by a brief review of coercive measures of the judiciary against the investor.

The Institute Prize Jury, assessed the thesis in terms of the following criteria: innovative approach, structure and coherence of the outline, adequacy of the research and coverage, critical assessment, contribution towards progress of the law, use of authorities and sources, writing excellence, and interest of the subject matter for international law practitioners. This assessment and resulting award are therefore proof of the quality, value and prospective impact of this book in the field of international investment law; we highly recommend it to both academics and practitioners.⁵

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