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THE YEAR IN REVIEW

AN ANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
VOLUME 51 • NUMBER 1 • 2018

THE INTERNATIONAL LAWYER
A TRIANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
ARTICLES
Rehabilitation in Article 14 of the Convention Against

Torture and Other Cruel, Inhuman, or Degrading
T H E I N T E R N AT I O N A L L AW Y E R
Treatment or Punishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nora Sveaass,
Felice Gaer,
and Claudio Grossman
Precarious Employment? Varying Approaches to Foreign
Sovereign Immunity in Labor Disputes . . . . . . . . . . . . . . . . . . Richard Garnett
The State of Investor-State Arbitration: A Reality Check
of the Issues, Trends, and Directions in Asia-Pacific . . . . . . . . . . Julien Chaisse
and Rahul Donde
When Contractual Good Faith Meets a Controversial
M&A Issue: The Sandbagging Practice in International
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maxime Panhard
Rule of Law in the U.A.E.: The Peaceful Path to
Nation-building in Abu Dhabi and the U.A.E. Through
Global Best Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valerie J. Pelton
Protection of Regulatory Autonomy and Investor
Obligations: Latest Trends in Investment Treaty
Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Klara Polackova Van der Ploeg
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THE YEAR IN REVIEW
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BRUCE RASHKOW 2018
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PATRICIA LEE REFO 2019
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RUTH WEDGWOOD 2019
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HOUSTON PUTNAM LOWRY 2020
LINDA MURNANE 2020
RONALD J. BETTAUER 2020
VED NANDA 2020
CHANTAL-AIMEE DOERRIES 2020

THE YEAR IN REVIEW

2018 Volume 51 Number 1
CONTENTS
ARTICLES
Rehabilitation in Article 14 of the
Convention Against Torture and
Other Cruel, Inhuman, or Degrading
Treatment or Punishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nora Sveaass, 1
Felice Gaer,
Precarious Employment? Varying

Approaches to Foreign Sovereign
Immunity in Labor Disputes . . . . . . . . . . . . . . . . . . . . . . . . Richard Garnett 25
The State of Investor-State Arbitration:

A Reality Check of the Issues, Trends,
and Directions in Asia-Pacific . . . . . . . . . . . . . . . . . . . . . . . . . Julien Chaisse 47
and Rahul Donde
When Contractual Good Faith

Meets a Controversial M&A Issue:
The Sandbagging Practice in
International Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . Maxime Panhard 69
Rule of Law in the U.A.E.:

The Peaceful Path to Nation-building
in Abu Dhabi and the U.A.E.
Through Global Best Practices . . . . . . . . . . . . . . . . . . . . . Valerie J. Pelton 87
Protection of Regulatory Autonomy

and Investor Obligations:
Latest Trends in Investment
Treaty Design . . . . . . . . . . . . . . . . . . . . . . . . Klara Polackova Van der Ploeg 109

THE YEAR IN REVIEW
Rehabilitation in Article 14 of the Convention

Against Torture and Other Cruel, Inhuman, or
Degrading Treatment or Punishment
NORA SVEAASS, FELICE GAER, AND CLAUDIO GROSSMAN*
I. Introduction
Persons exposed to torture have suffered serious attacks on their lives,
relationships, health, and sense of dignity. The torture they experienced will
remain a part of them even if they manage to move ahead and work through
the pain. The destructive power of torture affects life on so many levels:
mind and body, values and relationships, and the capacity for work and
leisure. Providing opportunities to reconstruct lives after torture should be a
priority in the international effort to prevent and prohibit torture.
International recognition of the right to redress, including rehabilitation
for all victims of torture and other cruel, inhuman, or degrading treatment,
as provided in Article 14 of the Convention against Torture and Other
Cruel, Inhuman or Degrading Treatment or Punishment (CAT),1 is an
important step in countering the negative effects of torture. Recognition of
this right will shed light on the many aspects of rehabilitation and the
different initiatives that States must undertake to comply with their
obligation under Article 14. As such, the Committee Against Torture
(Committee) developed General Comment 3 (GC 3) on Article 14, which
“clarifies that the right to redress under [CAT] extends both to victims of
torture and victims of . . . ‘ill-treatment.’”2 This “reflects long-standing
* Nora Sveaass is Associate Professor at the Department of Psychology at the University of

Oslo, former member of the Committee Against Torture and current member of the
Subcommittee on Prevention of Torture, nora.sveaass@psykologi.uio.no; Felice Gaer is
Director of the Jacob Blaustein Institute for the Advancement of Human Rights of the America
Jewish Committee and current Vice-Chair of the Committee Against Torture, gaerf@ajc.org;
and Claudio Grossman is Professor of Law and Dean of American University Washington
College of Law (WCL) and the Raymond Gerald Scholar for International and Humanitarian
Law, and former chair of the Committee Against Torture, grossman@wcl.american.edu.
1. United Nations Convention Against Torture and Other Cruel, Inhuman or Degrading
Treatment or Punishment art. 14, Dec. 10, 1984, 1465 U.N.T.S. 85, available at http://
www.ohchr.org/EN/ProfessionalInterest/Pages/CAT.aspx [hereinafter CAT].
2. Felice Gaer, The Treatment of Torture Victims: What Are a Government’s Obligations? 8,
CHATHAM HOUSE (Jan. 21, 2013), https://www.chathamhouse.org/sites/files/chathamhouse/
public/Research/International%20Law/210113summary.pdf; Comm. Against Torture, Gen.
Comment No. 3: Implementation of Article 14 by States Parties, U.N. Doc. CAT/C/GC/3, at
¶ 1, (2012), available at http://www2.ohchr.org/english/bodies/cat/docs/GC/CAT-C-GC-
3_en.pdf [hereinafter GC 3].
THE YEAR IN REVIEW
2 THE INTERNATIONAL LAWYER [VOL. 51, NO. 1
committee jurisprudence, which argues, inter alia, that ill-treatment as

outlined in [A]rticle 16 also violates [CAT] and requires redress.”3 In
adopting the General Comment, the Committee constantly referenced the
United Nations Basic Principles and Guidelines on the Right to a Remedy
and Reparation for Victims of Gross Violations of International Human
Rights Law and Serious Violations of International Humanitarian Law
(Basic Principles), which “identify mechanisms, modalities, procedures and
methods for the implementation of existing legal obligations under
international human rights law and international humanitarian law . . .”4
The Basic Principles establish five forms of redress for such violations:
“restitution, compensation, rehabilitation, satisfaction and guarantees of
non-repetition.”5 Rehabilitation is defined in the Basic Principles as
including “medical and psychological care as well as legal and social
services.”6 This definition of rehabilitation may sound like a medical term
with a narrow scope, but the Committee has interpreted it to include the
many aspects involved in the reconstruction of the lives of victims of torture
and not exclusively as a medical undertaking.
Studies show that there is a wide range of reactions following torture, and
not all victims of torture need rehabilitation in the form of special care or
treatment.7 This underpins the importance of identifying individual victim’s
needs and claims. Furthermore, rehabilitation is not an action that is “done”
or “given to” someone but a series of measures that must be based on close
collaboration and planning between the person who is in need of such care
and the service provider. Giving voice to and respecting the decisions and
agency of torture survivors are vital components of a process of recovering
life and dignity. Failure to take victim participation into account in this
process not only violates important ethical principles but also risks
continued humiliation of victims of torture. The lack of specificity with
regard to rehabilitation and the lack of State engagement as to planning,
implementing, and evaluating rehabilitation programs has called for a more
in-depth approach to the obligation of States.
3. Gaer, supra note 2; see also Sonko v. Spain, Comm. Against Torture, U.N. Doc. CAT/C/
47/D/368/2008, ¶¶ 10.4, 10.8 (Feb. 20, 2012), available at http://www.worldcourts.com/cat/
eng/decisions/2011.11.25_Sonko_v_Spain.pdf; Keremedchiev v. Bulgaria, Comm. Against
Torture, U.N. Doc. CAT/C/41/D/257/2004 ¶¶ 3, 9.2, 9.3 (Nov. 21, 2008), available at http://
www.bayefsky.com/pdf/bulgaria_t5_cat_257_2004.pdf; Dzemajl v. Serbia & Montenegro,
Comm. Against Torture, U.N. Doc. CAT/C/29/D/161/2000 ¶ 9.6 (Nov. 21, 2002), available at
http://www.univie.ac.at/bimtor/dateien/cat_2002_dzemajl_vs_serbia.pdf.
4. G.A. Res. 60/147, pmbl., ¶ 7 (Dec. 16, 2005), available at http://www.ohchr.org/EN/
ProfessionalInterest/Pages/RemedyAndReparation.aspx.
5. Id. ¶ 18.
6. Id. ¶ 21.
7. Metin Basoglu, Prevention of Torture and Rehabilitation of Survivors – Review of the UN
Committee Against Torture Working Document on Article 14: Convention Against Torture and other
Cruel, Inhuman or Degrading Treatment or Punishment, MASS TRAUMA, MENTAL HEALTH &
HUMAN RIGHTS (July 29, 2011), https://metinbasoglu.wordpress.com/2011/07/29/200/.
THE YEAR IN REVIEW
2018] REHABILITATION IN ARTICLE 14 3
In the following pages, the scope of the obligation to provide

rehabilitation as a form of reparation for victims of torture in accordance
with the requirements of Article 14 of CAT will be outlined and discussed
using GC 3 as a framework or reference. The right to rehabilitation, as
defined in other international human rights documents and treaties, will also
be addressed as applicable. The right to redress under Article 14 of CAT
specifies:
Each State Party shall ensure in its legal system that the victim of an act
of torture obtains redress and has an enforceable right to fair and
adequate compensation, including the means for as full rehabilitation as
possible. In the event of the death of the victim as a result of an act of
torture, his dependents shall be entitled to compensation.8
Article 14 requires States to establish a legal provision ensuring redress for
victims of torture that includes compensation for the victims. Rehabilitation
or rehabilitative services must be provided to victims in need. Article 14
states that the means for “as full rehabilitation as possible” must be ensured.
“As full as possible” refers to possible limitations in restoring the person
after torture, not to limitations of the State party’s capacity to provide
redress.9 Redress, according to Article 14, refers to legal redress and
compensation, which may include rehabilitation of both mental and physical
health, rehabilitation in relation to training and social integration, and
economic compensation to victims.10 GC 3 emphasizes that the term
“redress” covers all five forms of reparation as outlined in the Basic
Principles.11 All such forms of redress provided by the State “must be
adequate, effective and comprehensive.”12 GC 3 further specifies that all
victims of torture have a right to obtain redress, not only to seek it.13
II. The Right to Rehabilitation Under International Law

An overview of how the right to rehabilitation has been dealt with in other
international law contexts is presented in this section. The right to
rehabilitation has been established in human rights treaties,14 General
8. CAT, supra note 1, art. 14, ¶ 1.

9. See GC 3, supra note 2, ¶ 12.
10. See id. ¶ 10.
11. See id. ¶ 6.
12. Id.
13. See id. ¶ 20.
14. United Nations International Convention for the Protection of All Persons from Enforced
Disappearance art. 24, ¶ 5, Dec. 20, 2006, 2716 U.N.T.S. 3, available at http://www.ohchr.org/
Documents/ProfessionalInterest/disappearance-convention.pdf; United Nations Convention
on the Rights of Persons with Disabilities art. 16, ¶ 4, art. 22, ¶ 2, art. 25, art. 26, ¶¶ 1-3, Dec.
13, 2006, 2515 U.N.T.S. 3, available at https://www.un.org/development/desa/disabilities/
convention-on-the-rights-of-persons-with-disabilities/convention-on-the-rights-of-persons-
with-disabilities-2.html; United Nations International Convention on the Protection of the
Rights of All Migrant Workers and Members of their Families, art. 17, ¶ 4, art. 18, ¶ 4, Dec. 18,
THE YEAR IN REVIEW
Comments, and reports of United Nations special procedures, but

references to rehabilitation are not always presented in the context of the
right to reparation.
According to the treaties recognizing a right to rehabilitation, States have
a duty to provide defined groups or persons with certain characteristics or
experiences with some form of rehabilitation, such as: the right to social
rehabilitation in the penitentiary system, particularly for juvenile offenders,
as stated in the International Covenant on Civil and Political Rights
(ICCPR);15 the right to rehabilitation for disabled children and the right to
health for children generally, as stated in the Convention on the Rights of
the Child (CRC);16 and the right to habilitation and rehabilitation for
persons with disabilities, as stated in the Convention on the Rights of
Persons with Disabilities (CRPD).17
The right to rehabilitation after torture exists as a component of the right
to redress for victims of torture.18
The right to rehabilitation after torture could in principle be regarded
as a right to all persons subjected to torture, that is, without reference to
the right to reparation. Being a torture victim or survivor would, in
itself bestow the person with a right to rehabilitation. This would be
considered a free-standing right to those exposed to torture and in need
of rehabilitation services.19
It may be argued that whether the right to rehabilitation after torture exists
as a free-standing right to all victims of torture regardless of claims of
reparation is unsettled, such as under the CRPD,20 or whether it is primarily
linked to a reparation scheme.21
The question of whether victims of torture and ill-treatment should be
entitled to rehabilitation, regardless of where they are and who tortured
1990, 2220 U.N.T.S. 3, available at http://www.ohchr.org/Documents/ProfessionalInterest/

cmw.pdf; United Nations Convention on the Rights of the Child art. 23, ¶ 3, art. 24, ¶ 1, Nov.
20, 1989, 1577 U.N.T.S. 3, available at http://www.ohchr.org/Documents/ProfessionalInterest/
crc.pdf; United Nations International Covenant on Civil and Political Rights art. 10, ¶ 3, art.
14, ¶ 4, Dec. 16, 1966, 999 U.N.T.S. 171, available at http://www.ohchr.org/Documents/
ProfessionalInterest/ccpr.pdf.
15. See United Nations International Covenant on Civil and Political Rights, supra note 14.
16. See United Nations Convention on the Rights of the Child, supra note 14.
17. See United Nations Convention on the Rights of Persons with Disabilities, supra note 14,
art. 26, ¶¶ 1-3.
19. Nora Sveaass, Gross Human Rights Violations and Reparation Under International Law:
Approaching Rehabilitation as a Form of Reparation, 4 EUR. J. OF PSYCHOTRAUMATOLOGY 5
(2013), available at http://www.tandfonline.com/doi/full/10.3402/ejpt.v4i0.17191.
20. See Heidi K. Tokle, Seeking a Free Standing Right to Rehabilitation for Torture Survivors,
DIGNITY: DANISH INST. AGAINST TORTURE (May 26, 2010), https://dignityinstitute.org/news-
and-events/news/2010/seeking-a-free-standing-right-to-rehabilitation-for-torture-survivors/.
21. See United Nations Convention on the Rights of Persons with Disabilities, supra note 14,
art. 26.
THE YEAR IN REVIEW
them, has been frequently raised.22 GC 3 establishes that it should be a

universal duty to provide torture victims with health care and re-integrative
services, without consideration as to whether formal complaints or court
decisions have been made or to the question of who was responsible for the
torture or where it happened.23 This obligation to provide services
regardless of location underlies the argument that rehabilitation facilities for
torture victims should be established in all countries.24 In practice, “this
would mean that an Iraqi refugee [tortured in his or her home country]
coming to Switzerland should be entitled not only to general health care, but
also be given the option of a fuller rehabilitation directly related to the
health damage suffered,” including medical, psychological, social, and legal
services.25 In most scenarios, “this would imply something beyond what
would usually be considered basic and necessary health care” and may
include, for example, “complicated dental treatment, long-term
physiotherapy and/or psychotherapy, [o]r surgery.”26
Some argue that “in order to strengthen this free-standing right to
rehabilitation for victims of torture and other gross human rights violations
one could directly invoke the rights entailed in the [CRPD].”27 The basis for
this argument is that “[m]any victims of torture may in fact be considered as
persons with disabilities, given the serious psychological and physical
problems they encounter.”28 The focus in the CRPD on measures to
“enable persons with disabilities to attain and maintain maximum
independence, full physical, mental, social and vocational ability, and full
inclusion and participation in all aspects of life” and the obligation of State
parties to “organize, strengthen and extend comprehensive habilitation and
rehabilitation services and programs, particularly in the areas of health,
employment, education and social services” are highly relevant for victims of
torture and cruel, inhuman or degrading treatment or punishment.29
Unfortunately, there is a significant gap between the establishment of
rights and their implementation. Moreover, defining the rights of victims
does not mean that victims will necessarily have access to, be able to seek, or
be able to realize these rights. This is true for most of the disabled people in
the world, including those in countries that have ratified the CRPD, and it is
certainly true for most of those who have been exposed to torture.
22. See CLARA SANDOVAL VILLALBA, REHABILITATION AS A FORM OF REPARATION UNDER

INTERNATIONAL LAW 58-63 (2009), available at http://www.redress.org/downloads/
publications/The%20right%20to%20rehabilitation.pdf.
23. GC 3, supra note 2, ¶¶ 3, 23, 27.
24. See Rep. of Juan E. Méndez (Special Rapporteur on Torture and Other Cruel, Inhuman or
Degrading Treatment or Punishment), ¶ 33, U.N. Doc. A/HRC/16/52 (Feb. 3, 2011), available
at http://www2.ohchr.org/english/bodies/hrcouncil/docs/16session/A.HRC.16.52.pdf.
25. See Sveaass, supra note 19.
26. Id.
27. Id.
28. Id.
29. United Nations Convention on the Rights of Persons with Disabilities, supra note 14, art.
26, ¶ 1.
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III. Defining the Scope and Obligation of the Right to Redress

Under Article 14
The importance of defining and clarifying the content and scope of the
obligations under Article 14 of CAT has long been a concern raised in the
Committee. The need for full implementation of the obligation to ensure
redress for persons who have been subjected to torture, who often live in
situations of prolonged injustice, denial, insecurity, and lack of assistance,
make the need for clarifications even more pressing. As previously stated,
GC 3 was an important step in this direction. General Comments are a
useful tool for interpreting and implementing treaties and can:
(1) focus each state party on the inadequacies and lacunae and recurring
violations of the treaty as found in the reports submitted by each of the
state’s parties or through the interactive dialogue between
representatives of the state party and members of the committee; (2)
inform states parties on the experiences gained by the members of the
treaty body which can assist them in implementing the treaty; (3) guide
states parties in their general implementation of the treaty and possible
improved reporting procedures to the committee; (4) identify future
preventive measures that states parties can take to realize the rights in
the relevant treaties; and (5) provide victims with information of their
rights under the Convention.30
State parties must also provide victims with information of their rights under
CAT.31
In November 2009, the Committee began the process of drafting a
General Comment on Article 14 after the Former Chair of the Committee
(and co-author of this article), Professor Claudio Grossman, presented a
draft. Based on discussion of this draft, the Committee created a working
group consisting of four Committee members: Claudio Grossman, Felice
Gaer (Vice-chairperson), Abdul Gaye (member), and Nora Sveaass
(Rapporteur).32 The working group emphasized that the draft should
adequately reflect the Committee’s own jurisprudence, and therefore, it
postponed further discussion until May 2011 so that the Committee’s
jurisprudence and practice on this issue could be summarized and studied.
Committee members were also encouraged to submit alternative draft
language for discussion. Another draft was submitted by two of the working
group members (Gaer and Sveaass), and the working group sought to merge
these two drafts into one.
During the May 2011 session, the working group presented a merged
draft, which the Committee discussed, and in June, decided to post on the
Committee website. The Committee invited State parties, civil society
30. Gaer, supra note 2.

32. The authors of this article were involved in the drafting process of GC 3. As such, some of
what is said in this section is based on their recount of how GC 3 came about.
THE YEAR IN REVIEW
members, stakeholders, experts, and academics to submit their comments

and feedback by September 15, 2011. This represented the first round of
consultations on GC 3. The feedback was generally very positive and the
General Comment was widely supported. At the same time, observers
offered substantial comments and suggestions, including some criticism. A
large number of civil society organizations presented valuable comments,
and a number of U.N. bodies submitted constructive observations.
Although few States commented in the first round, more States engaged
when the draft was presented a second time for further discussion. Two
open meetings were held during the CAT sessions in May and November
2012—one invited NGOs and one invited States. Both meetings were well
attended and generated helpful feedback evidencing strong agreement on
the need for the General Comment. GC 3 was adopted by the Committee
in November 2012.33
In its more than twenty-five years of work, the Committee has adopted
very few General Comments. For the Committee, the workload has always
been very heavy and time allocated for the development of General
Comments has been limited.34 For more than a decade, the Committee had
only General Comment 1 (GC 1) on the implementation of Article 3
(1997).35 After extensive efforts, General Comment 2 (GC 2) on Article 2,
which discusses State party obligations to prevent torture, was adopted in
2008.36 GC 3 builds on principles from GC 2 and addresses additional
matters not covered by it.
There is a close relationship, both legally and psychologically, between
rehabilitation and the other forms of reparation, such as restitution,
compensation, satisfaction, and guarantees of non-repetition, which reflect
the full scope of measures required to redress violations under CAT.37 One
may ask whether it is possible for rehabilitation to take place if there is still
fear that the violence may be repeated, or, in situations where there is no
33. The adoption of GC 3, referred to as a “key document” regarding States’ obligations

under Article 14, was hailed as a “significant development” and “one of the most encouraging
highlights of the year.” REDRESS, ANNUAL REPORT 2012-13 3, 24 (2013), available at http://
www.redress.org/downloads/1redressannualreport2012-2013.pdf. Amnesty International
referred to GC 3 as a “landmark general comment” that would “provide excellent guidance to
states when implementing the Convention.” AMNESTY INT’L, UNITED NATIONS COMMITTEE
AGAINST TORTURE ADOPTS LANDMARK GENERAL COMMENT ON THE RIGHT TO
REPARATION 1 (2012), available at https://www.amnesty.org/en/documents/ior51/005/2012/en/.
34. See Navanethem Pillay (U.N. High Commissioner for Human Rights), Rep. on
Strengthening the United Nations Human Rights Treaty Body System, U.N. Doc. A/66/860, at 23
(June 2012), available at http://www2.ohchr.org/english/bodies/HRTD/docs/HCReportTB
Strengthening.pdf.
35. Comm. Against Torture, Gen. Comment No. 1: Implementation of Article 3 of the
Convention in the Context of Article 22, U.N. Doc. A/53/54, annex IX (1997), available at
http://www.refworld.org/docid/453882365.html.
36. Comm. Against Torture, Gen. Comment No. 2: Implementation of Article 2 by States
Parties, U.N. Doc. CAT/C/GC/2 (2008), available at http://www.refworld.org/docid/
47ac78ce2.html [hereinafter GC 2].
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truth or justice, if attempts to provide fair compensation or other measures

to ensure satisfaction have not been addressed.
GC 3 takes “an explicitly holistic and victim-oriented approach,
remind[ing] states to take into account the specifics of each case and that
redress should be proportionate to the ‘gravity of the violations
committed.’”38 It “further emphasizes the ‘inherent preventive and
deterrent effect’ of providing reparation to victims.”39 The following pages
provide analysis of the necessary components and contextual conditions that
make rehabilitation an adequate form of redress.
A. PROCEDURAL AND SUBSTANTIVE OBLIGATIONS ARE ESSENTIAL

COMPONENTS OF THE RIGHT TO REDRESS
GC 3 “identifies both procedural and substantive obligations to provide

redress.”40 It extensively outlines procedural elements, such as the
enactment of legislation and the establishment of complaints mechanisms,
investigative bodies, and other judicial bodies that enable victims of torture
or ill-treatment to seek and obtain redress.41 It also “addresses substantive
requirements that provide the victim with ‘full and effective redress’ in
response to each claim.”42 The “establishment of ‘effective’ and ‘accessible’
bodies is central to meeting” these procedural and substantive obligations.43
Concerning the substantive aspects of the right, “by identifying the five
components of redress outlined above, [GC] 3 clarifies that the concept of
redress is substantially broader than compensation and rehabilitation, the
two forms of redress mentioned by name in [A]rticle 14.”44 GC 3, thus, “also
offers an important elaboration of the concept of rehabilitation for victims of
torture and ill-treatment, emphasizing it must be ‘holistic and include
medical and psychological care as well as legal and social services.’”45 It
specifies that rehabilitative services should be provided “as soon as possible
following an assessment by qualified independent medical professionals” and
should not depend on the victim’s pursuit of judicial remedies.46 GC 3
“takes a victim-oriented approach with regard to participation and selection
of services, in keeping with the approach encouraged by the former U.N.
Special Rapporteur on Torture, Juan Mendez.”47
38. Gaer, supra note 2, at 7 (quoting GC 3, supra note 2, ¶ 6).

39. Gaer, supra note 2, at 7.
40. Id.; see also GC 3, supra note 2, ¶ 5.
44. Id.
45. Id. (quoting GC 3, supra note 2, ¶ 11).
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B. DEFINING VICTIMS
GC 3 uses the term “victim” when referring to persons who have suffered
and survived torture.48 The term “survivor” may also be appropriate, as the
term “victim” may be construed by some as indicating that the person is
victimized, permanently harmed, and/or in lesser charge of his or her own
life.49 This may not necessarily be the case, as many people demonstrate
strong resilience even when faced with torture. Nevertheless, their
experiences as persons subjected to torture entitle them to redress and
compensation or other forms of reparative measures, regardless of whether
they seek out rehabilitative services.
Victims of torture entitled to redress have “individually or collectively
suffered harm, including physical or mental injury, emotional suffering,
economic loss or substantial impairment of their fundamental rights,
through acts or omissions that constitute violations” of CAT.50 This concept
is flexible and has a wide scope. Victims also include “affected immediate
family or dependents of the victim as well as persons who have suffered harm
in intervening to assist victims or to prevent victimization.”51 This
definition reflects the Committee’s view that “family members and
dependents of disappeared persons are entitled to redress and not merely to
compensation.”52 The Committee has recommended compensation,
including in the form of rehabilitation, to family members of persons who
have disappeared. In 2008, the Committee made recommendations to
Algeria and asked the State to guarantee the right of families of disappeared
persons to redress and to pay fair compensation, “including by giving them
the necessary psychological, social and financial support . . .”53 This “tracks
definitions developed in such multilateral instruments as the 1985 United
Nations Declaration of Basic Principles of Justice for Victims of Crime and
Abuse of Power.”54 It also follows the 1999 Declaration on the Right to
Restitution for Victims of Gross Human Rights Violations, adopted by the
U.N. Commission on Human Rights,55 and the Basic Principles and
Guidelines on the Right to a Remedy and Reparation.56 The Committee’s
definition reflects ways to “ensure[ ] the maximum protection of a person
who has suffered harm as a result of torture or ill-treatment.”57

49. See id.
50. Id.
51. Id.
53. Comm. Against Torture, Consideration of Reports Submitted by States Parties Under
Article 19 of the Convention: Concluding Observations: Algeria, ¶ 13, U.N. Doc. CAT/C/
DZA/CO/3 (2008), available at http://www.univie.ac.at/bimtor/dateien/algeria_cat_2008_con
cob.pdf.
55. Id.
56. See id. at 7.
57. Id. at 6.
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Furthermore, GC 3 provides that “a person should be considered a victim

regardless of whether the perpetrator of the violation is identified,
apprehended, prosecuted or convicted.”58
Torture affects not only the tortured person but also those confronted
with the fact that a loved one is being subjected to or threatened with pain.
Torture of a family member may alter the lives of relatives when the victim
returns or, alternatively, if the victim dies as a result of the torture.
Reconstructing family life after torture or death can be a long and hard
process, as is the reconstruction of the family following a member’s brutal
death. The right of dependents to receive assistance, such as rehabilitation,
is, thus, formulated in GC 3 and represents an important step toward
positive change from a psychological, social, and legal point of view.
Victims of torture with a right to redress also include those who suffer
because of a lack of protection against torture and ill-treatment by non-State
actors.59 Noncompliance by a State with an obligation to exercise due
diligence to intervene in, stop, or sanction acts of torture and ill-treatment
“enables non-State actors to commit such acts impermissible under the
Convention with impunity, [and] the State’s indifference or inaction
provides a form of encouragement and/or de facto permission.”60 Persons
who have been victimized by such acts and by a lack of protection or due
diligence exercised by the State, whether in homes, institutions, schools, etc.,
are entitled to redress, including rehabilitation.
C. RIGHT TO REDRESS AS AN INDIVIDUAL RIGHT

GC 3 “emphasizes that legislation providing a remedy and the right to
redress ‘must allow individuals to exercise this right,’” and State parties must
“ensure that all victims have access to judicial remedies.”61 The Committee
acknowledges that, “[w]hile collective reparation and administrative
reparation programs may be acceptable as a form of redress, such programs
may not render ineffective the individual right to a remedy and to obtain
redress.”62 The Committee has addressed this issue. For example, in its
concluding observations and recommendations on Cambodia in 2010, the
Committee noted that “the Internal Rules of the ECCC only provide for
moral and collective reparation, precluding individual financial
compensation.”63 Consequently, the Committee recommended that the
ECCC “amend its Internal Rules to permit reparation to victims consistent
with [A]rticle 14 of the Convention, including, as appropriate, individual
58. GC 3, supra note 2, ¶ 3.

59. See id. ¶ 7 (citing GC 2, supra note 37).
60. GC 2, supra note 37, ¶ 18.
62. GC 3, supra note 2, ¶ 20.
63. Comm. Against Torture, Consideration of Reports Submitted by States Parties Under
Article 19 of the Convention: Concluding Observations: Cambodia, ¶ 27, U.N. Doc. CAT/C/
KHM/CO/2 (2011), available at http://www2.ohchr.org/english/bodies/cat/docs/CAT.C.
KHM.CO.2_en.pdf.
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financial compensation.”64 GC 3 “also stipulates that development projects

and humanitarian aid programs are not a substitute for an individual victim’s
right to redress.”65 It specifies further that “[c]ulturally sensitive collective
reparation measures shall be available for groups with shared identity, such
as minority groups, indigenous groups, and others” while reiterating that
“collective measures do not exclude the individual right to redress.”66
D. GENDER SENSITIVITY AND NON-DISCRIMINATORY MEASURES

GC 3 emphasizes that effective implementation of the right to redress
requires a gender-sensitive approach. In this regard, it states:
The Committee considers that complaints mechanisms and
investigations require specific positive measures which take into account
gender aspects in order to ensure that victims of abuses such as sexual
violence and abuse, rape, marital rape, domestic violence, female genital
mutilation, and trafficking are able to come forward and seek and obtain
redress.67
Furthermore, such measures should apply to any marginalized or vulnerable
person.68 Both in judicial and non-judicial proceedings, as well as in all
circumstances where redress—particularly in the form of rehabilitation—is
provided, sensitivity and specific training on the impact of torture and ill-
treatment on victims from marginalized and vulnerable groups are
essential.69 Such training must include “how to exercise sensitivity towards
victims of torture and ill-treatment, including in the form of sexual- or
gender-based discrimination, in order to prevent re-victimization and
stigmatization.”70
IV. The Right to Rehabilitation Under Article 14

Rehabilitation is explicitly identified as part of the State’s obligation to
redress all victims of torture in Article 14 of CAT.71 State responsibility in
relation to rehabilitation is also closely linked to obligations defined in other
provisions of CAT, such as Article 10 (on training), Article 12 (on
investigation), and Article 13 (on the right to complain),72 which should be
64. Id.
66. GC 3, supra note 2, ¶ 32.
67. Id. ¶ 33.
68. Id. ¶ 34.
69. Id.; see also, Sveaass, N., The UN Convention Against Torture and other Cruel, Inhuman
or Degrading Treatment or Punishment: the absolute prohibition and the obligation to prevent.
In M. Başoğlu (Ed.), Torture and Its Definition in International Law: An Interdisciplinary
Approach, 247 – 271 (New York: Oxford University Press 2017).
70. Supra note 68.
71. See CAT, supra note 1.
72. See id. arts. 10, 12, 13.
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read together with Article 14. In practice, a prerequisite for rehabilitation is

good and thorough training of professionals in different capacities in society.
Such training includes training on CAT with a special reference to “law
enforcement personnel, civil or military, medical personnel, public officials
and other persons who may be involved in the custody, interrogation or
treatment of any individual subjected to any form of arrest, detention or
imprisonment.”73
This obligation to educate and provide information on the prohibition of
torture also implies that the State must ensure that medical and other
relevant personnel have the necessary professional knowledge and capacity
to detect, investigate, refer, and treat the consequences of torture. Thus, in
the reporting process under CAT, States are frequently asked about available
programs to train medical personnel, not only to identify and document
torture, but also to provide rehabilitation services.74 Article 10 specifies the
obligation to include information about the prohibition of torture in
education and training programs.75 In its recommendations, the Committee
has frequently referred to the need, not only to provide information about
prohibition to a wide range of relevant personnel, but also to develop
education programs related to identification of torture and ill-treatment and
to provision of rehabilitation services.76 The importance of training as a
condition for ensuring the right to rehabilitation is illustrated in the
Committee’s recommendations to Serbia and Spain.77 Finally, complaints
mechanisms and investigations must be in place, as required under Articles
12 and 13 of CAT.78
73. Id. art. 10, ¶ 1.

74. See Committee against Torture, List of Issues to be Considered During the Examination
of the Initial Report of Montenegro, U.N. Doc CAT/C/MNE/1 (Sept. 9, 2008), http://doc
store.ohchr.org/SelfServices/FilesHandler.ashx?enc=6QkG1d%2FPPRiCAqhKb7yhslVpw9qed
E6H7W4xUzcOd4f%2B1mPPyvGFpSls4iXkiTESxriZuxZgsV%2BQudCwkbtwHFqLPZbns
um3nrj54eEhAxAV4wBX12UY4PiTYupK8tBz; Committee Against Torture, List of Issues to
be Taken up in Connection With the Consideration of the Second Periodic Report of Belgium,
U.N. Doc. CAT/C/BEL/2 (Sept. 9, 2008), http://docstore.ohchr.org/SelfServices/FilesHand
ler.ashx?enc=6QkG1d%2FPPRiCAqhKb7yhsgy8iElI7EhsMb0if1UiLCxLiY7tbX2d2o9KIqns
VqTLlvKNdCdmsX2Fqm7mp1f5%2BqYzs6nmX8LpYfNjclI%2BKuGNRC6zQbMwGsyUx4
VXwY4K; Committee against Torture, List of Issues to be Considered During the Examination
of the Fourth Periodic Report of Hong Kong, U.N. Doc. CAT/C/HKG/4 (Aug. 4, 2008),
www2.ohchr.org/English/bodies/cat/docs/AdvanceVersions/CAT.C.HKG.Q.4.doc.
75. CAT, supra note 1, art. 10, ¶ 1.
76. See, e.g., Concluding Observations: Cambodia, supra note 63, ¶ 25.
77. See Comm. Against Torture, Consideration of Reports Submitted by States Parties Under
Article 19 of the Convention: Concluding Observations: Serbia, ¶ 14, U.N. Doc. CAT/C/SRB/
CO/1 (2009), available at www.univie.ac.at/bimtor/dateien/serbia_cat_2009_concob.pdf
(“However, it is concerned that the training is not targeted at education and information
regarding the prohibition of torture and that training programs for medical personnel for the
identification and documentation of cases of torture in accordance with the Istanbul Protocol, is
insufficient, as is the rehabilitation of victims.”); Comm. Against Torture, Concluding
Observations on the Sixth Periodic Report of Spain, ¶ 23, U.N. Doc. CAT/C/ESP/CO/6
(2015), available at http://www.refworld.org/docid/564595214.html.
78. See CAT, supra note 1, arts. 12, 13.
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The right to rehabilitation is defined as part of the right to redress and

compensation.79 CAT was the first human rights treaty to refer to
rehabilitation in the context of redress and to specify that the right to be
provided was defined within a framework of redress or compensation for
harm done.80 The right holders are those who have been subjected to
torture or ill-treatment (mental and/or physical) and those dependent on the
victim.81
Based on Article 14, many questions are raised by members of the
Committee to representatives of States concerning the monitoring of State
compliance with their obligations under CAT. Most States include
information as to legal measures taken, outlining the established laws, and,
sometimes, the mechanisms relating to the right to redress.82 The
Committee also inquires about monetary compensation provided, including
information on how much was paid, to whom, and for what reasons.83 Some
States also report on procedural aspects regarding how individuals can
obtain redress.84 Less information has been provided to the Committee
about rehabilitative measures, including how such measures are
implemented, to whom rehabilitation is provided, who provides it, and
where it takes place; information about existing services provided in a
context of rehabilitation to torture victims has been scant.85 States
sometimes provide limited information on the monitoring and evaluation of
79. See id. art. 14, ¶ 1.

80. See Oxford Handbook of Int’l Human Rights Law 930 n.41 (Dinah Shelton ed., 2013).
81. See CAT, supra note 1, art. 14, ¶ 1.
82. See e.g., Comm. Against Torture, Consideration of Reports Submitted by States Parties
Under Article 19 of the Convention: Concluding Observations: Azerbaijan, ¶¶ 4-6, U.N. Doc.
CAT/C/AZE/CO/3 (2009), available at www2.ohchr.org/english/bodies/cat/docs/co/CAT.
C.AZE.CO.3.doc; Comm. Against Torture, Consideration of Reports Submitted by States
Parties Under Article 19 of the Convention Pursuant to the Optional Reporting Procedure:
United States, ¶ 147, U.N. Doc. CAT/C/USA/3-5 (2013).
83. See e.g., Comm. Against Torture, Consideration of Reports Submitted by States Parties
Under Article 19 of the Convention: Concluding Observations: Slovakia, ¶ 16, U.N. Doc.
CAT/C/SVK/CO/2 (2009), available at www2.ohchr.org/english/bodies/cat/docs/co/
CAT.C.SVK.CO.2.doc (The State “should [ ] collect data on the number of victims who have
received compensation and other forms of assistance.”); Comm. Against Torture, List of Issues
to be Taken Up During the Consideration of the Fourth Periodic Report of Cameroon, art. 14,
¶ 27, U.N. Doc. CAT/C/CMR/Q/4 (2010), available at http://www2.ohchr.org/english/bodies/
cat/docs/CAT.C.CMR.Q.4.pdf (“Please indicate whether there have been cases where persons
have received compensation following cases of torture or ill-treatment. If so, please indicate the
amount that they received and the number of such cases and describe the type of violence to
which the persons in question were subjected.”).
84. See, e.g., Consideration of Reports Submitted by States Parties Under Article 19 of the
Convention Pursuant to the Optional Reporting Procedure: United States, supra note 82.
85. See ELLIE SMITH ET AL., A REMEDY FOR TORTURE SURVIVORS IN INTERNATIONAL LAW:
INTERPRETING REHABILITATION 18 (2010), available at https://www.freedomfromtorture.org/
sites/default/files/documents/MF%20Rehabilitation%202010%20Final.pdf (explaining that
“the assessment of whether a [ ] State fulfils its obligation to provide as full rehabilitation as
possible is . . . extremely difficult due to the paucity of available information relating to clinical
provision for torture survivors.”).
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the training programs for personnel in charge of such services.86 As a result,

there has been little available statistical data on existing rehabilitation
services and beneficiaries and little information on any assessment or
evaluation as to the outcome or effectiveness of rehabilitation-related
services. The absence of this information, which is both unfortunate and
unacceptable, shows a prima facie lack of compliance with CAT’s mandate to
comply fully with Article 14. When services exist but information is not
provided, the Committee cannot assess the situation and/or provide proper
guidance to the State on the full satisfaction of its obligations under CAT.
GC 3 elaborates on rehabilitation as part of the right to redress under
Article 14.87 In the following section, this article presents the main aspects
of rehabilitation as a wide-ranging service provided to victims of torture and
ill-treatment.
A. REHABILITATION ENTAILS HOLISTIC AND MULTIDISCIPLINARY

SERVICES
GC 3 affirms the importance of rehabilitation, which is holistic and
multidisciplinary in nature and includes medical and psychological care as
well as legal and social services. According to GC 3, rehabilitation refers to:
[T]he restoration of function or the acquisition of new skills required by
the changed circumstances of a victim in the aftermath of torture or ill-
treatment. It seeks to enable the maximum possible self-sufficiency and
function for the individual concerned, and may involve adjustments to
the person’s physical and social environment. Rehabilitation for victims
should aim to restore, as far as possible, their independence, physical,
mental, social and vocational ability; and full inclusion and participation
in society.88
Given the short-term and long-term emotional, social, and cognitive effects
of torture, “a holistic and integrative concept of rehabilitation is vital.”89
Torture aims to break down the body and mind and may result in
‘“disintegration of the personality.’”90 Systematic humiliation, lack of
control, and a sense of helplessness resulting from torture can be serious
impediments to any form of regular social, vocational, or personal life, which
underscores the importance of a broad concept of rehabilitation.91 But
rehabilitation may often be insufficient for restitution, as the effects of
torture may be too pervasive to allow full recovery to take place. Thus, the
86. See, e.g., Concluding Observations: Azerbaijan, supra note 82, ¶ 23.
88. Id. ¶ 11.
89. Nilantha Ilangamuwa, Why Torture is Wrong, COUNTER PUNCH (Oct. 11, 2013), https://
www.counterpunch.org/2013/10/11/why-torture-is-wrong/.
90. Manfred Nowak (Special Rapporteur on Torture and Other Cruel, Inhuman or Degrading
Treatment or Punishment), Interim Rep., ¶ 63, U.N. Doc. A/65/273 (Aug. 10, 2010), available at
http://www2.ohchr.org/english/issues/torture/rapporteur/docs/A.65.273.pdf.
91. See id.
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term “as full rehabilitation as possible” refers to “the need to restore and
repair the harm suffered by a victim whose life situation, including dignity,
health, and self-sufficiency may never be fully recovered as a result of the
pervasive effect of torture.”92 A lack of resources, including limited available
professionals to deal with these issues, does not eliminate the requirement to
fulfill these obligations.
B. REHABILITATION SERVICES SHOULD BE APPROPRIATE,

AVAILABLE, AND ACCESSIBLE
Under GC 3, States should develop and adopt a “long-term, integrated
approach and ensure that specialized services for the victim of torture or ill-
treatment are available, appropriate and promptly accessible.”93
Rehabilitation services should be professional, effective, and accessible.94
This means that those in need of rehabilitative services and their dependents
or others supporting them should know where services are, how to contact
providers of services, how to obtain information, and how to access such
services. Rehabilitation services must be appropriate, accessible, safe, and
stable.95 Services should be offered that, in practice, take care of the multi-
professional and multi-dimensional aspects of rehabilitation after torture,
and it is important that these services are accessible and available to those
who need them. This also means that they must be free of charge for those
who need the care. The “[m]ere availability of general healthcare” does not
necessarily mean that the services are appropriate.96 A victim’s possibility to
receive good care depends on the circumstances in which this occurs. For
assistance to be beneficial, it is vital to offer a context where safety,
confidence, and trust can be established. Also, given the experiences of
torture victims, the risk of re-traumatization is always present, especially in
situations that may remind them of the torture or ill-treatment they
experienced.97
For rehabilitation to be effective, it must be based on professionally-sound
assessments of a victim’s needs and the mental and physical sequelae caused
by the torture.98 “Procedure[s] for assessment and evaluation” must be
established, including procedures for the documentation of torture, “based
on, among others, the Manual on the Effective Investigation and
92. GC 3, supra note 2, ¶ 12.

93. Id. ¶ 13.
94. See NIMISHA PATEL & AMANDA C DE C WILLIAMS, MONITORING AND EVALUATION OF
REHABILITATION SERVICES FOR TORTURE SURVIVORS 17-24 (2014), available at http://nebr
astunisie.org/pdf/ICHHR+Handbook+for+Service+Providers+MandE+of+Torture+Rehabilita
tion+Services+2014+Final.pdf; see also SMITH ET AL., supra note 85, at 28-29.
95. SMITH ET AL., supra note 85, at 28-29.
96. Id. at 28.
97. GC 3, supra note 2, ¶ 13.
98. See Claudio Grossman, The Normative Value of the Istanbul Protocol, in SHEDDING LIGHT
ON A DARK PRACTICE: USING THE ISTANBUL PROTOCOL TO DOCUMENT TORTURE 11-12
(Susanne Kjær & Asger Kjærum, eds., 2009).
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Documentation of Torture and Other Cruel, Inhuman or Degrading

Treatment or Punishment (The Istanbul Protocol).”99 Furthermore, an
individual’s therapeutic needs must be assessed, as well as needs related to
areas such as social functioning, work, economy, and training. This
encompasses “a wide range of inter-disciplinary measures, such as medical,
physical and psychological rehabilitative services; re-integrative and social
services; community and family-oriented assistance and services; vocational
training; [and] education.”100
Victims of torture have been exposed to severe human rights violations,
and their rehabilitation must provide, in practice, a wide range of assistance
depending on their actual needs. All therapy and assistance, particularly for
survivors of gross human rights violations, must emphasize the strength and
resilience of those affected.101 Active victim participation is one way in
which victims’ own self-awareness about their needs and reactions can be
utilized for the good of the individual and as a way to reengage with life and
the world. Because torture often means destruction of a victim’s personality,
agency, and meaning in life, the victim must play an active role in the
subsequent process of care and support in order to enable the process to be
one of re-empowerment and of bringing back a sense of life, meaning, and
dignity.102
C. REHABILITATION AND LEGAL REMEDIES
GC 3 addressed the important issue of whether rehabilitation depends on

the victim first pressing legal charges against those responsible for torture
and ill-treatment or if this can be provided without such charges. Two
aspects merit consideration: first, whether there is a demand for judicial
remedies, and/or second, whether the perpetrator is identified. GC 3 is very
clear with regard to these two points: “[a]ccess to rehabilitation programs
should not depend on the victim pursuing judicial remedies,” and “a person
should be considered a victim regardless of whether the perpetrator of the
violation is identified, apprehended, prosecuted or convicted, and regardless
of any familial or other relationship between the perpetrator and the
victim.”103
99. GC 3, supra note 2, ¶ 13; OFFICE OF THE U.N. HIGH COMM’R FOR HUMAN RIGHTS,
ISTANBUL PROTOCOL: MANUAL ON THE EFFECTIVE INVESTIGATION AND DOCUMENTATION
OF TORTURE AND OTHER CRUEL, INHUMAN OR DEGRADING TREATMENT OR PUNISHMENT,
U.N. Doc. HR/P/PT/8/Rev.1, U.N. Sales No. E.04.XIV.3 (2004) [hereinafter ISTANBUL
PROTOCOL].
100. GC 3, supra note 2, ¶ 13.
101. See Basoglu, supra note 7.
102. GC 3, supra note 2, ¶ 4 (emphasizing the importance of the victim’s participation in the
redress process).
103. Id. ¶¶ 3, 15.
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D. STATES ARE RESPONSIBLE FOR PROVIDING REHABILITATION TO

VICTIMS OF TORTURE OR ILL-TREATMENT
GC 3 explains that State parties to CAT are required to ensure that all
victims of torture and ill-treatment are able to access remedies and obtain
redress.104 The Committee “considers that the application of [A]rticle 14 is
not limited to victims harmed on the territory of the State party” or by or
against its nationals.105 The Committee explicitly notes and values when
State parties “provide[ ] civil remedies to victims tortured or ill-treated
outside the territory of the state party,” such as in the case of the United
States Alien Tort Claims Act.106
GC 3 reflects the Committee’s view that refugees, asylum-seekers,
stateless persons, and other victims of torture are entitled to protection and
rights under CAT once they enter a State party.107
An analysis of the traveaux préparatoires of [CAT], which explicitly
dropped all reference to the nationality of the perpetrator of torture for
which the victim is seeking redress, shows that the state party’s
obligations under [CAT] are not limited by nationality or the territory
where the abusive act took place.108
The fact that the United States lodged a reservation arguing that Article 14
should be limited to acts on its territory further supports the view that
Article 14, as adopted, was not intended to be limited to violations within the
territory of the State party.109
In practice, States can be asked about services available for refugees and
asylum-seekers who have suffered torture elsewhere and the Committee has
called for redress, including compensation and rehabilitation, to be ensured
for all victims including refugees.110 Indeed, Article 14 requires State parties
to ensure that all victims of torture and ill-treatment are able to access
remedies and obtain redress.111 GC 3 further underscores that rehabilitation
services shall be accessible to all victims “without discrimination and
regardless of a victim’s identity or status within a marginalized or vulnerable
group . . . including asylum seekers and refugees.”112
In instances where rehabilitation is provided—not by those responsible
for the torture but by others—one question that may arise is whether it is
regarded as redress or rather as necessary health care provided to victims
after extreme violence. Rehabilitation provided by States unrelated to
104. See id. ¶ 1 (citing CAT, supra note 1, art. 14, ¶ 1).
105. GC 3, supra note 2, ¶ 22.
107. GC 3, supra note 2, ¶ 32.
109. See S. Res. of Ratification, 100th Cong. (1990), available at https://www.congress.gov/
treaty-document/100th-congress/20/resolution-text.
110. See Sveaass, supra note 19, at 7; GC 3, supra note 2, ¶ 15.
111. See CAT, supra note 1, art. 14, ¶ 1.
112. GC 3, supra note 2, ¶ 15.
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torture violations, such as in refugee-receiving countries, may be understood

as ways of complying with refugee law through protection or as part of the
humanitarian support provided to victims of torture and ill-treatment who
have sought protection in the country. It may also be understood as
complying with the obligation to provide international cooperation and
assistance to fulfil economic, social, and cultural rights.
V. Rehabilitation in Practice
Providing as full rehabilitation as possible requires States to set up a system
of effective rehabilitation services and programs able to meet the individual
needs of persons with different backgrounds and requirements regarding
rehabilitation.113 These services must be provided under circumstances that
are as safe and stable as possible for the person involved. When
rehabilitation is offered in the country or region where torture has occurred,
special considerations must be taken, and those responsible for the redress
may need to ensure rehabilitation by services other than the public health
services. In this regard, GC 3 indicates:
[T]he obligation in [A]rticle 14 to provide for the means for as full
rehabilitation as possible can be fulfilled through the direct provision of
rehabilitative services by the State, or through the funding of private
medical, legal and other facilities, including those administered by
NGOs in which case the State shall ensure that no reprisals or
intimidation are directed to them.114
This means that rehabilitation can be offered and organized by civil society
organizations or groups of professionals not directly affiliated with the
public system with services funded by the State.115 Again, it is important to
emphasize the importance of victim participation when deciding upon
service providers.116
An important part of developing rehabilitation services is the inclusion of
“systems for assessing the effective implementation of rehabilitation
programs and services” as well as the outcomes of such services.117 These
components should be firmly based on relevant research in the area and on
“appropriate indicators and benchmarks” developed for such purposes.118
GC 3 requires State parties to carry out assessments and evaluations of the
effectiveness of rehabilitation services as part of their reporting
obligations.119
113. Id.
114. Id.
115. See Sveaass, supra note 19, at 9.
117. GC 3, supra note 2, ¶ 15; see also PATEL & WILLIAMS, supra note 94, at 86-103, 105-29.
118. GC 3, supra note 2, ¶ 15.
119. See id. ¶ 13.
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GC 3 further emphasizes the importance of “ensuring that victims and

their families are adequately informed of their right to pursue redress.”120
Such instruction must cover information about rights and ways in which
those rights can be enjoyed. This means that there must be available,
professional, and confidential procedures and mechanisms to allow redress
and rehabilitation to occur without imposing economic burdens on those
subjected to torture.121 Both judicial procedures should be available for
those whose rights have been abused, but rehabilitation must neither rest
upon nor be contingent upon legal decisions.122 GC 3 reiterates and expands
upon a list of impermissible discriminatory elements first identified in GC 2,
including:
race, colour, ethnicity, age, religious belief or affiliation, political or
other opinion, national or social origin, gender, sexual orientation,
transgender identity, mental or other disability, health status, economic
or indigenous status, reason for which the person is detained, including
persons accused of political offences or terrorist acts, asylum-seekers,
refugees or others under international protection, or any other status or
adverse distinction.123
GC 3 further emphasizes that complaints mechanisms should “avoid re-
victimization and stigmatization” of “person[s] marginalized or made
vulnerable on the basis of identities and [membership of] groups,” such as
those noted above, and it requires that States support victims who are
members of these or other marginalized groups in seeking and obtaining
redress.124
Seeking redress and rehabilitation may entail a number of social and
emotional hardships on the part of the exposed persons. Many will avoid
entering into such processes out of fear of threats and reprisals, further
shaming, and risk to the security of family, friends, and those who have
provided assistance to the victims.125 For these reasons, some will attempt to
obtain their rights in secrecy. While some who attempt to obtain their
rights will have support from those in their surroundings, others may
encounter resistance from their social networks. Regardless of the social
support available, there should be sufficient support in the system providing
redress and rehabilitation to allow victims to feel protected and that their
needs are being respected and taken seriously. For many victims, the
process may bring back very painful memories, and in some cases, it can be
an active re-traumatizing event.126 In rehabilitation, assessment and
mapping will be vital, and they will require going back, referring, and talking
120. Id. ¶ 29.

121. See id.
122. See id. ¶¶ 15, 30.
123. Id. ¶ 32.
124. See id. ¶¶ 15, 33, 34.
125. See SMITH ET AL., supra note 85, at 29.
126. See ISTANBUL PROTOCOL, supra note 99, ¶¶ 94, 147, 149.
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to strangers about painful events. When redress also entails legal

processes—which many will feel is both right and necessary—it may mean
confronting the perpetrator, listening to the defenses of persons who have
committed atrocities, and possibly having to live with legal decisions that do
not seem fair or just.127 As a result, there is a psychological and social
necessity to provide victims and witnesses with support and assistance as part
of the individual right to redress, or possibly even as a prerequisite for
redress.128
GC 3 refers to assessment and evaluation of needs as important parts of
what States should provide.129 Nevertheless, in many cases there may not be
a need for lengthy assessment and documentation in order to determine that
a person is a torture victim and, as such, entitled to rehabilitation. A
person’s ability to document having been present or held in places where
torture has been known to take place in a systematic manner (e.g.,
concentration camps, prisons during authoritarian rule, etc.) can be regarded
as sufficient evidence of torture without requiring detailed evidence of how
many times electric shock, beating, immersion in water, etc. occurred. For
example, documentation showing that an individual was held in one of the
detention centers run by General Pinochet during the military dictatorship
in Chile, such as Tejas Verdes or Tres Alamos, should be sufficient in itself to
prove that individual’s status as a victim of torture and no further
documentation or assessment should be required. This approach, in
contrast to presenting claims and making determinations on an individual
basis, will facilitate broader realization of the right to reparation and
rehabilitation. This approach is significant not only from a human rights
perspective but also from a psychological perspective—it represents an
acknowledgement of suffering and survival after atrocities. This may
amount to a powerful public statement and recognition of the broad injustice
that has been done, in contrast to requiring detailed and re-traumatizing
individual findings and determinations as to whether the individuals
detained were victimized in a particular way.
A final issue to be raised regarding rehabilitation is identification of the
models, best practices, and existing empirical research in the field of
rehabilitation of torture survivors. This article outlines the guidelines and
specifications regarding rehabilitation contained in CAT and GC 3. With
regard to monitoring and reporting, GC 3 refers to the need to employ
“methods available for assessing the effectiveness of rehabilitation programs
and services, including the application of appropriate indicators and
benchmarks, and the result of such assessment.”130 Furthermore, States shall
report on the “rehabilitation facilities available to victims of torture or ill-
127. See Sveaass, supra note 19, at 3.

128. See id.; see also ISTANBUL PROTOCOL, supra note 99, ¶ 94.
130. Id. ¶ 46(d).
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treatment and their accessibility as well as the budget allocation for

rehabilitation programs.”131
There is a need for further systematization and research on rehabilitation
services in a broader sense on medical, social, psychological, legal, and
training measures, among others.132 Monitoring and Evaluation of
Rehabilitation for Torture Victims, a recently published handbook for service
providers, suggests relevant standards and benchmarks in relation to
rehabilitation from both clinical health and human rights perspectives, and it
may be a valuable tool in this process.133 Because of the specialized nature of
these matters, professionals and practitioners in the fields of health,
education, social integration, and law have a critical role to play. They are
faced with the important challenge of developing strategies and best
practices. In addition, they are tasked with systematizing knowledge aiming
to provide the most effective form of rehabilitative care and services based
on research and outcome studies of interventions made “to ensure . . . access
to the highest quality of care and rehabilitation to torture survivors, which is
their right, not a privilege.”134 Professionals involved in this work must
continually monitor, adapt, and update their approaches, and they should
also “examine the usefulness of various components of their rehabilitation
program” in order to develop the best possible program.135 This work will
benefit the individuals who it strives to assist.
VI. Obstacles to Rehabilitation

There are numerous obstacles to enforcing the right to redress and, in
particular, to providing effective rehabilitation.136 Some of these obstacles
relate to situations where torture and ill-treatment have rendered a person
unable to stand up for him or herself. Others relate to the fear of being re-
traumatized and re-encountering the pain suffered. The best way to address
this is to create ways of dealing with the system-related obstacles frequently
encountered, thereby heightening the State’s obligation to ensure that
people obtain redress.
GC 3 “presents a lengthy list of measures that constitute obstacles to the
realization of the right to redress, as set forth in [CAT].”137 The list begins
with the need for “clear acknowledgement” that the redress is awarded for
131. Id. ¶ 46(c).

132. See, e.g., Edith Montgomery & Nimisha Patel, Torture Rehabilitation: Reflections on
Treatment Outcome Studies, 21 TORTURE 141, 142 (2011), available at http://irct.org/assets/
uploads/1018-8185_2011-2_141-145.pdf (explaining that evidence is limited because “whilst
outcome research is valued and recognised as crucial to the delivery of quality services, it is not
seen as a priority”).
133. See PATEL & WILLIAMS, supra note 94, at 17-24.
134. Montgomery & Patel, supra note 132, at 145.
135. Basoglu, supra note 7.
136. See GC 3, supra note 2, ¶¶ 37-43.
137. Gaer, supra note 2, at 9 (citing GC 3, supra note 2, ¶¶ 37-43).
THE YEAR IN REVIEW
violations of CAT “by action or omission.”138 The Committee is concerned

about a lack of due diligence by State parties in many circumstances, which
may give rise to State responsibility, hence the reference to “omission.”139
Among the many other items cited as obstacles are ineffective mechanisms
and courts; “discrimination in accessing complaints and investigation
mechanisms;” State secrecy laws; and “evidential burdens and procedural
requirements” that may unduly delay access to the right to redress.140
Failure to ensure protection of victims and witnesses from reprisals for
bringing claims is also cited as an obstacle to the right to redress.141
Noting the “continuous nature” of the effects of torture, GC 3 proscribes
statutes of limitations for torture or ill-treatment, pointing out, for example,
that post-traumatic stress may actually increase over time, requiring
“medical, psychological and social support.”142 Similarly, GC 3 recalls its
consistent position that “amnesties for torture and ill-treatment pose
impermissible obstacles to a victim in his or her efforts to obtain redress,”
and it calls on State parties to remove these.143 GC 3 further notes that
“granting immunity in violation of international law . . . is in direct conflict
with the obligation of providing redress to victims,” identifying de facto
impunity as yet another obstacle.144
VII. Conclusions
Rehabilitation after torture is a complex and potentially long-term process.
It may include support and assistance on many different levels, including
social, medical, and psychological care, work-training, and often economic
and judicial assistance.145 Special attention must be given to interventions
dealing with traumatic stress-related problems, as these may frequently be
the main source of disruption of normal life activities and may debilitate
effective reintegration into society after torture.146 For rehabilitation to
fulfill any of its objectives, the person to whom services are being offered
should be a close collaborator in the process. The victim should experience
the care, interventions, and assistance as something that engages and re-
vitalizes victims and also as something that provides a tool with respect to
dealing with trauma-related stress reactions. Accordingly, rehabilitation
must take place in a secure, reliable, trustworthy, and predictable context.
Rehabilitation should be provided by professionals, in special training or
rehabilitation centers, if possible. Providers should include personnel
138. GC 3, supra note 2, ¶ 37.

139. Id. ¶ 37.
140. Id. ¶ 38.
141. See id.
142. Id. ¶ 40.
143. Id. ¶ 41.
144. Id. ¶ 42.
145. See id. ¶ 11; Basoglu, supra note 7.
146. See Basoglu, supra note 7 (maintaining that “the greatest obstacle to a survivor’s
meaningful re-integration into society is the debilitating problems of traumatic stress”).
THE YEAR IN REVIEW
specially prepared to deal with all aspects of sequelae after torture and the
complexities involved in this work, particularly in relation to ways of dealing
with traumatic memories, avoidance reactions, painful triggers, etc.
Rehabilitation must be accessible and available to the person seeking
assistance. The care system providing rehabilitation needs to be able to
convey professionalism, a high level of competency with regard to listening,
and the capacity to adapt to the variety of needs involved. Furthermore, the
process and the care providers should establish trust, stability,
confidentiality, and a sense of safety. The capacity to assess needs and
develop plans for rehabilitation, together with a system for ongoing
monitoring and evaluation during the process, all aiming to improve
rehabilitation services, is required.147 To be as effective as possible, the
rehabilitation programs and services must build upon systematic clinical
knowledge, taking into account the complex social and cultural situations in
which services are provided.148 The need for more outcome studies on
rehabilitation programs is highlighted in overview studies by Jaranson and
Quiroga.149 In particular, Jaranson and Quiroga emphasize that in order to
improve the quality of care, studies on “[t]reatment efficacy (or clinical
impact) . . . [t]reatment effectiveness (or economic impact) . . . [and]
[e]fficiency (or cost/benefit analysis of the program]” must be undertaken.150
Additionally, there is a need to focus on studies that include a variety of
different approaches to rehabilitation as well as studies that cover work done
with children and adolescents.151
Confidentiality and trust are vital to the process of providing and
receiving rehabilitation. There may be serious issues related to lack of trust
for many victims of torture, especially with regard to those who will provide
services and assistance.152 Health professionals in countries where torture
has taken place may have been involved or complicit in torture and ill-
treatment and those governing the health services may have engaged in or
been part of the oppressing system. Even if time has passed and the system
has changed, the person in need of rehabilitation may feel unsafe and
vulnerable in such systems. This problem reinforces the importance of
involving non-state actors in the rehabilitation process. Such non-state
actors include different organizations involved in human rights monitoring
and assistance, many of which are affiliated with qualified professionals
whose competency and experience should be used in post-conflict
rehabilitation. As indicated in GC 3:
147. See PATEL & WILLIAMS, supra note 94, at 89.

148. See id. at 79.
149. See id. at 106.
150. James M. Jaranson & José Quiroga, Evaluating the Services of Torture Rehabilitation
Programmes: History and Recommendations, 21 TORTURE 98, 105 (2011), available at http://
irct.org/assets/uploads/1018-8185_2011-2_98-140.pdf.
151. See Montgomery & Patel, supra note 132, at 143.
152. See ISTANBUL PROTOCOL, supra note 99, ¶ 142(c).
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The obligation in [A]rticle 14 to provide for the means for as full

rehabilitation as possible can be fulfilled through the direct provision of
rehabilitative services by the State, or through the funding of private
medical, legal and other facilities, including those administered by non-
governmental organizations (NGOs), in which case the State shall
ensure that no reprisals or intimidation are directed at them.153
The requirements (or obligations) listed in GC 3 may seem complex to
some, but GC 3 sets forth, in its richness, what is required to provide full
redress and rehabilitation when possible in accordance with the legal
requirements of CAT. It is extremely important that any system of redress
avoid the doubling of efforts and repeated and protracted processes in order
for victims to obtain necessary assistance. This is true in all stages of the
rehabilitation process, including the initial determination as to whether one
is entitled to redress and determinations related to health care and other
measures.
All of these aspects must be considered when human beings have been
subjected to torture or ill-treatment. Such considerations also provide useful
guidance for the process of developing and adopting programs of redress and
rehabilitation, including situations where groups of individuals have been
affected and knowledge of violations has been established.
By elaborating on the concepts of redress, rehabilitation, and the
enforceable right to rehabilitation after torture, the Committee, through
GC 3, has taken a long-needed and important step forward. The obligations
under CAT have been specified and clarified, and ways in which redress,
including rehabilitation, can be ensured and realized, have been explicitly
outlined. But the contribution has not been only in relation to the meaning
of Article 14 of CAT. Indeed, GC 3 has also contributed to our
understanding of the right to redress and rehabilitation under international
law. Realizing what GC 3 has outlined helps to ensure that care is given to,
and new options in life are, in fact, made possible for victims of torture
through prompt, adequate, and effective reparation and rehabilitation for
harm suffered.
153. GC 3, supra note 2, ¶ 15.

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Precarious Employment? Varying Approaches to

Foreign Sovereign Immunity in Labor Disputes
RICHARD GARNETT*
I. Introduction
In 1998, I completed the first major article in the United States on the
application of the rules of foreign sovereign immunity in employment
disputes.1 Typically, immunity is pleaded by a foreign state as a defense to a
claim for unfair dismissal, unpaid wages, or sex discrimination by an
employee of the state. A successful plea of immunity will result in the
employee’s case being dismissed without the merits being investigated.
Immunity can, therefore, be a powerful weapon in the hands of a foreign
state in thwarting the vindication of employee rights.
In the 1998 article, it was found that U.S. courts have taken varying
approaches to the question of foreign sovereign immunity with occasionally
inconsistent results on similar facts. The aim of the present article is to
review the decisions of the past two decades to assess whether a clearer
position has emerged on the rights of foreign state employees. While the
earlier article examined disputes arising from employment in all foreign
state-owned enterprises, both within and outside the United States, the
present discussion focuses predominantly on employment taking place in the
United States in embassies, consulates, and other foreign state organizations
responsible for implementing government policy. Disputes arising from
these types of employment are not only the most common but also often the
most controversial.
II. The Legislative Regime

Before considering the recent decisions, the relevant legislation must first
be examined. In the United States, foreign sovereign immunity is governed
by the Foreign Sovereign Immunities Act of 1976 (FSIA), which gives a
general grant of immunity to foreign states subject to exceptions. For the
purposes of this study, the key exception is found in Section 1605(a)(2)(1) of
the FSIA which removes immunity where the action is “based upon a
commercial activity carried on in the United States” by the foreign state.2
* Richard Garnett is Professor of Law at the University of Melbourne, Australia and

Consultant in international litigation and arbitration at Herbert Smith Freehills.
1. Richard L. Garnett, The Perils of Working for a Foreign Government: Foreign Sovereign
Immunity and Employment, 29 CAL. W. INT’L L. J. 133 (1998).
2. Foreign Sovereign Immunities Act, 28 U.S.C.A. § 1605(a)(2) (1976).
THE YEAR IN REVIEW
In considering whether the commercial activity exception is satisfied in an

employment situation, U.S. courts have relied upon four approaches, which
are also noticeable in the jurisprudence of other countries.3
The first approach involves situations where courts and legislative bodies
have focused on the context or location of the employment. Where a person
is employed in a highly sovereign context such as an embassy, regardless of
the employee’s level or capacity, the forum state should grant immunity to
the foreign sovereign. The basis for such immunity is that any inquiry into
activities at such a place necessarily would intrude upon the foreign state’s
sovereignty. By contrast, where a person is employed in an organization
whose nature and functions are identical to corporations in the private
sector, a plea of foreign sovereign immunity rarely should be available
because no sensitive governmental concerns are implicated.
A second approach to employment claims by foreign states has paid
particular attention to the status and duties of the employee. A finding of
immunity should be more likely where the plaintiff employee is in a senior,
policy-oriented position because he or she is closer to the sovereign “core”
of the foreign state. But where an employee is engaged in routine, purely
operational duties, or in work that is highly similar to that performed by
persons in private corporations, a grant of immunity would not be
appropriate. This analysis, focusing on the functions and role of the
employee, is advocated in this Article as the best method for protecting the
rights of both employer and employee and because it arguably now
represents the customary international law standard applied in the majority
of nation states.4
A third approach to resolving immunity pleas in employment actions
focuses on the territorial connection between the forum, the employee, and
the employment contract. A number of national immunity statutes,
including the FSIA, expressly require a territorial connection between the
claim and the forum of adjudication before jurisdiction can be exercised.5 In
3. For analyses of the position in other jurisdictions, see Julia Brower, State Practice on
Sovereign Immunity in Employment Disputes Involving Embassy and Consular Staff, CENTER FOR
GLOBAL LEGAL CHALLENGES (Dec. 19, 2015), https://law.yale.edu/system/files/
state_immunity_in_employment_disputes.pdf; Richard L. Garnett, The Precarious Position of
Embassy and Consular Employees in the United Kingdom, 54 INT’L & COMP L. Q. 705 (2005);
Richard L. Garnett, State and Diplomatic Immunity and Employment Rights: European Law to the
Rescue?, 64 INT’L & COMP. L. Q. 783 (2015); Richard L. Garnett, State Immunity in Employment
Matters, 46 INT’L & COMP. L. Q. 81 (1997); Richard L. Garnett, State Immunity and
Employment Relations in Canada, 18 CANADIAN LAB. & EMP. L. J. 643 (2014), http://
heinonline.org/HOL/Page?handle=hein.journals/canlemj18&div=25&g_sent=1&casa_token=&
collection=journals. The issue has particularly attracted the attention of European scholars. See,
e.g., Philippa Webb, The Immunity of States, Diplomats and International Organisations in
Employment Disputes: The New Human Rights Dilemma?, 27 EUROPEAN J. INT’L L. 745 (2016);
Andrew Sanger, State Immunity and the Right of Access to a Court under the EU Charter of
Fundamental Rights, 65 INT’L & COMP. L. Q. 213 (2016).
4. See Brower, supra note 3, at 784.
5. See 28 U.S.C.A. § 1605(a)(2).
THE YEAR IN REVIEW
2018] PRECARIOUS EMPLOYMENT 27
addition, the nationality of the employee, in particular, whether he or she is

a citizen of the foreign state, the United States, or a third country, has been
considered a relevant criterion.
The fourth tendency perceptible in the case law and legislation of
countries dealing with employment disputes with foreign states has been the
isolation and characterization of the particular claim brought by the
employee in order to ask whether such an action excessively implicates the
sovereignty of the foreign state. For example, where an employment action
involves an investigation into the conduct of a state’s security services, a
court should deny jurisdiction, granting immunity. But where the claim
merely requires an examination of conduct typically performed by persons
situated in the private sector, immunity should not be granted.
All these approaches represent attempts to reconcile a number of
competing interests at work in a foreign sovereign employment case. While
there is a plaintiff employee’s interest in obtaining redress, there is also a
foreign state employer’s interest in protecting its governmental functions
from the scrutiny of other states. Similarly, while the forum state has an
interest in protecting its nationals and residents employed by the foreign
state, it also has a conflicting concern to maintain good diplomatic and
commercial relations with the foreign state defendant.
The legislative history of the FSIA on the commercial activity exception
should also be considered. The history indicates that commercial activity is
conduct that is not public or governmental in nature.6 Further, “the
employment of diplomatic, civil service, or military personnel” would be
public or governmental in nature, but not the employment of United States
citizens or third country nationals by the foreign state within the United
States.7 The “engagement of laborers, clerical staff or public relations or
marketing agents” would also be considered commercial activity.8 Such
history arguably focuses principally on the second and third of the two
approaches above, namely the status and duties of the employee and the
territorial nexus in the immunity determination. The suggestion that the
employment of diplomatic or civil service personnel would be sovereign
activity while employment of laborers, clerical staff, public relations, or
marketing agents would be commercial appears to emphasize the different
role and duties performed by such staff. The reference to the employee
having United States or third country nationality also implies that the
foreign state’s interest in precluding adjudication should be given less weight
in such cases.
Despite these observations in the legislative history, U.S. courts—in
decisions both before and after 1998—have also relied on the other two
criteria referred to above in immunity determinations, namely the place of
6. See FOREIGN SOVEREIGN IMMUNITIES ACT OF 1976, H.R. REP. NO. 94-1487, 16 (1976),
reprinted in UNITED NATIONS LEGISLATIVE SERIES MATERIALS ON JURISDICTIONAL
IMMUNITIES OF STATES AND THEIR PROPERTY 107 (1982).
7. Id.
8. Id. at 108.
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employment and the nature of the claim. A brief appraisal of the pre-1999
decisions will first be made in order to provide a background to the recent
cases.
III. Pre-1999 Decisions: Diplomatic and Consular Employment
Embassies and consulates are arguably the most sovereign locations of a

foreign state in another country’s territory where matters of important and
sensitive national policy are considered. Consequently, disputes concerning
employment at such missions have always been difficult and controversial.
In 1996, the 9th Circuit gave a resounding endorsement of the employee’s
rights and duties approach to immunity in such cases in Holden v. Canadian
Consulate.9 There the court held that a U.S. citizen employed as a
commercial officer within the trade and investment section of a consulate
was entitled to sue her employer for sex and wage discrimination.10
The distinction in the legislative history to the FSIA between the
employment of diplomatic or civil service personnel and clerical staff, public
relations, or marketing agents was relied upon, with the court noting that it
required an assessment of the duties of the employee. The claimant was not
a civil servant because she completed no examination prior to being hired
and was not entitled to tenure or any benefits provided to foreign service
officers from her employer.11 Nor was she a member of the diplomatic
personnel; although employed in the consulate and not in a separate trade
office her activities were not those of a diplomat.12 She was engaged in
promoting and marketing products of the foreign state, which was the type
of work regularly done by private persons. The employee was not involved
in policy determination, lobbying activity, or legislative work for the
government and could not speak on its behalf. As a U.S. citizen, she could
not enter the consulate unless in the company of a foreign service officer.
Holden, therefore, is a very clear case of a court resolving the immunity
determination by reference to the role and duties of the employee, but such
an approach was not universally adopted in embassy/consulate cases prior to
1999. For example, in Ferdman v. Consulate Gen. of Israel,13 immunity was
imposed in a suit by a public affairs officer for sex discrimination on the basis
that because a consulate was a highly sovereign workplace; no investigation
of its affairs or activities was permissible.14 As is apparent, an approach that
focuses on the nature of the employee’s workplace can be particularly harsh
on employees in sovereign location cases, where the worker is engaged in
9. Holden v. Canadian Consulate, 92 F.3d 918 (9th Cir. 1996).

10. See id. at 922.
11. Id. at 921.
12. Id. at 922.
13. Ferdman v. Consulate Gen. of Isr., 997 F. Supp. 1051 (N.D. Ill. 1998).
14. Id. at *4 (saying, “[c]onsulate activities are of course the epitome of ‘sovereign or public
acts’”).
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menial or routine duties. Such an analysis also appears inconsistent with the
legislative history to the FSIA above.
IV. Pre-1999 Decisions: State-Owned Marketing, Cultural, and

Tourism Bodies
Distinct from embassies and consulates are organizations established by
foreign states to carry out broad policy aims such as the dissemination of
cultural material or assistance in the marketing of the home country’s
products or tourism. There was one pre-1999 decision where the
governmental nature of such a body was instrumental in an employee’s claim
being dismissed on immunity grounds. In Iacobelli,15 a secretary was not
permitted to sue to recover unemployment benefits after her employment at
the Japanese Development Bank ended because the court found that the
nature of the activities undertaken by the organization was governmental.
Despite the use of the term “bank” in the employer’s title, it was, in fact, an
instrument of government policy with responsibility for gathering
governmental, financial, and economic information for the foreign state.16
By contrast, in other pre-1999 decisions involving marketing and cultural
bodies, commercial activities were found to be present by reference to the
status and duties of the employee. In Segni v. Commercial Office of Spain,17 a
claimant was permitted to sue his employer, an agency of the Spanish
Government responsible for promoting Spanish exports to the United
States. What was important in the immunity determination was not the
nature of his employer’s activities—which was found to be governmental—
but rather the position and duties of the employee. His role was to provide
services in product marketing, and he was not involved in either the creation
or implementation of government policy. A similar approach was taken in
allowing suits by a marketing executive of a foreign state-owned tourist
authority18 and a receptionist switchboard operator at a foreign government
owned institution “for cultural, educational and informational exchange.”19
Also significant in those decisions decided similarly to Holden, was that the
employee did not hold the nationality of the foreign state employer.
By contrast, in another pre-1999 cultural bodies case, Goethe House New
York, German Cultural Ctr. v. N.L.R.B.,20 a U.S. court resolved the question
of commercial activity by referencing the nature of the employee’s claim
before the court. Specifically, immunity was denied in the context of a claim
for union certification on behalf of U.S. nationals employed at a foreign-
15. In re Claim of Iacobelli, 484 N.Y.S.2d 318 (App. Div. 1985).

16. Id.
17. Segni v. Commercial Office of Spain, 835 F.2d 160 (7th Cir. 1987).
18. Elliott v. British Tourist Auth., 986 F. Supp. 189, 194 (S.D.N.Y. 1997), aff’d 172 F.3d 37
(2d Cir. 1999).
19. EEOC Decision no. 85-11, 38 Fair Empl. Prac. Cas. (BNA) 1876 (1985).
20. Goethe House New York, German Cultural Ctr. v. N.L.R.B., 869 F.2d 75, 81 (2d Cir.
1989).
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state subsidized cultural center because the court’s entertaining the claim
would not involve an intrusion into the sovereign functions of the foreign
state.
V. Post-1999 Decisions: Embassies and Consulates
A. THE NATURE OF THE EMPLOYEE’S DUTIES AS COMMERCIAL

ACTIVITY
In the majority of cases since 1999 involving embassy and consular
employment, courts have favored the second approach mentioned above,
namely, resolving the immunity question by reference to the status, role, and
duties of the employee. The leading decision comes from the District of
Columbia Federal Circuit Court of Appeals in El-Hadad v. U.A.E..21 El-
Hadad involved an action for breach of employment contract and defamation
by an Egyptian citizen against the UAE. The claimant had been employed
as an auditor and supervising accountant in the cultural attaché office at the
UAE Embassy.22
The court began by quoting the legislative history to the FSIA, noting
that a foreign government’s civil servants and diplomats “do not qualify for
the commercial activity exception.”23 Yet at the same time, the court noted,
the reverse does not apply; merely because an employee is not a civil servant
or diplomat does not mean that such a person cannot “still be engaged in
quintessentially governmental work–like, for example, a judge.”24 Hence, if
the court finds the claimant to be a civil servant, immunity will be imposed,
but if he or she is not within that category, the court must still proceed to
examine the nature of the person’s employment and duties to determine if
they are sovereign in nature.
Before considering whether the employee was a civil servant on the facts,
the court in El-Hadad made other important comments about the
commercial activity exception in employment disputes. First, it specifically
rejected the nature of the claim approach for determining whether
commercial activity exists, for example, where a court focuses simply on the
circumstances underpinning the employee’s action (such as the employer’s
acts of discrimination). Application of such a test may mean that the “case
might entirely defy analysis”25 in the sense that it would be difficult to
determine whether commercial activity was present at all. Instead, it was
necessary for the court to look at the employment relationship “as a
whole.”26 The nature of the claim approach is discussed in more detail at
21. El-Hadad v. U.A.E., 496 F.3d 658, 662 (D.C. Cir. 2007) (substantially affirming its earlier
decision), aff’g 216 F.3d 29 (D.C. Cir. 2000).
22. Id.
23. Id. at 663-664.
24. Id. at 664.
25. Id. at 663, n.1.
26. Id.
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Section VI.B below. Secondly, the court, while endorsing the employee’s
duties and responsibilities approach from the Holden and Segni cases (above),
nevertheless departed from the courts in those decisions’ analysis of the
legislative history. Specifically, in those cases, the courts suggested that once
an employee was found not to be a civil servant a finding of commercial
activity must follow. However, the court in El-Hadad said that this approach
misread the legislative history because the description of diplomatic or civil
service personnel was meant to be illustrative, not exhaustive, and would not
preclude a court from finding immunity even where the employee was not a
civil servant or diplomat.27
The court in El-Hadad then articulated the following criteria for
determining whether an employee was a civil servant of the foreign state.28
First, how does the law of the foreign country define its civil service, and did
the employee’s “job title and duties come within that [description]?”29
Second, what is the nature of the claimant’s relationship with the foreign
state; is it purely contractual, or is it based solely upon the civil service laws
of the foreign country? Third, was there any connection between the
claimant’s prior working history in the foreign state and his or her
subsequent employment at the embassy? Specifically, was the embassy role a
new job or a continuation of domestic civil service?30 Fourth, what is the
nature of the claimant’s work at the embassy? Finally, what is the relevance
of the claimant holding a nationality other than that of the foreign state and,
in particular, is the foreign state a country that would employ non-nationals
in governmental positions? The foreign state employer has the burden of
proof of establishing the above criteria.
Applying the above guidelines to the facts, first, while the law of the UAE
had no definition of civil service, the employee in El-Hadad was not eligible
for civil service benefits.31 Second, the employee fell within the definition of
a local employee of a mission abroad that expressly excluded civil servants.32
Third, there was no doubt that the employment at the embassy was separate
and “unrelated to his prior employment in the UAE.”33 Fourth, it was clear
that the claimant “had no role in the creation of UAE government policy
and was not” a party to UAE political decisions and “performed only the
ordinary auditing duties of any commercial accountant” with no discretion
in his duties.34 While the plaintiff had supervisory authority over other
accountants in his office, his exclusion from policy formulation and lack of
27. El-Hadad v. U.A.E., 496 F.3d 658, 664 n.2 (D.C. Cir. 2007) (substantially affirming its
earlier decision), aff’g 216 F.3d 29 (D.C. Cir. 2000).
28. See id. at 665.
29. Id.
30. See id.
31. See id. at 665–67.
32. See id. at 666.
34. Id.
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discretion were more compelling factors. Finally, the fact that the claimant
held the nationality of a third country was irrelevant given that “small
countries like the UAE [ ] at times employ non-nationals in high
governmental positions.”35 Where, by contrast, a state “rarely if ever hires
non-citizens for its civil service . . . non-citizenship strongly indicates that
someone is not a civil servant.”36 Yet, in all cases, the fact that an employee
has the citizenship of the foreign state will support a finding that the person
is a civil servant.
Therefore, the applicant was found not to be a civil servant, and the court
then had to consider next whether his duties nevertheless involved the
exercise of governmental power for which immunity should attach.37
According to the court, a “distinctive mark of governmental work is
discretionary involvement with sovereign law or policy.”38 Since, as noted
above, the claimant had no role in the creation of government policy, his
duties were not discretionary and he “did standard accounting work . . . of a
character easily found in commercial enterprise,” the commercial activity
exception applied.39
El-Hadad is a compelling affirmation of the employee’s role and duties
approach both in its analysis of the meaning of “civil servant” and its
assessment of the status of a foreign state employee who is not a civil
servant.40 Given the highly sovereign context of employment involved in
that case—an embassy—this is a significant step in favor of protecting the
rights of foreign state employees.
A similar approach has been taken in other embassy/consulate cases. In
Mukaddam v. Permanent Mission of Saudi Arabia to the U.N., a plaintiff who
was employed to write speeches for Saudi government officials, draft
correspondence, public statements, and reports to the foreign ministry, and
establish a data bank classification system was held entitled to sue her
employer for wrongful termination of employment.41 The court found that
that the employee was not a civil servant. First, there was no evidence of
Saudi law being followed on the question, and second, the facts showed that
she did not complete a competitive examination prior to being hired, did not
have tenure, and did not receive the same benefits as foreign service officers
or the more general civil service protections. The plaintiff’s employment
contract showed that she “was a contract employee hired to conduct research
and perform [ ] clerical duties.”42 The employee was also not a member of
35. Id. at 667.

36. Id.
37. See id.
38. Id. at 668.
40. See id. at 665–66.
41. Mukaddam v. Permanent Mission of Saudi Arabia to U.N., 111 F. Supp. 2d 457, 464
(S.D.N.Y. 2000).
42. Id.
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the state’s diplomatic personnel as she was not involved in the

“administration of government policy, privy to [ ] policy deliberations,”
engaged in legislative and lobbying activities, or authorized to speak on
behalf of the foreign state.43 At most, the claimant “drafted speeches and
statements that set forth [the foreign state’s] governmental policy and
positions.”44 Once the court established that the employee was neither a
civil servant nor a diplomat, it proceeded to find, again by reference to her
above duties and responsibilities, that her action was based upon commercial
activity.45 The plaintiff’s U.S. citizenship was another factor in support of
denying immunity. Mukaddam is, therefore, another emphatic statement of
the employee role and duties approach.
Note that in Mukaddam the foreign state also sought to rely on Article 7
of the Vienna Convention on Diplomatic Relations (VCDR) to support its
claim to immunity. Article 7 provides that the sending state may “freely
appoint the members of the staff of [its] mission,” but the court properly
found that such provision, on its face, confers no “absolute grant of
immunity” from “any legal challenge to the hiring and firing of [m]ission
staff.”46 More fundamentally, while the VCDR provides rules on the
immunities for diplomatic personnel, the instrument says nothing about
foreign sovereign immunity, which is comprehensively dealt within the
FSIA.47 Hence, if jurisdiction over a foreign state is established under the
FSIA, the VCDR cannot alter the conclusion.
A very recent decision by the District Court of the District of Columbia,
with highly similar facts, confirms that where an embassy or consular
employee is not a member of the foreign state’s civil service and is
performing generic administrative tasks with no involvement in
governmental decision making, immunity will not be available. In Ashraf-
Hassan v. Embassy of France,48 the court stated that employment will be
considered commercial “if an employee is contracted to work as a non-civil
servant and has duties of a clerical nature.”49 Here, the plaintiff was engaged
in “supervising the embassy’s [ ] placement program and coordinating [its]
partnership with the French-American Cultural Exchange in New York.” As
a result, commercial activity was found.50 Her position was purely
administrative with no involvement in governmental decisions.
Interestingly, in the appeal in Ashraf-Hassan, the foreign state conceded
the question of commercial activity and instead argued (rather ambitiously)
43. Id.
44. Id.
45. See id. at 466.
46. Id. at 468 (quoting the Vienna Convention on Diplomatic Relations, art. 7, Apr. 18, 1961
23 U.S.T. 3227, 500 U.N.T.S. 95).
47. See id. at 469-70.
48. Ashraf-Hassan v. Embassy of Fr., 40 F. Supp. 3d 94 (D.D.C. 2014), aff’d 610 F. App’x. 3
(D.C. Cir. 2015).
49. Id. at 102.
50. Id. at 98.
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that the claimant’s case was not based upon such activity because her action
on the merits would almost certainly fail.51 The court quite properly
rejected such an assertion, noting that it “erroneously conflates the question
of subject matter jurisdiction with an inquiry into the merits. A plaintiff
need not be successful on the merits for a court to have [subject matter]
jurisdiction.”52
In some decisions involving embassy and consular employees, the
application of the role and duties approach has, by contrast, resulted in the
imposition of immunity. Sanchez-Ramirez v. Consulate of Mexico in San
Francisco concerned two consular employees, both nationals of the foreign
state: G, who assisted Mexican nationals with issuing and renewing of
passports and visas, and S, who was a lawyer and notary public responsible
for authenticating legal documents.53 G and S both sued for breaches of “the
California Labor Code [for] failing to provide meal and rest breaks” and pay
overtime.54 Additionally, S brought an individual action for disability and
sex discrimination.55 The court noted that both G and S were Mexican
nationals working in the United States under A2 visas, which are granted to
persons travelling to the United States to engage in solely official and
governmental activities of the foreign state (but who are not ambassadors,
ministers, or diplomatic officers).
The court agreed with the foreign state that both G and S were civil
servants and that the nature of both of their jobs were integral to the
government because the services could not be provided to Mexican nationals
without employees such as the plaintiffs. The work also could not be
performed by a private party in commerce.56 In the case of S, while he did
not have final approval over the submission of documents to the
government, he had primary drafting responsibility, and his role involved
selection and filling out the correct forms. Similarly, G’s role, in “verifying
the identity of persons seeking government-issued identification” (passports)
was a uniquely governmental position.57 While the court noted some of the
employees’ tasks could be characterized as “clerical [and] administrative” in
the terms of the legislative history, “almost any job involving documentation
will have ‘clerical’ and ‘administrative’ aspects.”58 The court also noted that
both employees received many of the same types of benefits that diplomatic
and consular officers enjoyed, such as health benefits and relief from
taxation.
51. Ashraf-Hassan v. Embassy of Fr., 610 F. App’x. 3, 5–6 (D.C. Cir. 2015).
52. Id. at 6. For another recent decision involving an embassy employee (a receptionist) where
the French government conceded that commercial activity existed, see Jouanny v. Embassy of
Fr. In the U.S., 220 F. Supp. 3d 34 (D.D.C. 2016).
53. Sanchez-Ramirez v. Consulate of Mex. in San Francisco, 2013 WL 4013947 *1 (N.D. Cal.
2013), aff’d. 603 Fed. App’x. 631 (9th Cr. 2015).
54. Id.
55. Id. at *2.
56. Id. at *9.
57. Id.
58. Id.
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The decision in Sanchez-Ramirez, while a disappointing result for the

employees in question, appears to be a defensible application of the duties
and responsibilities approach to define commercial activity. While neither
party was in a senior, policy-oriented role, their work was uniquely
governmental in that the tasks performed had no private sector counterpart,
and both employees were citizens of the foreign state who enjoyed civil
service benefits. Therefore, it is understandable that a foreign state would
not want public adjudication of matters that could reveal its policies and
practices regarding immigration and the benefits provided to its civil service.
A more contentious category of embassy and consulate employment cases
concerns persons employed as chauffeurs. While the courts in such cases
have purported to apply an employee duties test, in reality, they excessively
defer to the interests of foreign states. In Crum v. Kingdom of Saudi Arabia, a
chauffeur at the Saudi Embassy—responsible for transporting embassy
officials, their families, and guests—was not permitted to sue his employer
because his work was not commercial as it involved the securing the safety of
the state’s officials.59 This result was reached despite the employee being a
U.S. citizen and not a member of the Saudi civil service. The court also
bolstered its conclusion by referencing Article 7 of the VCDR, but as noted
above by the court in Mukaddam, neither this provision, nor the VCDR, as a
whole, has any relevance to foreign sovereign immunity in employment
cases.60
In a more recent decision, Figueroa v. Ministry of Foreign Affairs of Sweden,
it was confirmed that a chauffeur, responsible for transporting the
ambassador of a foreign state, his or her family, and other diplomatic staff,
was not permitted to sue for workplace claims.61 Again, it was noted by the
court that:
The safe transport of [foreign state] dignitaries, [is] an activity integral
to effecting the governmental function of the Mission. A sovereign’s
decisions on how best to address the safety concerns of government
officials are peculiarly sovereign because [a] failure to protect or
safeguard a sovereign representative, such as an ambassador or a titular
head of state, can have extremely adverse consequences for the
sovereign nation.62
While the court acknowledged that a chauffeur stands closer to a clerical

worker than a civil servant in terms of the FSIA legislative history, such
59. Crum v. Kingdom of Saudi Arabia, 2005 WL 3752271 at *4 (E.D. Va. 2005); See also
Martinez v. Consulate Gen. of Alg. in N.Y., 2016 WL 6808227 (S.D.N.Y 2016) (where Crum
was recently applied—with minimal reasoning—to another case involving a chauffeur at a
consulate).
60. Id. at *4.
61. Figueroa v. Ministry of Foreign Affairs of Swed., 222 F. Supp. 3d 304, 306 (S.D.N.Y.
2016).
62. Id. at 315.
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comments were only informative, not outcome determinative.63 Also, while

the chauffeur was unlikely to have been a civil servant under Swedish law, he
was still subject to a special benefits scheme for locally engaged staff.64
It is relevant that the courts in Crum and Figueroa relied heavily on the 4th
Circuit Court of Appeals decision in Butters v. Vance Int’l in support of their
conclusion that a chauffeur was in a uniquely “sovereign” position.65 Butters
involved a security agent assigned to the Saudi Arabian royal family, with
direct responsibility for securing the safety of its members, whose
employment suit was also barred by immunity because it was not based upon
commercial activity.
It is questionable, however, whether these decisions involve a correct
application of the employee’s role and duties criterion. The preferable
rationale for this principle is that certain types of employment involve
activities that simply cannot be performed by persons in the private sector
because of their seniority, involvement in government policy, or proximity
to sensitive information belonging to the foreign state. To say that a
chauffeur and a security guard fall within such a category simply because the
persons they are looking after happen to be senior officials of the foreign
state seems an unreasonable extension of immunity. It is notable in Figueroa
that the court referred to the “adverse consequences” that could be suffered
by a foreign state because of harm to its leading representatives.66 But what
if the chauffeur had been transporting more junior officials of the foreign
state or leading CEOs of major private corporations? There would be
commercial activity in such cases, yet concerns about safety would still be
present. Also, how does allowing a chauffeur to sue for discrimination in
relation to his or her employment endanger the safety or security of the
foreign state or its leaders? Lawsuits against state officials may be
embarrassing, but that is a feature of any litigation; imposing immunity
hardly deters such undesirable workplace practices in the future. The
correct focus should instead be on the nature of the work involved, which is
driving and transporting, an activity that can be equally performed in the
private sector, rather than focusing on the persons for whom the job is being
done. A concentration on the employer in this context is, therefore,
effectively an application of the first criterion for defining commercial
activity discussed above—the nature of the workplace or the employer—
which will almost always lead to absolute immunity where the worker is
employed at an embassy or consulate. Arguably, it is the employee who
suffers the greater adverse consequences of such a test, particularly when
they are U.S. citizens and residents with effectively one forum in which to
seek redress.
A much more defensible grant of immunity in the state security context
can be seen in the decision of the 9th Circuit Court of Appeals in Eringer v.
63. Id. at 315–16.

64. See id.
65. Butters v. Vance Int’l, 225 F.3d 462, 467 (4th Cir. 2000).
66. Figueroa, 222 F. Supp. 3d at 315.
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Principality of Monaco.67 There, an acknowledged “spymaster,” employed as

the Director of Monaco Intelligence Services, was precluded from suing his
foreign state employer.68 The claimant here was engaged in liaising with
other intelligence agencies, investigating potential government
appointments, investigating suspicions of corruption and other illegal
activity in Monaco, and protecting the Prince of Monaco from improper
foreign influence.69 Obviously, these are tasks and activities unique to
government, with the employee here operating at a high level of sensitive
national security. Not only could such conduct not be performed in the
private sector, but also there are compelling reasons of comity and inter-
state relations why a U.S. court should not be placed in the position of
reviewing such matters.
B. THE NATURE OF THE EMPLOYER AS COMMERCIAL ACTIVITY

Having considered the decisions which purported to apply the employee
duties and responsibilities criterion for defining commercial activity, it is
worth mentioning one case involving embassy employment where the first
approach—that is, the nature of the employer—was explicitly relied upon to
resolve the issue. Hijazi v. Permanent Mission of Saudi Arabia to the U.N.
involved a Jordanian claimant employed at the Saudi Arabian Mission who
sued for workplace discrimination.70 The claimant was an adviser whose role
included taking notes at diplomatic meetings, conducting research, writing
memoranda, and on one occasion, speaking on behalf of the mission.71 In
essence, this case presented highly similar facts to Mukaddam (above), yet the
court reached the opposite conclusion on the issue of commercial activity
and upheld the plea of immunity.72
The court was heavily influenced by the decision in Kato73 (discussed at
Section VI.A below) which shifted the focus in defining commercial activity
in employment immunity cases to “whether particular actions that the
foreign state perform[s] [are the] type of actions by which [a] private party
engage[s] in trade and traffic or commerce.”74 Once the foreign state is
found to engage in sovereign activities at a particular workplace, the
question becomes whether the plaintiff employee’s duties form part of such
state’s functions.75 The practical effect of such a test is that where a highly
67. Eringer v. Principality of Monaco, 533 F. App’x. 703 (9th Cir. 2013).
68. Id. at 705.
69. See id. at 704–05.
70. See Hijazi v. Permanent Mission of Saudi Arabia to U.N., 689 F. Supp. 2d 669 (S.D.N.Y.),
aff’d, 403 F. App’x 631 (2d Cir. 2010).
71. See id. at 669–75.
72. See id. at 669; but cf. Mukaddam, 111 F. Supp. 2d at 469–70 (denying defendant immunity
where plaintiff’s employment was considered commercial activity in accordance with the
exception to the Foreign Sovereign Immunities Act).
73. Kato v. Ishihara, 360 F.3d 106 (2nd Cir 2004).
74. Id. at 106 (emphasis added).
75. See id. at 107.
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sovereign workplace is involved, it will be difficult for the employee to show

that his or her tasks are not part of the state’s functions. The Hijazi court
almost admits as much by saying that “the focus of the inquiry ought to be
on the employer’s general actions rather than the specific employment
contract at issue.”76
Such a test effectively reinstates absolute immunity for embassy and
consular employees, and in Hijazi, the court had little difficulty finding that
the employee’s duties were so “sufficiently intertwined with the diplomat’s
governmental functions” that they fell outside the commercial activity
exception.77 On appeal, the Second Circuit Court of Appeals78 affirmed,
noting that the claimant’s duties were “in service of the [m]ission’s
governmental function.”79 Again, the point must be made: once a foreign
sovereign’s workplace is used as a starting point for determining whether a
commercial activity exists, the inquiry into the employee’s duties inevitably
becomes secondary or incidental, and the result being that it will be difficult
to show that such duties are not part of the state’s governmental functions.
The contrast with the second criterion above is stark; instead of considering
whether the employee’s role is uniquely sovereign and cannot be performed
by a comparatively placed employee in the private sector, the court simply
considers whether the employee is part of the apparatus of government,
which will almost always be so in the case of an embassy or consular
employee. It is suggested that such an approach is excessively protective of
foreign state interests at the expense of legitimate claims for redress by
routine employees.80
VI. Post-1999 Decisions: State-Owned Marketing, Tourism,

and Cultural Bodies
It was noted above that a general trend in the pre-1999 authorities on
marketing, tourism, and cultural bodies, especially the Segni case, was to
determine the issue of commercial activity by referencing the status and
duties of the employee.81 In more recent decisions, a serious divide has
emerged in U.S. case law between courts that continue to apply an employee
role and duties approach, others that focus on the nature of the employer
and its activities, and still others that give primacy to the particular claim or
action that forms the basis of the suit. As will be argued, while the nature of
the employer test unduly privileges foreign states at the expense of employee
rights, the nature of the claim analysis goes in the opposite direction, making
76. Hijazi, 689 F. Supp. 2d at 674.

77. Id. at 669.
78. Hijazi, 403 F. App’x at 631.
79. Id. at 632.
80. In Jimenez v. United Mexican States, a court dismissed on immunity grounds a workplace
claim by a consulate employee simply on the basis that there was “no evidence” of commercial
activity. No reasoning was given for this conclusion. See Jimenez v. United Mexican States, 978
F. Supp. 2d 720 (S.D. Tex. 2013).
81. See Segni, 835 F.2d at 164–65.
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it almost impossible for a state to claim immunity. The employee role and
duties approach, by contrast, is an appropriate middle ground that allows for
a balancing and weighing of the competing interests.
A. THE NATURE OF THE EMPLOYER AS COMMERCIAL ACTIVITY

The leading case from the Second Circuit is the decision of the Federal
Court of Appeals in Kato v. Ishihara.82 Kato involved a Japanese citizen
employed by the Tokyo Metropolitan Government (TMG) in New York
who sued for gender discrimination.83 Kato was employed under the terms
of a Japanese law applicable to “local public servants,” which included
qualification by competitive examination, guaranteed life tenure, and
rotation of employment placements.84 The claimant’s tasks included
“promotional activities on behalf of Japanese companies, such as manning
booths at trade shows to promote specific products,” and preparing
marketing reports for Japanese companies.85
After referring to the legislative history of the FSIA, the court noted that
although the claimant was “employed in activities relat[ing] to marketing
and business, [she] was concededly a ‘civil servant’ under Japanese law and
subject to many of the protections afforded the Japanese civil service.”86 The
court, therefore, made the important point that despite the apparently
separate references to “civil servant” and “marketing agent” in the legislative
history, in practice they are not always wholly distinct categories.87 Instead,
according to the court, the key inquiry was “whether TMG’s activities in
New York were typical of a private party engaged in commerce.”88 In one
swoop, the court shifted the focus away from the employee’s duties and
responsibilities to the nature and functions of the employer or workplace.
Applying this test to the facts, it was found that “TMG performed actions
that were only superficially similar to actions typically undertaken by private
parties.”89 Its role was “product promotion for Japanese companies, general
business development assistance, [and] participation in trade shows on behalf
of the companies to promote those companies’ products for sale.”90 While
“a private Japanese business might engage in those activities on its own
behalf . . . such a business will not typically undertake the promotion of
other Japanese businesses, or the promotion of Japanese business interests in
general.”91 Hence, the court concluded that where an entity engages in “the
promotion of commerce,” as opposed to simply “commerce,” it is
82. Kato, 360 F.3d at 109.

83. See id.
84. Id. at 109.
85. Id.
86. Id. at 111.
87. Id.
88. Kato v. Ishihara 360 F.3d 106, 111 (2nd Cir 2004).
89. Id.
90. Id.
91. Id. at 112.
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performing a “quintessential governmental function.”92 Because TMG was

not involved in commercial activity, the claimant’s “involvement in such
activities on TMG’s behalf” must also necessarily be governmental.93 The
conclusion that TMG was engaging in governmental activity and Kato was
doing so on its behalf also meant that Kato was a civil servant.94
Kato is a highly significant decision in that it almost has the effect of
bringing absolute immunity back to many foreign sovereign employment
disputes. The reality is that apart from the most obviously commercial
places of employment, such as private corporations and banks engaged in
profit making activities, an employee’s rights will now be dependent on the
activities performed by his or her employer. Such a result can be highly
unjust, especially where the employee’s own duties are routine and generic,
with no policy dimension. Hence, for any employees of organizations
engaged in policy implementation or formulation, the position is bleak after
Kato. While the result in Kato could possibly be justified on the ground that
the employee there was a Japanese citizen who was a civil servant under
Japanese law, her duties were nonetheless of a low-level nature that would be
unlikely to implicate the sovereignty and security concerns of the foreign
state.
The impact of Kato has already been seen in the Hijazi case discussed in
Section V.B above. Its influence is also apparent in other recent decisions
such as Kim v. Korean Trade Promotion Investment Agency (KOTRA)95 and
Salman v. Saudi Arabian Cultural Mission.96
Kim concerned a U.S. citizen responsible for researching and identifying
potential buyers of goods and services in the United States for Korean
exporters and linking up exporters and buyers, with his job title being
marketing manager and consultant.97 KOTRA was an entity established for
the “purpose of promoting development of the Korean economy by
providing services to Korean industries and enterprises,” specifically to act as
a local office to assist Korean enterprises in selling goods and services in the
United States.98 The court applied the approach in Kato based on “the
nature of the employer” to find that no commercial activity existed in this
case.99 After noting that KOTRA’s activities were “virtually indistinguishable
from the services offered by TMG [in Kato]” the court found that the
organization’s “sole purpose was the furtherance of Korean government
policy in facilitating Korean trade and economic interests.”100 Furthermore,
92. Id.
93. Id.
94. See id. at 109.
95. Kim v. Korea Trade Promotion–Inv. Agency, 51 F. Supp. 3d 279 (S.D.N.Y. 2014).
96. Salman v. Saudi Arabian Cultural Mission, No. 1:16 CV1033, 2017 WL 176576, at *1
(E.D. Va. Jan. 17, 2017).
97. See Kim, 51 F. Supp. 3d 279.
98. Id. at 281.
99. See id. at 284; See Kato, 360 F.3d at 111.
100. Kim, 51 F. Supp. 3d at 287–88.
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the claimant’s employment was “closely intertwined” with KOTRA’s

government role of promoting Korean companies.101
As argued above, the “intertwined” test may at first blush appear to be a
middle ground between the nature of the workplace and the employee’s role
and duties tests in defining commercial activity, but ultimately in its
application, it gives great weight to the activities of the employer. This
conclusion flows from the fact that in every case where the employer was
found to be engaged in sovereign acts (for example, Kato, Kim, and Hijazi
discussed above), the “intertwined” test has always been satisfied. Again, it is
clear that where an employee happens to work in a “sovereign” location it
will be almost impossible for them to show that their duties were somehow
extraneous or peripheral to their employer’s functions.
The impact of Kato can also be seen in the very recent decision of Salman
v. Saudi Arabian Cultural Mission.102 The claimant in that case, a U.S.
citizen, was employed as an academic adviser with an organization “created
by the Saudi government to administer programs and policies to meet the
educational and cultural needs of Saudis studying in the United States.”103
The purpose of the organization was to provide services to students such as
financial aid, accommodation, and advice on course selection and academic
requirements.104
The claimant sued for sex discrimination and the court again endorsed the
Kato approach to commercial activity, saying that “the question is not
whether an individual employed by a foreign state performed job functions
with an analogue in the private sector. Rather the inquiry centers on the
nature of the conduct undertaken by the foreign state itself and the
individual’s role in that activity.”105 In this case, the court found that a free
college education was a public benefit in Saudi Arabia, and the organization
was, therefore, involved in the distribution of public benefits with the
plaintiff being “tasked” with providing such public benefits to Saudi students
in the United States.106 The Saudi government “did not buy or sell anything
or engage in any profit-driven activity” but “simply acted through [the
organization] to effectuate its educational policy, ensuring that students
studying abroad received precisely the same benefits as their domestic
counterparts.”107 The manner in which the government conducts its
educational policy “has political, cultural, and religious dimensions,” and so
it is clearly governmental in nature.108 The government must, therefore,
have free “choice of personnel [in] implementing [such] policy.”109 Again,
101. Id. at 289 n.4.

102. Salman, 2017 WL 176576 at *1.
103. Id.
104. See id.
105. Id. at *4.
106. Id. at *5.
107. Id.
108. Id.
109. Id.
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the almost exclusive focus is on the employer, with little or no attention

given to the position and status of the employee.
As mentioned above, the only situation in which the Kato test will work to
the benefit of the employee is where the activities of the employer are found
to be private or commercial in nature. An example arose in Ghawanmeh v.
Islamic Saudi Acad., where a U.S. citizen employed as a teacher at a Saudi
school—in the United States—was allowed to sue the school for
discrimination.110
The administration of a school was found to be “an activity that was
routinely performed by private parties.”111 A similar case was Islamic Saudi
Acad. v. Islamic Saudi Acad. Emp. Prof’l Ass’n, where an employee association
was allowed to seek union certification on behalf of workers at an Islamic
school in the United States.112 The court found that the school had engaged
in commercial activity by entering into contracts with teachers, suppliers,
local cleaners, and security services, which was again conduct that could be
performed by private parties.113
B. THE NATURE OF THE CLAIM AS COMMERCIAL ACTIVITY

By contrast, in three other cases involving cultural and marketing
organizations, courts found commercial activity to exist by focusing on the
nature of the plaintiff’s claim and whether it implicated or compromised the
foreign state’s sovereignty. The first of these cases is Hansen v. Dutch Tourist
Bd., where an action for age and gender discrimination was declared
admissible.114 The court found that “the actions that formed the basis of [the
plaintiff’s] complaint [for discrimination did] not reflect the exercise of
powers particular to sovereigns.”115 Instead, the actions of the defendant
were challenged as “basic employment decisions akin to those made by many
small businesses.”116
The “nature of the claim” approach was applied in another case involving
the KOTRA, Cha v. Korean Trade Ctr.117 The claimant was a U.S. citizen
employed first as a secretary and then as a marketing manager/consultant by
KOTRA, who complained of gender discrimination.118 While the
defendant employer sought to rely on the Kato principle to deny commercial
activity, the court distinguished the case on the ground that the employee
was both a Japanese national and civil servant.119 While such facts were
110. Ghawanmeh v. Islamic Saudi Acad., 672 F. Supp. 2d 3 (D.D.C. 2009).

111. Id. at 9.
112. Islamic Saudi Acad., 2012 N.L.R.B. Reg. Dir. Dec. LEXIS 86 (2012).
113. See id.
114. Hansen v. Danish Tourist Bd., 147 F. Supp. 2d 142 (E.D.N.Y. 2001).
115. Id. at 151.
116. Id.
117. Jina Cha v. Korea Trade Ctr., No. 111678/08, 2009 N.Y. Misc. LEXIS 5165, at *1 (Sup.
Ct. 2009).
118. See id.
119. See id.
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present in Kato, as argued above, they were not the determinative elements
of the decision. Rather, the main thrust of Kato was to emphasize the nature
of the employer entity. The court then proceeded to hold that the
employee’s claim was based on commercial activity. First, applying Hansen
above, the court determined that: (1) the nature of the employee’s action did
not implicate the sovereignty of the foreign state; (2) the employee was a
U.S. citizen; and (3) the employee’s duties were commercial in nature.120 So
approaches two, three, and four, as seen above, which define commercial
activity (nature of the claim, nature of the employee’s duties and territorial
nexus), were all relied upon to provide a broader analysis of the immunity
question.
Thirdly, in Shih v. Taipei Econ. & Cultural Representative Office (TECRO),
a group of U.S. citizens were permitted to sue for age discrimination.121 The
case involved three employees; Shih, who was involved in answering phones
and translating public documents and articles, having no contact with
confidential government information or involvement in policy decisions;
Yao, who performed bookkeeping and other clerical tasks; and Hu, who
performed clerical tasks in the library.122 The court first found (1) that the
plaintiffs’ claims for discrimination were based on “the adverse employment
actions” and management of their employer; (2) that they allegedly suffered
as a result of their age; and (3) that the employer’s conduct in imposing such
adverse employment actions was itself commercial activity.123 The court
further noted that “making decisions about what tasks employees perform,
how much they are paid or how they are treated in the workplace does not
implicate concerns peculiar to sovereigns.”124 While the court in Cha
distinguished Kato, Shih appeared to reject the decision outright, saying that
the correct approach in defining commercial activity was not to focus on the
activities of the employer in an abstract sense, but rather to examine “the
nature of the act” upon which the plaintiff’s claim is based.125
While the above cases relying on the “nature of the claim” approach
certainly produce more positive outcomes for employees of foreign states,
this test is not recommended. The main problem is that it provides
insufficient protection for foreign states because in almost every case
commercial activity will be found. Where a plaintiff sues, for example, for
discriminatory conduct, failure to pay wages or other benefits, or unlawful
termination, the facts supporting such claims would be conduct that a
private party could engage in, making it commercial. While it is conceivable
that a U.S. court could conclude that a particular action seriously implicated
the security or sovereignty concerns of a state (for example, if a state were
120. Id. at *16.

121. Shih v. Taipei Econ. & Cultural Representative Office, 693 F. Supp. 2d 805 (N.D. Ill.
2010).
122. See id.
123. Id. at 811.
124. Id.
125. Id. at 812, 815.
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ordered to reinstate a high level official), such cases have not yet arisen in the
United States. The far more common situation is a suit for damages arising
from improper conduct in the workplace, which can and does occur in any
employment location.
C. THE NATURE OF THE EMPLOYEE’S DUTIES AS COMMERCIAL

ACTIVITY
The final case to consider under the heading of employment at marketing
and cultural bodies involves a clear application of the employee duties and
responsibilities approach to commercial activity. Lee v. Taipei Econ. and
Cultural Representative Office (TECRO) was another case involving a suit for
age discrimination at TECRO.126 In Lee, the plaintiff was a chauffeur who
was a member of the service staff of TECRO.127 The court first rejected the
argument that the employee was a civil servant for a number of reasons.
First, the foreign state, Taiwan, had failed to establish this status under its
law.128 Second, nothing about the plaintiff’s role as a chauffeur had
recognized markers of civil service (such as involvement with political
deliberations) or indicated that the plaintiff was part of the Taiwanese
government.129 Third, the plaintiff’s employment did not have to go
through official channels or receive approval from the foreign ministry.
Additionally, the plaintiff did not take any exam at the time of his
employment or receive civil service benefits.130 In effect, the plaintiff was
performing “a civil service staff job that any laborer could have fulfilled.”131
Fourth, he was a dual Taiwanese–U.S. citizen who was locally recruited in
the United States to work only in that country.132 Finally, “the strongest
evidence” of non-civil service status lay in the plaintiff’s responsibilities as
chauffeur: he “had no role in political deliberations and policymaking” and
“performed menial tasks around the office, waited outside at events, and had
no discretionary authority.”133
Once the court found that Lee was not a civil servant, it also, similar to El-
Hadad, again relied on the nature of his duties to conclude that his
employment was commercial.
His tasks as a driver, maintenance and repairman, and errand runner are
standard in the commercial world. His duties involved no discretionary
duties or involvement with sovereign law or policy. He participated in
126. Lee v. Taipei Econ. & Cultural Representative Office, No. 4:09-CV-0024, 2010 WL
786612, at *1 (S.D. Tex. Mar. 5, 2010).
127. See id. at *3.
128. See id.
129. See id.
130. Id. at *5.
131. Id.
132. Id. at *6.
133. Lee v. Taipei Econ. & Cultural Representative Office, No. 4:09-CV-0024, 2010 WL
786612, at *6 (S.D. Tex. Mar. 5, 2010).
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official events only in the capacity of a service staff member, driving

officials to events and waiting outside. . . . [His] job is one that is
commonplace in a commercial enterprise . . . . [with] the outward form
. . . indisputably resembl[ing] service jobs in the commercial sphere.134
This case is an emphatic vindication of the “status and duties of the
employee” test and a clear riposte to the decisions in Crum, Figueroa, and
Butters, discussed above, that treated any job where the “safety” of the
employer was involved, as beyond review. As argued above, this test is the
best method for balancing the protection of employee rights against the
security interests of foreign states, as it aims to assess the nature of the
employee’s work compared to similarly situated persons in the private
sector. Obviously, an employee tasked with handling and analyzing sensitive
government materials or making high level policy decisions has no
counterpart in the commercial world, and a U.S. court litigating such a case
would pose serious risks to the foreign state’s security and sovereignty. But
an employee whose tasks differ little from those in an equivalent role
working for a non-foreign state entity should not be denied justice simply
because of his or her possibly fortuitous choice of a foreign sovereign
employer.
The Lee decision in the area of cultural and marketing entities, when
coupled with the compelling and well-reasoned opinion of the DC Circuit
Court of Appeals in El-Hadad in the context of embassy and consulate work,
point the correct way forward to resolving foreign sovereign employment
disputes. As noted above, the employee role and duties approach does not
automatically lead to a finding of commercial activity, and hence, no
immunity in every case. Where an employee is in a uniquely governmental
position, a court will properly decline to adjudicate to protect the foreign
state’s interests, as can be seen from the Sanchez-Ramirez and Eringer
decisions. The “nature of the claim” approach should, however, be rejected
for going too far in favor of employee interests. The decision in Kato, by
contrast, leaves employees of most all foreign state organizations with policy
dimensions that have no scope for recourse. A more balanced approach is
required.
VII. Implied Waiver of Immunity
An alternative argument raised by some foreign state employees, with

varying success, has been to assert that the foreign state has implicitly waived
its immunity to U.S. jurisdiction. In the legislative history to the FSIA, it
was noted that prior to the promulgation of sovereign immunity rules, U.S.
courts found implied waivers in cases where a foreign state had agreed that
134. Id. at *7; see also Lasheen v. Embassy of the Arab Republic of Egypt, 485 F. App’x 203 (9th
Cir. 2012) (holding that a professor employed at a public university in Egypt, who was studying
in the U.S. on a scholarship, was not a civil servant).
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the law of a particular country should govern a contract.135 Such an

approach has been endorsed in subsequent decisions, although courts have
taken slightly different approaches to the issue of whether an employment
contract is governed by U.S. law.
Where there is a clause in the contract that expressly states that it is to be
“governed by U.S. law” or “U.S. legislation” then an implied waiver will be
found, see, for example, Ashraf-Hassan v. Embassy of France, Ghawanmeh v.
Islamic Saudi Academy, or Ewald v. Royal Norwegian Embassy.136 Where,
however, reference is merely made in the contract to the application of U.S.
laws on employment, discrimination, or harassment, such statements, by
themselves, will be insufficient for a waiver137 particularly where the contract
also contains a provision stating that the foreign sovereign employer does
not intend to waive sovereign immunity.138 The rationale for such an
approach is that the foreign sovereign lacked an “unmistakable” or
“unambiguous” intention to waive immunity.
VIII. Conclusion
This article has considered a number of important and recent U.S.

decisions involving the rights of employees of foreign states where the
commercial activity exception to foreign sovereign immunity in the FSIA
has arisen. While no uniform and consistent approach can be discerned
from those decisions as to the definition of commercial activity in
employment cases, it suggests that an approach that focuses on the
employee’s precise role and responsibilities is the preferable model. Foreign
states and their employees often have competing interests; while states want
no review or exposure of their sensitive, sovereign matters by a foreign
court, employees simply want just redress for their grievances. An approach
that balances these often-opposing objectives and, in particular, provides
justice to employees whose work is largely indistinguishable from that in the
private or commercial spheres, is surely the best way forward. Further, the
inclusion of an express choice of U.S. law in an employment contract, so as
to establish an implied waiver of immunity by the state, may be the best
strategy for a foreign state employee. It is, however, recognized that there
will often be inequality of bargaining power between such a person and their
employer, which may in practice make insertion of such a clause unrealistic.
135. H.R. Rep. No. 94-1487, at 18–19 (1976).

136. See Ashraf–Hassan v. Embassy of Fr., 40 F. Supp. 3d 94, 101 (D.D.C. 2014), aff’d, 610 F.
App’x 3 (D.C. Cir. 2015); Ghawanmeh v. Islamic Saudi Acad., 672 F. Supp. 2d 3 (D.D.C. 2009);
Ewald v. Royal Norwegian Embassy, No. 11-CV-2166, 2013 WL 6094600, at *4 (D. Minn.
Nov. 20, 2013).
137. Kim, 51 F. Supp. 3d at 285–86.
138. Salman, 2017 WL 176576, at *3.
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The State of Investor-State Arbitration: A Reality

Check of the Issues, Trends, and Directions in
Asia-Pacific
JULIEN CHAISSE AND RAHUL DONDE*
I. Introduction
The significant increase in the number of international investment

agreements (IIAs) over the past two decades has been accompanied by a
meteoric rise in the number of investor-state disputes.1 In 2015 alone, 77
investor-state arbitrations were initiated, the highest number of cases in a
single year and significantly up from the 58 arbitrations initiated in the
previous year.2 The Asia-Pacific region itself has witnessed a startling
number of investment disputes; about 21 percent of all investment disputes
* Mr. Julien Chaisse (LL.M., Ph.D.) is Professor, Faculty of Law, Director of the Centre for
Financial Regulation and Economic Development (CeFRED), at the Chinese University of
Hong Kong. Mr. Rahul Donde (LL.B., LL.M.) is Senior Associate at the Geneva-based Lévy
Kaufmann-Kohler law firm. This Article partly draws on some ideas earlier published as Julien
Chaisse and Rahul Donde, The Future of Investor-State Arbitration: Revising the Rules? In: Julien
Chaisse, Tomoko Iskikawa, Sufian Jusoh (eds) Asia’s Changing International Investment Regime:
Sustainability, Regionalization, and Arbitration (New York: Springer 2017). The authors would
like to thank Manjiao Chi, Tomoko Ishikawa, Lise Johnson, Sufian Jusoh, Shintaro Hamanaka,
Matthew Hodgson, Luke Nottage, Karl P. Sauvant, and Romesh Weeramentry for comments
on key ideas and/or earlier drafts of this Article. We are also grateful to the editors and staff of
The International Lawyer for their hard work and skillful editing. The views expressed herein by
Authors are their own personal ones.
1. See U.N. CONF. ON TRADE & DEV. (UNCTAD), World Investment Report 2016,
Investor Nationality: Policy Challenges, at xii, U.N. Sales No. E.16.I.D.4 (2016) [hereinafter
“WIR 2016”] (noting that the number of investor-state arbitrations in 2015 set a new annual
high); U.N. CONF. ON TRADE & DEV. (UNCTAD), IIA Issues Note No. 2, Investor-State Dispute
Settlement: Review of Developments in 2015, 38, UNCTAD/WEB/DIAE/PCB/2016/4 (June
2016) [hereinafter “IIA Issues Note 2”]; Malcolm Langford, Daniel Behn & Runar Hilleren Lie,
The Revolving Door in International Investment Arbitration, 20 J. INT’L ECON. L. 301, 307 (2017);
Umakrishnan Kollamparambil, Bilateral Investment Treaties and Investor State Disputes 1, 1–2
(Econ. Research South Africa, Working Paper No. 589, 2016), https://econrsa.org/system/files/
publications/working_papers/working_paper_589.pdf (concluding based on empirical analysis
that investors initiate a higher number of cases against countries with bilateral investment
treaties).
2. WIR 2016, supra note 1, at xii; IIA Issues Note 2, supra note 1, at 1-2; U.N. CONF. ON
TRADE & DEV. (UNCTAD), IIA Issues Note No. 1, Recent Trends in IIAs and ISDS, 1, 5,
UNCTAD/WEB/DIAE/PCB/2015/1 (Feb. 2015). This is the number of publicly known cases.
As a significant number of cases are conducted in a confidential framework, the actual number
of disputes is likely to be higher.
THE YEAR IN REVIEW
involve Asian states.3 The vast majority of claims are against India (twenty-
two), making it the eleventh highest sued country in the world, followed by
Kazakhstan (eighteen) and Kyrgyzstan (thirteen) in the Asia-Pacific.4
Several authors foretell a greater number of disputes involving Asian parties,
mainly because of the rising number of IIAs in parallel with increasing FDI
flows, coupled with a greater awareness of investment rules shown by Asian
actors.5
While international arbitration remains the preferred mechanism for
resolving disputes between an investor and a state,6 several states
disenchanted with, or simply critical of, investment arbitration are proposing
viable alternatives.7 Several states are redefining the current investor-state
arbitration framework and its relationship to democratic decision-making.
In fact, the EU-Vietnam Free Trade Agreement contemplates the creation of
an “investment court” that would resolve disputes between investors and
Member States.8 Other states have chosen to significantly reduce the scope
3. Proportion of investment disputes involving Asian states compared to all investment

disputes, Investment Dispute Settlement Navigator, U.N. CONF. ON TRADE & DEV. (UNCTAD),
http://investmentpolicyhub.unctad.org/ISDS (follow “advanced search” hyperlink; then enter
respondent’s nationality as “Asia,” dates of initiation as “1980 to 2016,” and “Search”; see total
number of cases loaded; then compare to results from enter respondent’s nationality as
“World,” dates of initiation as “1980 to 2016,” and “Search”) (last visited Sept. 25, 2017). See
also Julien Chaisse, Assessing the Exposure of Asian States to Investment Claims, 6 CONTEMP. ASIA
ARB. J. 187, 202-03 (2013) (concluding that more than ninety investment disputes involving
twenty-four Asia-Pacific states were filed since 1987). Dr. Chaisse’s study did not include cases
involving Asian investors, or claims filed from 2014 to 2017.
4. Number of claims against states, and rank among states, Investment Dispute Settlement
Navigator, U.N. CONF. ON TRADE & DEV. (UNCTAD), http://investmentpolicyhub.unctad.
org/ISDS (follow “COUNTRY” hyperlink; then toggle “Cases as Respondent State” to
descending order) (last visited Sept. 25, 2017).
5. See Julien Chaisse, The Shifting Tectonics of International Investment Law–Structure and
Dynamics of Rules and Arbitration on Foreign Investment in the Asia-Pacific Region, 47 GEO. WASH.
INT’L L. REV. 563, 567, 612 (2015); Julien Chaisse, Assessing the Exposure of Asian States to
Investment Claims, 6 CONTEMP. ASIA ARB. J. 187, 206 (2013); Joongi Kim, A Pivot to Asia in
Investor-State Arbitration: The Coming Emergence of Asian Claimants, 27 ICSID REV. 399, 400,
415 (2012); Sam Luttrell, ISDS in the Asia-Pacific: A Regional Snap-shot, 19 INT’L TRADE BUS. L.
REV. 20, 21 (2016); Loretta Malintoppi, Is there an “Asian Way” for Investor-State Dispute
Resolution?, KUALA LUMPUR REGIONAL CTR. FOR ARB. NEWSL. NO. 19 (Kuala Lumpur
Regional Ctr. for Arb., Kuala Lumpur, Malay.), July-Sept. 2015, at 16-17, 20.
6. See generally Kenneth J. Vandevelde, A Brief History of International Investment Agreements,
12 U.C. DAVIS J. INT’L L. & POL’Y 157, 174-75, 184 (2005) (noting that foreign investors are
increasingly resorting to international arbitration to resolve their disputes with host states).
7. See Nathalie Bernasconi-Osterwalder & Diana Rosert, Investment Treaty Arbitration:
Opportunities to Reform Arbitral Rules and Processes, at 2, 11-17, INT’L INST. FOR SUSTAINABLE
DEV. (IISD), IISD Report (Jan. 2014).
8. On February 1, 2016, the text of the EU-Vietnam Free Trade Agreement was published,
following the announcement of the conclusion of the negotiations. The legal review of the text
has now begun and will be followed by translation into the EU’s official languages and
Vietnamese. The Commission will then present a proposal to the Council of Ministers for
approval of the agreement and ratification by the European Parliament. European Commission
Press Release, The EU and Vietnam finalise landmark trade deal (Dec. 2 2015), http://
THE YEAR IN REVIEW
2018] STATE OF INVESTOR-STATE ARBITRATION 49
of issues that can be submitted to arbitration,9 while still others require such
disputes to be submitted first to their own domestic courts.10
In addition, the G20 recently released its “Guiding Principles for Global
Investment Policymaking” (G20 Principles), which insist that “[i]nvestment
policies should provide legal certainty and strong protection to investors and
investments, tangible and intangible, including access to effective
mechanisms for the prevention and settlement of disputes, as well as to
enforcement procedures.”11 The Principles also emphasize the importance
of adequate and modern dispute resolution mechanisms: “[d]ispute
settlement procedures should be fair, open and transparent, with appropriate
safeguards to prevent abuse.”12 While the ramifications of the Principles
have yet to be seen, it is expected that they will have a significant resonance
in the Asia-Pacific region.
In this scenario, with the Asia-Pacific region also witnessing record
foreign investment inflows and outflows,13 it is timely to review current
trends, concerns, and recent developments in investment arbitration,
trade.ec.europa.eu/doclib/press/index.cfm?id=1409. See Michael P. Daly & Jawad Ahmad, The

EU-Vietnam FTA: What Does It All Mean? What Does It Mean for the Future?, KLUWER
ARBITRATION BLOG (Dec. 14, 2015), http://kluwerarbitrationblog.com/2015/12/14/the-eu-
vietnam-fta-what-does-it-all-mean-what-does-it-mean-for-the-future/. An investment court is
also contemplated under the EU-Canada Comprehensive Economic and Trade Agreement.
Comprehensive Economic and Trade Agreement (CETA), Can.-EU, art 8.29, Oct. 30, 2016,
2017 O.J. (L 11) 23.
9. U.N. CONF. ON TRADE & DEV. (UNCTAD), Investor-State Dispute Settlement: UNCTAD
Series on Issues in International Investment Agreements II, 16, 43, UNTAD/DIAE/IA/2013/2
(2014) (noting a recent trend of “more circumscribed” IIA dispute settlement provisions, and
citing the Malaysia-Pakistan Closer Economic Partnership Agreement (2007) which excludes all
disputes concerning national treatment and performance requirements as an example). See also
WIR 2016, supra note 1, at 110-12, 175 (noting that Indonesia’s draft Model BIT is
“characterized by carve-outs, safeguards[,] and clarifications”).
10. An example of such is India’s 2015 Model Bilateral Investment Treaty, which the
Government proposed in response to the high number of investment treaty arbitration claims
pending against it at the time. MODEL TEXT FOR THE INDIAN BILATERAL INV. TREATY art.
14.3(i)-(ii), (v) (GOV’T OF INDIA, Treaty Proposal 2015) (“The Parties agree that the . . .
exhaustion of domestic remedies . . . [is a] condition[ ] precedent to the submission of the
dispute to arbitration.”); Ashutosh Ray, Unveiled: Indian Model BIT, KLUWER ARBITRATION
BLOG (Jan. 18, 2016), http://kluwerarbitrationblog.com/2016/01/18/unveiled-indian-model-
bit/.
11. The G20’s Guiding Principles for Global Investment Policymaking were agreed upon at
the Group’s Trade Ministers’ Meeting in Shanghai, China during July 9-10, 2016. The official
statement following the meeting reinforced the Ministers’ determination to “promote inclusive,
robust[,] and sustainable trade and investment growth.” Group of Twenty [“G20”], G20 Trade
Ministers Meeting Statement, ¶ 3, Shanghai Meeting (July 9-10, 2016), http://g20chn.org/
English/Documents/Current/201607/t20160715_3057.html. The Principles provide guidance
for investment policymaking, and are non-binding. They seek to promote inclusive economic
growth, sustainable development, and coherence in national and international investment policy
resulting in an open and transparent global policy environment that is conducive to investment.
Id. at Annex III: G20 Guiding Principles for Global Investment Policymaking.
12. See id., at Annex III.
13. WIR 2016, supra note 1, at 197-98.
THE YEAR IN REVIEW
particularly as they affect the region. Section II of this Article briefly

introduces IIAs and investment arbitration. Section III outlines current
trends and concerns, focusing on the Asia-Pacific. Section IV reviews global
developments in the traditional investment arbitration framework and
examines their reception in the region. Section V concludes.
II. IIAs and Investment Arbitration
IIAs may be broadly understood as treaties between sovereign states to

protect and promote investments made by investors from one state in the
territory of the other.14 They are entered into with the aim of mutual
development of both states by inter alia promising a stable and predictable
business environment.15 IIAs may take the form of bilateral investment
treaties (BITs)—i.e. treaties between two states (such as the India-Australia
BIT), or investment chapters in broader economic agreements (like Chapter
9 of the Australia-China Free Trade Agreement).16
A. IIAS AND INVESTMENT ARBITRATION

IIAs are now ubiquitous, and the global network of IIAs has grown
considerably over the past years. It now consists of over 3,322 treaties,
thirty-seven of which were concluded in 2016.17 By the end of 2016, 150
economies were engaged in negotiating new IIAs.18
Asian states have been prolific in entering into IIAs.19 More than half of
investment treaties in the world involve at least one Asian state.20 In 2016
and 2017, three Asian states concluded the highest number of IIAs.21
14. See generally Andreas F. Lowenfeld, Investment Agreements and International Law, 42
COLUM. J. TRANSNAT’L L. 123, 129-30 (2003).
15. Vandevelde, supra note 6, at 157-58, 161-62, 175-78, 183-85. See also International
Investment Agreements (IIAs), UNCTAD.ORG, http://unctad.org/en/pages/DIAE/International
%20Investment%20Agreements%20(IIA)/International-Investment-Agreements-(IIAs).aspx
(last visited Sept. 8, 2017).
16. See e.g., Free Trade Agreement between the Government of Australia and the Government
of the People’s Republic of China, Austl.-China, ch. 9, June 17, 2015, [2015] ATS 15;
Agreement between the Government of Australia and the Government of the Republic of India
on the Promotion and Protection of Investments, Austl.-India, Feb. 26, 1999, [2000] ATS 14
(no longer in force; terminated by India Mar. 23, 2017). See generally Julien Chaisse &
Christian Bellak, Navigating the Expanding Universe of International Treaties on Foreign
Investment—Creation and Use of a Critical Index, 18 J. INT’L ECON. L. 79, 85-88 (2015).
17. WIR 2016, supra note 1, at 101.
18. Id.
19. See Chaisse, The Shifting Tectonics of International Investment Law, supra note 5, at 567-69.
20. Emma Lindsay & Bieta Andemariam, International Investment Arbitration in Asia: Year in
Review 2015, BRYAN CAVE 1, 6 (Feb. 1, 2016), https://www.lexology.com/library/detail.aspx?g
=ecb1496d-a05a-4841-a2c6-703ac8494813.
21. WIR 2016, supra note 1, at 101 (noting that Japan, the Republic of Korea, and China were
among the “most active” in concluding IIAs).
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B. INVESTMENT ARBITRATION
Investment arbitration—also known as investor-state arbitration—is a
mechanism through which foreign investors may obtain a binding
adjudication of their claims against host states that have either violated IIA
obligations or, in some circumstances, have breached their contractual
commitments or their national foreign investment laws.22
As we mentioned above, investment arbitration is by far the most popular
mechanism for resolving investor-state disputes.23 Indeed, investment
arbitration is attractive from an investor’s perspective as it allows the
investor to make a claim without having to rely on its home state24 to initiate
inter-state proceedings against the host state25 for a violation of the latter’s
treaty obligations. This is in stark contrast to the dispute resolution
procedures of the World Trade Organization (WTO) that only allow
Member States to initiate proceedings against other Member States in the
event of a violation.26 Investment arbitration is attractive to states too, as it
improves the investment climate of the host state, making it easier for the
host state to attract foreign investment.27
There is no single global forum under which investor-state disputes are
conducted.28 The majority of such disputes are conducted under the
procedural framework of the Convention on the Settlement of Investment
Disputes between States and Nationals of Other States (ICSID Convention)
and the ICSID Arbitration Rules.29 The next most popular procedural
framework for resolving disputes is the UNCITRAL Arbitration Rules.30
Unlike ICSID, the UNCITRAL framework has no formal or permanent
institutional support, and the contracting states to the IIA need not be
22. C.L. Lim & Jean Ho, International Investment Arbitration, OXFORD BIBLIOGRAPHIES (Apr.
28, 2016), http://www.oxfordbibliographies.com/view/document/obo-9780199796953/obo-978
0199796953-0135.xml.
23. U.N. CONF. ON TRADE & DEV. (UNCTAD), IIA Issues Note No. 1, Recent Trends in IIAs
and ISDS, 1, UNCTAD/WEB/DIAE/PCB/2015/1 (Feb. 2015). See also WIR 2016, supra note
1, at xii; IIA Issues Note 2, supra note 1, at 1-2.
24. ‘Home state’ refers to the investor’s state of nationality.
25. ‘Host state’ refers to the state in which the investment is made.
26. See Giorgio Sacerdoti, Trade and Investment Law: Institutional Differences and Substantive
Similarities, 9 JRSLM. REV. LEGAL STUD. 1, 7 (2014). See generally Julien Chaisse, Deconstructing
the WTO Conformity Obligation: A Theory of Compliance as a Process, 38 FORDHAM INT’L L. J. 57
(2015).
27. See Stephen E. Blythe, The Advantages of Investor-State Arbitration as a Dispute Resolution
Mechanism in Bilateral Investment Treaties, 47 INT’L L. 273, 277-78 (2013).
28. Miriam Sapiro, Transatlantic trade and investment negotiations: Reaching a consensus on
investor-state dispute settlement, BROOKINGS.COM, at 3 (Oct. 16, 2015), https://www.brookings.
edu/research/transatlantic-trade-and-investment-negotiations-reaching-a-consensus-on-
investor-state-dispute-settlement/.
29. IIA Issues Note 2, supra note 1, at 4 (finding that 62 percent of all known cases have been
filed under the ICSID Convention or ICSID Additional Facility Rules).
30. Todd Allee & Clint Peinhardt, Delegating Differences: Bilateral Investment Treaties and
Bargaining Over Dispute Resolution Provisions, 54 INT’L STUD. Q. 1, 4-5 (2010).
THE YEAR IN REVIEW
parties to the ICSID Convention.31 For states like India that have not
ratified the ICSID Convention, initiating a dispute under the UNCITRAL
framework is an option available to investors.32
Investment arbitration awards frequently run into several million U.S.
dollars.33 Despite this, states tend to comply with them, arguably because
the economic costs of non-compliance are higher than compliance.34 For
instance, non-payment of an ICSID award may restrict a state’s ability to
access World Bank funding.35 Further, in non-ICSID contexts, non-
compliance may significantly impact a state’s sovereign risk rating, in turn
increasing its borrowing costs.36 Other consequences could be equally
severe: in 2012, the U.S. suspended Argentina’s preferential trade status due
to its failure to comply with two investment arbitration awards.37
Having broadly set out the contours of the IIA and investment arbitration
framework, we now turn to examine trends, concerns, and developments in
this framework.
III. Investment Arbitration: Trends and Concerns
The first investment arbitration arising out of an IIA was filed in 1987 by
a Hong Kong corporation against an Asian state, Sri Lanka.38 Since then,
31. Some level of institutional support is offered by The Hague. See UNCITRAL Endorses the
Hague Principles, HAGUE CONFERENCE ON PRIVATE INTERNATIONAL LAW (July 8, 2015),
https://www.hcch.net/en/news-archive/details/?varevent=414.
32. Int’l Ctr. for Settlement of Inv. Disps. [ICSID], List of Contracting States and Other
Signatories of the Convection on the Settlement of Investment Disputes between States and Nationals of
Other States, at 2, ICSID Doc. ICSID/3 (as of Apr. 12, 2016), https://icsid.worldbank.org/en/
Documents/icsiddocs/List%20of%20Contracting%20States%20and%20Other%20Signatories
%20of%20the%20Convention%20-%20Latest.pdf (India is not listed as a signatory or
contracting state of the Convention.).
33. Susan D. Franck & Lindsey E. Wylie, Predicting Outcomes in Investment Treaty Arbitration,
65 DUKE L. J. 459, 459 (2015).
34. Todd Allee & Clint Peinhardt, Contingent Credibility: The Impact of Investment Treaty
Violations on Foreign Direct Investment, 65 INT’L ORG. 401, 425 (2011).
35. U.S. Will Vote Against Loans to Argentina in World Bank and IDB, MERCOPRESS (Sept. 29,
2011), http://en.mercopress.com/2011/09/29/us-will-vote-against-loans-to-argentina-in-world-
bank-and-idb.
36. Jorge Viñuales & Dolores Bentolila, The Use of Alternative (Non-Judicial) Means to Enforce
Investment Awards Against States, DIPLOMATIC AND JUDICIAL MEANS OF DISPUTE
SETTLEMENT: ASSESSING THEIR INTERACTIONS 263 (Laurence Boisson de Chazournes,
Marcelo G. Kohen, & Jorge E. Viñuales eds., 2012).
37. Charles B. Rosenberg, The Intersection of International Trade and International Arbitration:
The Use of Trade Benefits to Secure Compliance with Arbitral Awards, 44 GEO. J. INT’L L. 503, 504
(2013).
38. INT’L CTR. FOR SETTLEMENT OF INV. DISPS. (ICSID), ICSID 2016 ANNUAL REPORT, at
9, https://icsid.worldbank.org/en/Documents/resources/ICSID_AR16_English_CRA_bl2_
spreads.pdf. See Asian Agric. Prods. Ltd. (AAPL) v. Republic of Sri Lanka, ICSID Case No.
ARB/87/3, Final Award, ¶ 1 (June 15, 1990), https://www.italaw.com/sites/default/files/case-
documents/ita1034.pdf.
THE YEAR IN REVIEW
there have been over 800 investment claims.39 Significantly however, a

recent study found that no investment dispute has arisen under more than 90
percent of the BITs presently in force.40 This Section reviews the global
trends in order to assess the significance of the ISA related developments in
the Asia-Pacific region.
A. GLOBAL TRENDS
The large number of investment claims led to the undertaking of studies

meant to identify and analyse trends in investment arbitration. While these
studies have not always reached the same conclusion (because of different
units of analysis and different sources of data), they largely conclude that
most disputes are decided in favour of the state.41
According to a study recently conducted by UNCTAD, 495 investor-state
proceedings have been concluded up to 2016.42 Of these, a quarter were
settled, approximately one-third were decided in favour of the state, and
about one-fourth were decided in favour of the investor.43 About half the
cases that were favourable to states were dismissed for lack of jurisdiction.44
Where cases moved beyond jurisdiction to the merits (i.e. where a tribunal
made a determination of whether the state breached any of the IIAs
substantive obligations), 60 percent were decided in favour of the investor
and 40 percent in favour of the state.45
In another study, Franck and Wylie observed that states “win”46
approximately 60.4 percent of the time and investors “win” approximately
39.6 percent of the time.47 Miller and Hicks came to largely similar
conclusions: about one-third investment claims settle amicably, and for
those that are not settled, states generally win twice as many times as
investors.48 Further, they conclude that when investors do prevail, they are
39. Daniel Behn, Tarald Laudal Berge & Malcolm Langford, Poor States or Poor Governance?
Explaining Outcomes in Investment Treaty Arbitration, 37 NW. J. INT’L L. & BUS. (forthcoming
2017) (manuscript at 9), https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2978546.
40. Scott Miller & Greg Hicks, Investor-State Dispute Settlement: A Reality Check 7 (Ctr. for
Strategic & Int’l Stud., Working Paper, 2014), https://csis-prod.s3.amazonaws.com/s3fs-public/
legacy_files/files/publication/141029_investor_state_dispute_settlement.pdf.
41. See WIR 2016, supra note 1, at 107 (but, in cases decided on the merits the investor
prevails 60 percent of the time); IIA Issues Note 2, supra note 1, at 5; Rachel L. Wellhausen,
Recent Trends in Investor-State Dispute Settlement, 7 J. INT’L DISP. SETTLEMENT 117, 118 (2016);
supra note 33, at 459 (2015).
43. Id.; IIA Issues Note 2, supra note 1, at 5.
45. Id.; IIA Issues Note 2, supra note 1, at 1.
46. A ‘win’ for the investor is defined as the awarding of one U.S. dollar or more, even if de
minimus or less than the investor’s unrecovered expenses, to the claimant. A ‘win’ for a state is
when the preceding does not occur. Franck & Wylie, supra note 33, at 485.
47. Id. at 489-90.
48. Miller & Hicks, supra note 40, at 1.
THE YEAR IN REVIEW
usually awarded a small fraction of their initial claim—usually less than 10

percent of the amounts claimed.49
The most recent study of 676 public international investment arbitrations
filed from the 1990’s too reached similar conclusions: cases are settled about
one-third of the time, and states win more than one-third of disputed cases.50
While this empirical analysis has been criticised by some, it cannot be
denied that states overall have been more successful than investors in
investment arbitration, a conclusion that undermines arguments that the
investment arbitration system is biased in favour of investors.51
B. TRENDS IN ASIA
Unlike the global trends in investment arbitration considered above, it is
difficult to identify particular trends in investment arbitration in Asia.
Prominent scholars have often reached contradictory conclusions.
In terms of the likely number of investment claims involving Asia, in 2012,
Nottage and Weeramantry predicted that there would be few Asia-centric
claims possibly because of institutional barriers—including costs and a
paucity of experienced counsel and arbitrators in Asia—rather than any
specific cultural aversion to adversarial forms of dispute resolution (such as
arbitration).52 A study conducted a few months later, however, reached a
different conclusion. Citing the higher number of claims seen in 2011, it
predicted that the future would see more claims against Asian states as well
as claims being made by Asian investors.53
In 2015, Chaisse conducted a comprehensive review of investor-state
claims involving the Asia-Pacific. Like the other studies mentioned above,
he noted a sharp jump in 2011 (ten claims, compared to five each year over
the previous decade), which was maintained in 2012 and 2013 (thirteen
claims each).54 He observed that the growth in investment claims could be
explained by increased FDI, a larger number of IIAs, as well as a better
understanding of these instruments by both Asian states and Asian
investors.55 He too predicted an increasing number of claims involving
Asia.56 Other authors have come to the same conclusion, while others
49. Id.
50. Rachel L. Wellhausen, Recent Trends in Investor-State Dispute Settlement, 7 J. INT’L DISP.
SETTLEMENT 117, 118 (2016).
51. For an analysis of the limits of empirical research in answering legal questions, see Gus Van
Harten, Summary of G. Van Harten, “The Use of Quantitative Methods to Examine Possible Bias in
Investment Arbitration” and “Reply” [to Franck, Garbin, and Perkins], in THE YEARBOOK ON
INTERNATIONAL INVESTMENT LAW & POLICY 2010-2011 (Karl P. Sauvant ed., 2012), http://
digitalcommons.osgoode.yorku.ca/all_papers/33/.
52. Luke Nottage & J. Romesh Weeramantry, Investment Arbitration in Asia: Five Perspectives
on Law and Practice, 28 ARB. INT’L 19, 48 (2012).
53. Kim, supra note 5, at 415.
54. Chaisse, The Shifting Tectonics of International Investment Law, supra note 5, at 611.
55. Id. at 621.
56. Id.
THE YEAR IN REVIEW
submit that it is simply too early to tell whether investor-state arbitration

will proliferate in the region.57
Few studies have been conducted examining claims brought by Asian
investors. Salomon and Friedrich observe that twenty-nine investment
arbitrations have been brought by investors in the East Asia and Pacific
region, twenty-two of which were under the ICSID Convention.58 Nineteen
investment arbitrations were based on an IIA, two of these on the ASEAN
Agreements.59 They note that after a period of decline in the 1990s, where
only one claim was brought, there were nine new cases between 2000 and
2010, and sixteen cases from 2010 to 2015.60 Overall, 112 cases have been
initiated by Asian claimants, sixty-five of which (58 percent) have been
initiated in 2013 or later.61
In terms of subject-matter, oil, gas, and mining has traditionally been the
dominant sector for claims in Asia.62 But “2015 saw a disproportionate
increase in the number of disputes in the electric power and other energy
sector[s] . . . perhaps a sign of industrial diversification in Asia . . .”63
In terms of outcome, a recent study concluded that states in Asia-Pacific
have won fourteen out of the forty-one disputes considered.64 States in the
Middle East, North Africa, and Europe (and the former Soviet Union) are
found to win significantly more often than Asian states.65 Latest statistics,
however, indicate that Asian states have won twenty-one (55 percent) out of
the thirty-eight disputes that concluded with a decision on the merits.66
57. Junji Nakagawa, No More Negotiated Deals? Settlement of Trade and Investment Disputes in
East Asia, 10 J. INT’L ECON. L. 837, 863 (2007).
58. Claudia T. Salomon & Sandra Friedrich, Investment Arbitration in East Asia and the Pacific,
16 J. WORLD INV. & TRADE 800, 837 (2015).
59. Id.
60. Id. at 838.
61. Total cases initiated by Asian claimants, and since the end of 2012, Investment Dispute
Settlement Navigator, U.N. CONF. ON TRADE & DEV. (UNCTAD), http://investmentpolicy
hub.unctad.org/ISDS (follow “advanced search” hyperlink; then enter claimant’s nationality as
“Asia,” dates of initiation as “1980 to 2017,” and “Search”; see total number of cases loaded;
then compare to results from enter claimant’s nationality as “Asia,” dates of initiation as “2013
to 2017,” and “Search”) (last visited Sept. 25, 2017).
62. Lindsay & Andemariam, supra note 20, at 1.
63. Id.; See also Julien Chaisse, Renewables Re-energized? The Internationalization of Green Energy
Investment Rules and Disputes, 9 J. WORLD ENERGY L. & BUS. 269 (2016).
64. Wellhausen, supra note 51, at 131.
65. Id. at 130.
66. Proportion of claims resulting in a decision won by Asian state respondents compared to
all decisions involving Asian state respondents, Investment Dispute Settlement Navigator, U.N.
CONF. ON TRADE & DEV. (UNCTAD), http://investmentpolicyhub.unctad.org/ISDS (Follow
“advanced search” hyperlink; then enter Respondent’s nationality as “Asia,” select “Decided in
favour of State” under “Status/Outcome of original proceedings,” and “Search”; see total
number of cases loaded; then compare to results from enter Respondent’s nationality as “Asia,”
select “Decided in favour of State,” “Decided in favour of investor,” and “Decided in favour of
neither party (liability found but no damages awarded)” under “Status/Outcome of original
proceedings,” and “Search”) (last visited Sept. 25, 2017).
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C. CONCERNS
The findings outlined above should lead one to conclude—or at least

seriously question—the perception that investor-state arbitration favours
investors over states. By contrast, however, there has been increasing
criticism of investment arbitration as being pro-investor. The popular press
has carried several (oft-misleading) articles on investor-state arbitration67
alleging, for instance, that secret trade courts68 pose a “real threat to the
national interest from the rich and powerful.”69
Nearly every aspect of investment arbitration has come under criticism.
Concerns have been expressed about the biased interpretation of IIA
provisions in favour of investors, the lack of predictability and transparency
of arbitral proceedings, as well as the independence and impartiality of
arbitrators.70 Other serious concerns include suggesting that investment
arbitration has a chilling effect on a state’s regulatory power,71 and that
foreign investors circumvent the operation of domestic law and national
courts through the process.72
Unfortunately, these criticisms have had a particular resonance in Asia.
Indonesia’s termination of its IIAs, and India’s new model BIT have both
been linked to the so-called pro-investor interpretation of IIA provisions by
investment tribunals.73 Australia’s earlier rejection of investment arbitration
67. See, e.g., Dan Ikenson, Eight Reasons to Purge Investor-State Dispute Settlement from Trade
Agreements, FORBES (Mar. 4, 2014), www.forbes.com/sites/danikenson/2014/03/04/eight-
reasons-to-purge-investor-state-dispute-settlement-from-trade-agreements/; The Arbitration
Game, THE ECONOMIST (Oct. 14, 2014), https://www.economist.com/news/finance-and-
economics/21623756-governments-are-souring-treaties-protect-foreign-investors-arbitration.
68. Editorial, The Secret Trade Courts, N.Y. TIMES (Sept. 27, 2004), http://www.nytimes.com/
2004/09/27/opinion/the-secret-trade-courts.html?mcubz=0&module=arrowsNav&content
Collection=opinion&action=keypress&region=fixedLeft&pgtype=article.
69. George Monbiot, Opinion, From Obamacare to Trade, Superversion Not Subversion is the New
and Very Real Threat to the State, THE GUARDIAN (Oct. 14, 2013, 3:31 PM), https://
www.theguardian.com/commentisfree/2013/oct/14/obamacare-trade-superversion-subversion-
threat-state.
70. See PIA EBERHARDT & CECILIA OLIVET, Profiting from Injustice: How Law Firms,
Arbitrators, and Financiers Are Fueling an Investment Arbitration Boom 71 (Helen Burley ed.,
Corporate Europe Observatory and the Transnational Institute 2012), http://corporateeurope.
org/sites/default/files/publications/profiting-from-injustice.pdf; Gus Van Harten, Arbitrator
Behaviour in Asymmetrical Adjudication: An Empirical Study of Investment Treaty Arbitration, 50
OSGOODE HALL L. J. 211, 211 (2012); Ikenson, supra note 67.
71. See Julia G. Brown, International Investment Agreements: Regulatory Chill in the Face of
Litigious Heat?, 3 WESTERN J. LEGAL STUD. 1 (2013) (noting that IIAs “do indeed prevent some
countries from developing or enforcing effective environmental policies”).
72. See generally STEPHAN W. SCHILL, REFORMING INVESTOR-STATE DISPUTE SETTLEMENT
(ISDS): CONCEPTUAL FRAMEWORK AND OPTIONS FOR THE WAY FORWARD (E15Initiative
Geneva: Int’l Ctr. for Trade & Sustainable Dev. (ICTSD) & World Econ. Forum eds., 2015),
http://e15initiative.org/wp-content/uploads/2015/09/E15-Investment-Schill-Final.pdf.
73. See Press Release, Government of India, Model Text for the Indian Bilateral Investment
Treaty (Dec. 16, 2015, 8:10 PM) (available at http://pib.nic.in/newsite/
PrintRelease.aspx?relid=133411) (“During the last few years, significant changes have occurred
THE YEAR IN REVIEW
too can be traced to a belief that investment arbitration was biased towards
investors.74 A related concern is that of regulatory chill, with non-
governmental organizations fanning the belief that Asian states fail to enact
bona fide regulatory measures because of a perceived or actual threat of
investment arbitration.75
It is not within the scope of this Article to respond to these criticisms; this
retort has been comprehensively done elsewhere76 and has even formed the
subject-matter of a survey conducted by the International Bar Association to
ascertain whether the criticism was justified.77 It suffices to say here that
most of these concerns are overstated. In any event, significant attempts
have been made to address them through the various reforms discussed
below.
IV. Recent Developments
The criticism of ISDS outlined above has led to an evolution of

international investment law—both in the substantive protections offered to
investors, as well as in the procedural framework of investment arbitration.78
While most developments are incremental and address only some aspects of
the system, others, such as the establishment of a permanent investment
court, result in an entirely new system for investor-state disputes.79
globally regarding BITs, in general, and investor-state dispute resolution mechanism in

particular.”); Leon E. Trakman & Kunal Sharma, Why is Indonesia Terminating its Bilateral
Investment Treaties?, EAST ASIA F. (Sept. 20, 2014), www.eastasiaforum.org/2014/09/20/why-is-
indonesia-terminating-its-bilateral-investment-treaties.
74. Kyla Tienhaara & Patricia Ranald, Australia’s rejection of Investor-State Dispute Settlement:
Four Potential Contributing Factors, INV. TREATY NEWS (July 12, 2011), www.iisd.org/itn/2011/
07/12/australias-rejection-of-investor-state-dispute-settlement-four-potential-contributing-
factors.
75. See generally Luke Nottage, The Rise and Possible Fall of Investor-State Arbitration in Asia: A
Skeptic’s View of Australia’s “Gillard Government Trade Policy Statement, TDM 5 (2011),
www.transnational-dispute-management.com URL: www.transnational-dispute-management.
com/article.asp?key=1767; Tietje et al., The Impact of Investor-State-Dispute Settlement (ISDS) in
the Transatlantic Trade and Investment Partnership (2014); Study prepared for the Minister of
Foreign Trade and Development Cooperation, Ministry of Foreign affairs, The Netherlands;
UNCHR, High Commissioner for Human Rights, Human Rights, Trade and Investment (2003)
UN doc E/CN.4/Sub.2//2003/9, 35.
76. See, for instance, Gloria Maria Alvarez et al., A Response to the Criticism against ISDS by
EFILA, 33 J. INT’L ARB. 1 (2016).
77. INT’L BAR ASS’N SUBCOMM. ON INV.TREATY ARBITRATION, REPORT ON THE
SUBCOMMITTEE’S INVESTMENT TREATY ARBITRATION SURVEY 1 (2016).
78. See UNCTAD, WORLD INVESTMENT REPORT 2016, at 108-116, U.N. Sales No. E.16.
II.D.4 (2016); See generally UNCTAD, TAKING STOCK OF IIA REFORM (Mar. 2016), http://
unctad.org/en/PublicationsLibrary/webdiaepcb2016d3_en.pdf.
79. See UNCTAD, WORLD INVESTMENT REPORT 2016, at 115, U.N. Sales No. E.16. II.D.4
(2016); UNCTAD, TAKING STOCK OF IIA REFORM, at 10, (Mar. 2016), http://unctad.org/en/
PublicationsLibrary/webdiaepcb2016d3_en.pdf.
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These developments are particularly relevant for Asia-Pacific for several

reasons. First, the backlash80 against investment arbitration has been severe
in this region, with several Asian states substantially reforming their IIAs as a
result.81 Others are either delaying ratification of IIAs,82 renegotiating
them,83 or terminating them altogether.84 Second, by dominating global
investment flows and entering into an increasing number of IIAs, “Asian
actors are in a good position to translate their economic importance into
global-rule-making power.”85 Stephen Schill continues, “there is little doubt
that Asian countries . . . are becoming focal points in rule-making in
international investment law.”86 Third, Asian states are already involved in a
significant number of investment disputes that run into billions of dollars
and concern increasingly sensitive issues.87 Some developments, such as
transparency and third-party participation, could, thus, be usefully adopted
in on-going proceedings to quell criticism that investment arbitration is a
closed process. Fourth, the number of claims against Asian states is expected
to rise in the future.88 Asian states should, thus, pay close attention to recent
80. See generally Malcom Langford et al., Backlash and State Strategies in International
Investment Law, in THE CHANGING PRACTICES OF INTERNATIONAL LAW: SOVEREIGNTY, LAW
AND POLITICS IN A GLOBALISING WORLD (Tanja Aalberts & Thomas Gammeltoft-Hansen
eds.) (forthcoming 2017), https://ssrn.com/abstract=2704344 (“providing a historical overview
of the narrative of ‘legitimacy crisis’ in the field of investment arbitration”); see generally
MICHAEL WAIBEL ET AL., THE BACKLASH AGAINST INVESTMENT ARBITRATION (Michael
Waibel et al. ed., 2010).
81. Sri Lanka announced its intention to move away from traditional IIAs, inter alia because of
the “bitter lessons” learned from investment arbitration. See Champika Malalgoda, Dir.
Research & Policy Advocacy Dep’t, Bd. of Inv. of Sri Lanka, Speaking at the World Investment
Forum 2014: IIA Conference (Oct. 16, 2014) (Transcript available, http://unctad-worldinvest
mentforum.org/wp-content/uploads/2014/10/Malalgoda.pdf). The same is the case with India,
which substantially revised its earlier model IIA in light of the ruling against it in the White
Industries arbitration. See Press Info. Bureau Gov’t of India, supra note 73.
82. See generally Yoram Haftel & Alexander Thompson, Delayed Ratification: The Domestic Fate
of Bilateral Investment Treaties, 67 INT’L ORG. 355 (2013).
83. This is the case with India, which has begun renegotiating 47 IIAs. See AP, India Wants
New Foreign Investment Pacts to Limit Lawsuits, INDIAN EXPRESS (July 11, 2016), http://
indianexpress.com/article/india/india-news-india/india-wants-new-foreign-investment-pacts-
to-limit-lawsuits-2906478/.
84. This is the case with Indonesia. See, e.g., Ben Bland & Shawn Donnan, Indonesia to
Terminate More Than 60 Bilateral Investment Treaties, FIN. TIMES (Mar. 26, 2014), www.ft.com/
cms/s/0/3755c1b2-b4e2-11e3-af92-00144feabdc0.html#axzz42JTevYOq; Leon E. Trakman &
Kunal Sharma, Indonesia’s Termination of the Netherlands–Indonesia BIT: Broader Implications in the
Asia-Pacific?, KLUWER ARB. BLOG (Aug. 21, 2014), http://kluwerarbitrationblog.com/2014/08/
21/indonesias-termination-of-the-netherlands-indonesia-bit-broader-implications-in-the-asia-
pacific/.
85. Stephen W. Schill, Changing Geography: Prospects for Asian Actors as Global Rule-Makers in
International Investment Law, COLUM. FDI PERSP., No. 177, July 4, 2016, at 1.
86. Id.
87. Australia, for instance, recently won a case against Phillip Morris. Phillip Morris Asia Ltd.
v. The Commonwealth of Australia, 12 (Perm. Ct. Arb. 2012); see generally Joongi, supra note 5.
88. See Julien Chaisse, Assessing the Exposure of Asian States to Investment Claims, 6 CONTEMP.
ASIA ARB. J. 187, 205-06 (2013).
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developments to make sure that the oft-competing state and investor

interests are adequately balanced.
It is not possible to review all the current developments in this chapter.
Instead, we touch on a few procedural developments that will likely have the
strongest repercussions in Asia. Some of these developments—such as
controlling treaty interpretation—already exist within the Asian investment
arbitration framework.89 Others, however, are notably absent.
A. CONTROL OF INTERPRETATION
As we mentioned above, one of the serious criticisms of the current
investment arbitration framework is that investment tribunals interpret IIAs
not precisely in accordance with what states had in mind when they
negotiated and entered into those IIAs.90 Methymaki and Tzanakopoulos
argue that at the time states entered into IIAs, they were not fully “aware at
the time of the implications that the structure and language of the treaty
provisions would have in practice.”91
To address this concern, recent IIAs contemplate joint interpretations by
the states party to the IIA in question.92 Arbitral tribunals are bound by such
interpretations, although whether an interpretation would also apply to a
pre-existing dispute remains to be seen.93 Several states including Canada,
Chile, Mexico, the United States, and the European Union now include
express provisions in their IIAs allowing for binding joint interpretations of
the IIA.94
89. See Agreement Establishing the ASEAN-Australia-New Zealand Free Trade Area, art. 27
¶ 3, Feb. 27, 2009, http://www.asean.org/storage/images/2013/economic/afta/AANZFTA/
Agreement%20Establishing%20the%20AANZFTA.pdf (“A joint decision of the Parties,
declaring their interpretation of a provision of this Agreement shall be binding on a tribunal,
and any decision or award issued by a tribunal must be consistent with that joint decision.”);
ASEAN Comprehensive Investment Agreement, art. 40 ¶ 3, Feb. 26, 2009, http://
www.asean.org/storage/images/2013/economic/aia/ACIA_Final_Text_26%20Feb%202009.pdf
(“A joint decision of the Member States, declaring their interpretation of a provision of this
Agreement shall be binding on a tribunal, and any decision or award issued by a tribunal must
be consistent with the joint decision.”).
90. See generally Margie-Lys Jamie, Relying Upon Parties’ Interpretation in Treaty-Based Investor-
State Dispute Settlement: Filling in the Gaps in International Investment Agreements, 46 GEO. J.
INT’L L. 262 (2014).
91. See generally Eleni Methymaki & Antonios Tzanakopoulos, Masters of Puppets? Reassertion
of Control Through Joint Investment Treaty Interpretation, REASSERTION OF CONTROL OVER THE
INVESTMENT TREATY REGIME 156 (Andreas Kulick ed., 2017).
92. See generally David Gaukrodger, The Legal Framework Applicable to Joint Interpretative
Agreements of Investment Treaties (OECD Working Papers on International Investment No. 1,
2016), http://dx.doi.org/10.1787/5jm3xgt6f29w-en.
93. Methymaki & Tzanakopoulos, supra note 91, at 163-64.
94. See Comprehensive Economic and Trade Agreement, Can.-E.U., art. 8.31, 8.44, Oct. 30,
2016, http://trade.ec.europa.eu/doclib/docs/2014/september/tradoc_152806.pdf; Central
America-Dominican Republic Free Trade Agreement, Art. 10.22 ¶ 3, 19.1 ¶ 3, Aug. 5, 2004,
https://ustr.gov/trade-agreements/free-trade-agreements/cafta-dr-dominican-republic-central-
america-fta/final-text.
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It is heartening to note that some Asian IIAs, such as the ASEAN

Comprehensive Investment Agreement (ACIA) between ten major Asian
nations,95 and the ASEAN-Australia-New Zealand FTA (AANZ-FTA),
already contain such provisions.96 In fact, some Asian states have gone a step
further by not only controlling the interpretation of the IIA, but also
controlling its application. For instance, under the China-Australia FTA
(ChAFTA), if an investor challenges a regulatory measure, the respondent
state is permitted to issue a ‘public welfare notice’ specifying why it believes
that the measure falls within this exception.97 After which, the arbitration
proceedings are suspended and a ninety-day consultation period with the
other treaty party is triggered.98 If the state parties agree that the challenged
measure is excluded from the FTA, their decision would bind the investment
tribunal.99 If the treaty parties are unable to agree whether the measure is
excluded within the ninety-day period, the matter would be decided by the
investment tribunal, which is not to draw any adverse inference from the
non-issuance of a public welfare notice by the respondent, or from the
absence of any decision between the respondent and the non-disputing Party
as to whether a measure is an exception.100
B. COUNTERCLAIMS
Investment arbitration is commonly perceived as being biased towards

investors.101 It is assumed that the state must always adopt a defensive
position when faced with an investment claim102 and can, at best, only hope
to defeat the claims of an investor.103 Recent developments, however, are
altering this perceived asymmetry, with counterclaims becoming
increasingly common. Twenty-eight counterclaims are known to have been
95. ASEAN, Brunei, Cambodia, Indonesia, Lao People’s Democratic Republic, Malaysia,
Myanmar, Philippines, Singapore, Thailand, and Vietnam, http://asean.org/asean/asean-
member-states/ (last visited Sept. 13, 2017).
96. AANZFTA & ACIA, supra note 89.
97. Anthea Roberts & Richard Braddock, Protecting Public Welfare Regulation Through Joint
Treaty Party Control: a ChAFTA Innovation, BLOG. EUR. J. INT’L L. (June 21, 2016), https://
www.ejiltalk.org/category/international-tribunals/investor-state-arbitration-tribunals/page/2/
(talking about contents of ChAFTA article 9.11.5).
98. See Free Trade Agreement Between the Government of Australia and the Government of
the People’s Republic of China, Austl.-China, art. 9.11.5–.6, June 17, 2015, A.T.S. 15
[hereinafter China–Australia Free Trade Agreement/ FTA or ChAFTA].
99. See id. at art. 9.18.3.
100. Id. at art. 9.11.8.
101. See generally MICHAEL WAIBEL ET AL., The Backlash Against Investment Arbitration:
Perceptions and Reality, THE BACKLASH AGAINST INVESTMENT ARBITRATION xxxvii–li (Michael
Waibel et al. eds., 2010).
102. See Pierre Lalive & Laura Halonen, On the Availability of Counterclaims in Investment Treaty
Arbitration, 2 CZECH Y.B. INT’L L. 141, 154–55 (2011).
103. Id.
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raised so far, thirteen of which have been filed within the past six years.104
Further, most recent treaties contemplate counterclaims.
The Asian experience with counterclaims is somewhat mixed. On the one
hand, four Asian states have initiated counterclaims, with Indonesia so far
being the only successful counterclaimant in its dispute with a Saudi Arabian
investor.105 Further, provided certain conditions are met, the Trans Pacific
Partnership (TPP) allows counterclaims,106 as does the Agreement for the
Promotion, Protection and Guarantee of Investments Among Member
States of the Organisation of the Islamic Conference, which comprises a
large number of Asian states.107 On the other hand, most Asian IIAs do not
contemplate counterclaims, at least expressly.108
C. TRANSPARENCY
A serious concern voiced about the existing ISDS system is the lack of
transparency. Recently, however, there has been a global movement
towards increased transparency and third-party participation in investment
arbitration,109 even among those states that have been traditionally opposed
to transparency. For instance, Ecuador now regularly publishes information
104. See Ina C. Popova & Fiona Poon, From Perpetual Respondent to Aspiring Counterclaimant?
State Counterclaims in the New Wave of Investment Treaties, 2 BCDR INT’L ARB. REV. 223,
254–59 (2015).
105. See Al-Warraq v. Indon., UNCITRAL, Final Award, 141–42 (Arb. Trib. Dec. 15, 2014),
https://www.italaw.com/sites/default/files/case-documents/italaw4164.pdf.
106. See Trans-Pacific Partnership Agreement, Investment, art 9.19.2, Feb. 4, 2016, https://
ustr.gov/sites/default/files/TPP-Final-Text-Investment.pdf [hereinafter TPP] (“When the
claimant submits a claim pursuant to paragraph 1(a)(i)(B), 1(a)(i)(C), 1(b)(i)(B), or 1(b)(i)(C), the
respondent may make a counterclaim in connection with the factual and legal basis of the claim
or rely on a claim for the purpose of a set off against the claimant.”).
107. See Agreement on Promotion, Protection and Guarantee of Investments Among Member
States of the Organisation of the Islamic Conference, art. 17.1.1.a, Sept. 23, 1986, http://
investmentpolicyhub.unctad.org/Download/TreatyFile/2399.
108. See generally TRISHA MITRA & RAHUL DONDE, Claims and Counterclaims under Asian
Multilateral Investment Treaties, JUDGING THE STATE IN INTERNATIONAL TRADE AND
INVESTMENT LAW: MODERN SOVEREIGNTY, THE LAW THE ECONOMICS 105, 105–26 (Leı̈la
Choukroune ed., 2016) (for a review of counterclaims in Asian IIAs).
109. See generally TRANSPARENCY: UNCTAD SERIES ON ISSUES IN INTERNATIONAL
INVESTMENT AGREEMENTS II, U.N. Sales No. E.11. II.D.16 (2012); GABRIELLE KAUFMANN-
KOHLER, Non-Disputing State Submissions in Investment Arbitration: Resurgence of Diplomatic
Protection?, DIPLOMATIC AND JUDICIAL MEANS OF DISPUTE SETTLEMENT 305, 308 (Laurence
Boisson de Chazournes et al. eds., 2013).
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about progress of its investment cases on its government websites.110 A

similar policy is being followed by the Czech Republic.111
In 2014, the UNCITRAL Rules on Transparency in Investor-State
Arbitration came into effect. These Rules apply to all UNCITRAL
arbitrations initiated under IIAs concluded on or after April 1, 2014, unless
the Parties to the IIA have agreed otherwise.112 They also apply to
arbitrations under existing IIAs, provided the parties to those treaties
consent to their application.113 The Rules chart new ground concerning
public access to ISDS.114 They cover issues ranging from disclosure of the
initiation of arbitral proceedings, to specifying the documents to be
disclosed, to requiring open hearings and publication of awards.115 Further,
the Rules are not limited to arbitrations conducted under the UNCITRAL
Arbitration Rules; they are available for both institutional and other ad hoc
investment arbitration proceedings.116 The Stockholm Chamber of
Commerce, for instance, has issued a practice note which calls for the
application of the Transparency Rules in investment arbitration.117
In another noteworthy development, in 2015, states agreed on a
Convention on Transparency in Treaty-Based Investor-State Arbitration
(Transparency Convention).118 The Transparency Convention was designed
to extend the scope of application of the UNCITRAL Transparency Rules
by providing a mechanism by which states can agree to the application of the
Transparency Rules to UNCITRAL arbitrations instituted under pre-April
2014 IIAs.119 While only Mauritius, Switzerland, and Canada have ratified
110. See Julia Calvert, State Strategies for the Defense of Domestic Interests in Investor–State
Arbitration, INV. TREATY NEWS, INT’L INST. SUSTAINABLE DEV. (Feb. 29, 2016), https://www.
iisd.org/itn/2016/02/29/state-strategies-for-the-defence-of-domestic-interests-in-investor-
state-arbitration-julia-calvert/#_edn2.
111. See generally Luke Eric Peterson & Zoe Williams, The Czech Republic: Updates on Fifteen
Investment Treaty Disputes, INV. ARB. REP. (May 24, 2016), https://www.iareporter.com/articles/
the-czech-republic-updates-on-fifteen-investment-treaty-disputes/.
112. See UNCITRAL RULES ON TRANSPARENCY IN TREATY-BASED INVESTOR-STATE
ARBITRATION, G.A. Res. 68/109, U.N. Doc. A/68/462 1, 5 (Dec. 16, 2013), https://
www.uncitral.org/pdf/english/texts/arbitration/rules-on-transparency/Rules-on-Transparency-
E.pdf.
113. Id.
114. See id.
115. See generally id.
116. See id. at 5.
117. See Mauritius Convention and UNCITRAL Rules on Transparency, ARB. INST. STOCKHOLM
CHAMBER COM. (Feb. 15, 2016), http://www.sccinstitute.com/media/72819/scc-application-of-
mauritius-convention-and-uncitral-rules-on-transparency.pdf.
118. See U.N. CONVENTION ON TRANSPARENCY IN TREATY-BASED INVESTOR-STATE
ARBITRATION, G.A. Res. 69/116, U.N. Doc. A/69/496 (Dec. 10 2014), http://www.uncitral.org/
pdf/english/texts/arbitration/transparency-convention/Transparency-Convention-e.pdf.
119. See id.
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the Transparency Convention so far,120 more States are likely to do so in the

near future. Twenty-one countries have signed the Transparency
Convention to date, but none from the Asia-Pacific.121
It is now a foregone conclusion that investment arbitration should be
conducted in an open, transparent manner. Given the public dimension of
investment disputes and the growing interest of civil society, Asian states
would do well to make their investment disputes more transparent. While a
few Asian states have taken steps in this direction, others are lagging.122
D. STATE-STATE DISPUTE SETTLEMENT

Most IIAs contain two dispute resolution clauses, one permitting investor-
state arbitration for investment disputes and the other permitting state-to-
state arbitration for disputes concerning the treaty’s interpretation and/or
application.123 State-state dispute resolution provisions are not commonly
used to resolve investor-state disputes. This position has, however, changed
recently with state-state dispute resolution emerging as a viable option
through which states can exercise greater control over the interpretation and
application of disputed IIA provisions.124 States have initiated claims against
their counterparty in response to investor-state disputes that they were
facing at the time. For example, in Peru v. Chile, state-state arbitration was
initiated to define the temporal limits of the Peru-Chile BIT.125 Similarly, in
Ecuador v. United States, a tribunal was called on to decide the scope of the
states’ obligations under the U.S.-Ecuador BIT.126
Some Asian IIAs include state-state dispute resolution as the only dispute
resolution mechanism—not one in addition to ISDS. For example,
Australia’s agreements with the United States and Malaysia, and the
120. See Status United Nations Convention on Transparency in Treaty-based Investor-State

Arbitration (New York, 2014), UNCITRAL.ORG, http://www.uncitral.org/uncitral/en/uncitral_
texts/arbitration/2014Transparency_Convention_status.html (last visited Sept. 22, 2017).
121. See id.
122. See Zhao Jun Liu Yun, The Transparency Reform in International Investment Arbitration and
China’s Reactions, 44 J. ZHEJIANG U. 150, 150–63 (2014); Locknie Hsu, Asian Treaty-Makers and
Investment Treaty Arbitration: Negotiating with a Wary Eye, 5(2) CONTEMP ASIA ARB. J. 243, 253
(2012) (For instance, while the ACIA and the AANZ contain transparency obligations, China is
more reluctant.).
123. Anthea Roberts, State-to-State Investment Treaty Arbitration: A Hybrid Theory of
Interdependent Rights and Shared Interpretive Authority, 55 HARV. INT’L L. J. 1, 1 (2014).
124. See MICHELE PROTESTÀ, State-to-State Dispute Settlement Pursuant to Bilateral Investment
Treaties: Is there Potential?, INTERNATIONAL COURTS AND THE DEVELOPMENT OF
INTERNATIONAL LAW: ESSAYS IN HONOUR OF TULLIO TREVES 753, 767 (Nerina Boschiero et
al. eds., T.M.C. Asser Press 2013).
125. See Nathalie Bernasconi-Osterwalder, State-State Dispute Settlement in Investment Treaties,
INT’L INST. SUSTAINABLE DEV. ii, 10 (Oct. 2014), https://www.iisd.org/sites/default/files/
publications/best-practices-state-state-dispute-settlement-investment-treaties.pdf (Discussing
the case).
126. See Ecuador v. U.S., PCA Case No. 2012-5, Request for Arbitration, ¶ 2 (Perm. Ct. Arb.
2011); see generally Roberts, supra note 123.
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Philippines’ with Japan, subject all investment disputes to state–state dispute

settlement.
Asian states should review and consider state-state dispute resolution
mechanisms in their existing (and new) investment treaties to ascertain
whether, and how, these provisions can be effectively used in an investor-
state context.
E. APPEALS MECHANISM
Decisions of arbitral tribunals in investment arbitration are final, and
usually subject only to very limited grounds of review.127 As mentioned
above, the current ISDS system has been criticised as there is no corrective
mechanism if tribunals get their decisions wrong.128 The ability to appeal
decisions was one of the key concerns raised by both businesses and non-
governmental organizations.129
In this context, the establishment of an appellate mechanism has regained
currency.130 The EU-Vietnam FTA as well as the Canada-EU FTA both
contemplate the creation of an Investment Court (examined below), as well
as an appeal tribunal. Other IIAs also contemplate the creation of an
appellate mechanism under which the correctness of a decision of an arbitral
tribunal can be contested. The US-Singapore FTA contemplates the
creation of an appeals mechanism,131 as does India’s new model BIT.132 The
TPP refers to the possibility of an “appellate mechanism for reviewing
awards rendered by investor-State dispute settlement tribunals [being]
developed in the future.”133 This possibility is also left open in the ChAFTA
under which China and Australia are to commence negotiations for an
127. See generally ENFORCEMENT OF INVESTMENT TREATY ARBITRATION AWARDS: A GLOBAL

GUIDE (Julien Fouret et al. eds., 2015) (In the ICSID context, grounds for annulment are
specified in Article 52 of the ICSID Convention. In non-ICSID context, the grounds specified
in Article V of the New York Convention would apply.).
128. See Investment in TTIP and Beyond–the path for reform: Enhancing the Right to Regulate and
Moving from Current Ad Hoc Arbitration Towards an Investment Court, EUR. COMMISSION 1, 8
(May 5, 2015), http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF.
129. See id.
130. See generally ANTONIO R. PARRA, Advancing Reform at ICSID, RESHAPING THE INVESTOR-
STATE DISPUTE SETTLEMENT SYSTEM 569, 569–83 (Jean E. Kalicki & Anna Joubin-Bret eds.,
2015); see also Katia Yannaca-Small, Improving the System of Investor-State Dispute Settlement: The
OECD Governments’ Perspective, in APPEALS MECHANISM IN INTERNATIONAL INVESTMENT
DISPUTES 223, 223–28 (Karl P. Sauvant & Michael Chiswick-Patterson eds., 2008) (Proposals
for an appeals mechanism were considered by ICSID in 2004 and by the OECD in 2005.).
131. See United States–Singapore Free Trade Agreement, Sing.-U.S., art. 15.19.10, May 6,
2003, https://ustr.gov/sites/default/files/uploads/agreements/fta/singapore/asset_upload_file
708_4036.pdf [hereinafter U.S.–Singapore FTA].
132. See Bilateral Investment Treaty Between the Government of the Republic of India and
___, art. 29, https://www.mygov.in/sites/default/files/master_image/Model%20Text%20for
%20the%20Indian%20Bilateral%20Investment%20Treaty.pdf [hereinafter India Model BIT].
133. See TPP, Investment, art 9.23.11, Feb. 4, 2016, https://ustr.gov/sites/default/files/TPP-
Final-Text-Investment.pdf.
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appellate and review mechanism for hearing questions of law arising out of
arbitral awards issued under that Agreement.134 Thus, “there is now a real
possibility that some kind of regional investment appeals body will be
established in the coming years.”135
F. INVESTMENT COURT
Another development of considerable importance is the Investment Court
System (ICS), which would altogether replace the current investment
arbitration framework. This system is contemplated in the EU-Vietnam
FTA as well as the Canada-EU FTA.136
Under this approach, amicable resolution is favoured and settlement can
be agreed at any time, including after arbitration proceedings have
commenced.137 Where a dispute cannot “be resolved [amicably], a claimant
. . . shall submit a request for consultations to the other party” which must
usually take place within sixty days.138 Six months after the submission of
this request for consultations, the claimant can submit a claim to the
Tribunal of First Instance (the Tribunal).139
In the EU-Vietnam FTA, the Tribunal is composed of nine judges,
appointed on a permanent basis, with three judges being nationals of a
Member State of the EU, three judges being nationals of Vietnam, and a
further three judges being nationals of third countries.140 Three judges hear
each individual dispute, with one judge from the EU, one from Vietnam, and
one from a third country.141
The Tribunal is to issue its “award within eighteen months of the date of
submission of the claim.”142 Any party dissatisfied with the award may
approach the Appellate Tribunal on specific grounds, including errors in the
application or interpretation of applicable law and “manifest errors” in the
establishment of the facts, including the establishment of relevant domestic
134. See Free Trade Agreement Between the Government of Australia and the Government of
the People’s Republic of China, Austl.-China, art. 9.23, June 17, 2015, A.T.S. 15 [hereinafter
China–Australia Free Trade Agreement/ FTA or ChAFTA].
135. ISDS in the Asia-Pacific: A Regional Snap-Shot, 19 INT’L TRADE & BUS. L. REV. 20, 34–35
(2016).
136. See Free Trade Agreement Between the European Union and the Socialist Republic of
Vietnam, EU-Viet., Investment, art. 14.6, Jan. 2016, http://trade.ec.europa.eu/doclib/docs/
2016/february/tradoc_154210.pdf [hereinafter EU–Vietnam FTA]; see also Comprehensive
Economic and Trade Agreement, EU-Can., Investment, art. 8.27–28, Oct. 30, 2016, http://
ec.europa.eu/trade/policy/in-focus/ceta/ceta-chapter-by-chapter/ [hereinafter CETA] (Both
these treaties are awaiting domestic approvals and subsequent ratification.).
137. See EU–Vietnam FTA, Investment, Annex Agreement between Member States of the
European Union and Vietnam, §3.2 at art. 3.
138. See id. §3.2 at art 4.
139. See id. §3.3 at art 7.1.
140. See id. §3.4. at arts. 12.2, .5.
141. See id. at art. 12.6.
142. See id. §3.5. at art. 27.6.
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law.143 The Appellate Tribunal is empowered to uphold, modify, or reverse

an award.144
The reception that the ICS will have in Asia-Pacific is yet unknown. In
fact, some prominent Asian commentators have expressed their strong
discontent with the ICS.145 But as the EU and Canada have expressed their
strong support for the proposal,146 and as they are both currently negotiating
investment agreements with important Asian states,147 it is likely that—at
least for some Asian states—ICS will replace the traditional investment
arbitration framework.
V. Conclusion
The Asia-Pacific region is in the midst of unprecedented economic

growth. Foreign investment inflows and outflows are at historic highs.
Investment protection instruments like IIAs continue to be critical to the
investment framework of the region. In addition, the G20 Principles
explicitly place foreign investment very high in terms of international
economic policy by indicating that the G20 has “the objective of (i) fostering
an open, transparent and conducive global policy environment for
investment, (ii) promoting coherence in national and international
investment policymaking, and (iii) promoting inclusive economic growth
and sustainable development.”148 The combination of favorable regional and
global drivers suggest that investment flows and investment policies will gain
in importance in the years to come as a key driver of the world economy.
A vast majority of Asian IIAs provide for investment arbitration, both as
an element of the regional trade and investment treaty architecture as well as
143. See EU–Vietnam FTA, Investment, Annex Agreement between Member States of the
European Union and Vietnam, §3.5 at art. 28.1.
144. See id. at arts. 28.2–.3.
145. See e.g., M. SORNARAJAH, An International Investment Court: Panacea or Purgatory?,
COLUMBIA FDI PERSPECTIVES, COLOM. CTR. SUSTAINABLE INV. No. 180 (Aug. 15, 2016),
http://ccsi.columbia.edu/files/2013/10/No-180-Sornarajah-FINAL.pdf.
146. See Joint Statement: Canada-EU Comprehensive Economic and Trade Agreement (CETA), EUR.
COMMISSION (Feb. 29, 2016), http://europa.eu/rapid/press-release_STATEMENT-16-446_
en.htm.
147. See Canada-India Foreign Investment Promotion and Protection Agreement Negotiations,
GLOBAL AFFAIRS CAN., http://international.gc.ca/trade-FNcommerce/trade-agreements-
accords-commerciaux/agr-acc/india-inde/fipa-apie/background-contexte.aspx?lang=eng (last
visited Sept. 22, 2017); see also EUR. COMMISSION, http://ec.europa.eu/trade/policy/countries-
and-regions/countries/china/ (last visited Sept. 22, 2017). (For instance, Canada and India are
presently negotiating a ‘Foreign Investment Promotion and Protection Agreement,’ as are the
EU and China.).
148. See Annex III: G20 Guiding Principles for Global Investment Policymaking, UNCTAD.ORG,
http://investmentpolicyhub.unctad.org/Upload/Documents/Annex%20III%20G20%20Guid
ing%20Principles%20for%20Global%20Investment%20Policymaking.pdf (last visited Sept.
22, 2017).
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a practical means for resolving disputes. Nearly 21 percent of all investment

disputes involve Asian states, and these numbers are likely to rise.149
Investment arbitration has, however, been facing a considerable backlash,
which is leading to an adjustment in investment disciplines as well as dispute
settlement procedures. This backlash has been particularly significant in
Asia, with some Asian states exiting from the system altogether and others
altering it in material ways.150
Several reforms to the present investment arbitration framework have
been proposed to reaffirm state control while at the same time retain
investor interest. These reforms are particularly significant for Asia, and it is
heartening to note that some Asian states are adopting a more refined
approach towards investment arbitration.151 Asia-Pacific is, however, lagging
in some respects. Having considerable investment jurisprudence before
them, Asian states are uniquely placed now to benefit from the experiences
of others.152 Besides, the increase of Asia-centric investment flows places
Asian states in an increasingly important position to determine the future of
global investment governance. This is certainly an exciting time for those
dealing with international investment law, particularly in the Asia-Pacific
region.
149. Sources: UNCTAD, ‘Investment Dispute Settlement Navigator’ Investment Policy Hub
<http://investmentpolicyhub.unctad.org/ISDS/FilterByCountry>; ICSID, ‘Cases’ International
Centre for Settlement of Investment Disputes, <https://icsid.worldbank.org/apps/ICSIDWEB/
cases/Pages/AdvancedSearch.aspx> (both accessed 22 Oct. 2017).
150. See Emma Lindsay & Bieta Andemariam, International Investment Arbitration in Asia: Year
in Review 2014, BRYANCAVE.COM 1, 4, https://www.bryancave.com/images/content/6/4/v2/
64874/Arbitration-Asia-YIR-FINAL.pdf (last visited Sept. 22, 2017).
151. See Stephan W. Schill, Reforming Investor-State Dispute Settlement (ISDS): Conceptual
Framework and Options for the Way Forward, E15INITIATIVE.ORG (July 2015), http://e15initia
tive.org/publications/reforming-investor-state-dispute-settlement-isds-conceptual-framework-
and-options-for-the-way-forward/.
152. See Stephan W. Schill, Special Issue: Dawn of an Asian Century in International Investment
Law?, J. WORLD INV. & TRADE 765, 771 (2015), http://booksandjournals.brillonline.com/
content/journals/10.1163/22119000-01606012.
THE YEAR IN REVIEW

THE YEAR IN REVIEW
When Contractual Good Faith Meets a

Controversial M&A Issue: The Sandbagging
Practice in International Arbitration
MAXIME PANHARD*
I. Introduction
International Commercial Arbitration (ICA) is a forum where different

legal systems meet, merge, and create autonomous rules, mostly unwritten
and sometimes subjective. Given this autonomy, one interesting way to
study the ICA approach to certain issues is to start with comparative law and
add specificities of this system. The results give insights about what can be
expected in ICA, as well as an illustration of the specificities of this system.
This article analyzes a mergers and acquisitions (M&A) issue known as the
sandbagging practice. Sandbagging occurs when the buyer of a company
brings a claim against the seller after the deal has closed for a breach of
representation that the buyer knew about before the closing.1 This issue
occurs in civil and common law systems, but is approached with different
legal grounds, including the contractual good faith principle. Despite this,
ICA is the most used dispute resolution method with regard to transnational
M&A disputes, and implies a very specific role for the contractual good faith
principle.2 Given the different national system solutions to the contractual
good faith principle, it must be determined whether the frequent use of the
good faith principle by international arbitrators can also be used to solve
sandbagging practice cases in ICA.
* Maxime Panhard is a French lawyer specialized in international litigation, Ph.D candidate

at the Sorbonne University in Paris, and visiting researcher at Fordham University in New
York. He is member of the Paris Bar and of the Madrid Bar and teaches law at the Paris
Dauphine University. He practices law in Paris, Madrid, and New York.
1. See Charles K. Whitehead, Sandbagging: Default Rules and Acquisition Agreements, 36 DEL.
J. CORP. L. 1081, 1081 (2011).
2. See Beata Gessel-Kalinowska vel Kalisz, Representations and Warranties in Cross Border
Mergers and Acquisitions: The Challenges of Cultural Diversity, 24 ICC INTERNATIONAL COURT
OF ARBITRATION BULLETIN 1, 32 (2013) (“The vast majority of disputes arising out of M&A
transactions are resolved outside State courts. Arbitration is favoured [sic] by parties looking for
expediency, confidentiality, a good understanding of business needs in M&A transactions on the
part of the tribunal, and a spirit of cooperation that at best could lead to a settlement and will
otherwise result in a fair and equitable award under applicable law.”); Ronald L. Hicks, Jr. &
Amanda R. Gerstnecker, Litigation Issues in Asset Purchase Agreements, ASS’N OF CORP. COUNS.,
Dec. 1, 2011.
THE YEAR IN REVIEW
As this issue is controversial in different legal systems and international

arbitrators widely use the good faith principle because of its subjectivity,3
sandbagging practice cases might be solved in ICA with the application of
the good faith principle, balanced by the binding force of contracts.4
A. THE SANDBAGGING PRACTICE: A CONTROVERSIAL ISSUE
Given the definition of the sandbagging practice, some practical reasons

made it a controversial issue, which remains sensitive in different legal
systems.
1. Definition of the Sandbagging Practice
The common definition of sandbagging usually refers to the idea of unfair

treatment and misrepresentation.5 Indeed, this expression comes from the
nineteenth century when robbers used sandbags to knock their victims out in
order to rob them.6 Since the 1940’s, this expression is used in poker when a
player acts like he does not have a good hand, when he actually does, in
order to take advantage of his co-players.7 In golf, sandbagging occurs when
a player pretends he is bad when in actuality he is good in order to gain
handicap strokes and increase his chances of winning.8 In procedural law,
the act of sandbagging has different meanings. It can be the act of
voluntarily delaying a procedure, “in order to gain some benefit from the
delay or prejudice to one’s opponent.”9 It can also mean voluntarily
remaining silent when there is an error at a trial, with the idea of using the
error for appeal if the decision does not meet a party’s expectations.10
Additionally, it defines the actions of a company facing a hostile takeover
3. See Munir Maniruzzaman, The Concept of Good Faith in International Investment Disputes-The
Arbitrator’s Dilemma, KLUWER ARBITRATION BLOG (Apr. 30, 2012), http://kluwerarbitration
blog.com/2012/04/30/the-concept-of-good-faith-in-international-investment-disputes-the-
arbitrators-dilemma-2/.
4. See Door Janice Wall & Omar Amin, The Implied Duty Of Good Faith In Commercial
Contracts And Its Impact On Deferred Consideration Clauses In Corporate Sale And Purchase
Agreements, LEGAL BUS. WORLD POSTS (May 22, 2017), https://www.legalbusinessworld.nl/
single-post/2017/05/22/The-Implied-Duty-Of-Good-Faith-In-Commercial-Contracts-And-
Its-Impact-On-Deferred-Consideration-Clauses-In-Corporate-Sale-And-Purchase-
Agreements.
5. See Sandbag, MERRIAM-WEBSTER LEARNER’S DICTIONARY (last visited Oct. 5, 2017),
http://www.learnersdictionary.com/definition/sandbag.
6. Glenn D. West & Kim M. Shah, Debunking the Myth of the Sandbagging Buyer: When Sellers
Ask Buyers to Agree to Anti-Sandbagging Clauses, Who is Sandbagging Whom?, 11 MERGERS &
ACQUISITIONS L. 1, 3 (2007).
7. See Aleksandra Miziolek & Dimitrios Angelakos, Sandbagging: From Poker to the World of
Mergers and Acquisitions, 92 MICH. B. J. 6, 30 (2013).
8. Sandbagging, BOUVIER LAW DICTIONARY (2012).
9. Id.
10. Sandbagging, BLACK’S LAW DICTIONARY (10th ed. 2014).
THE YEAR IN REVIEW
2018] SANDBAGGING PRACTICE IN INTERNATIONAL ARBITRATION 71
when it pretends to be negotiating for the sole purpose of gaining time to

secure a more favorable offer.11
This article focuses on another definition of sandbagging, regarding the
negotiation and execution of the representation and warranty provisions that
are included in almost all private M&A negotiations.12 In the representation
provisions, the seller communicates to the buyer all information that he
knows, or that he is supposed to know, about the target company.13 These
provisions allow both parties to determine the risks of the operation.14 After
closing, in the event of a breach of the representation and warranty
provisions, the buyer can bring an indemnity claim.15 In the latter situation,
the sandbagging practice occurs when the buyer closes a deal despite
knowing that the seller made a false or inaccurate representation, and then
brings a breach of representation claim.16 The buyer performs due diligence
prior to closing and might sometimes be a former executive officer of the
company.17 If the buyer brings an indemnity claim after closing but had
previous knowledge of the errors of the buyer, we are faced with what can be
called the sandbagging practice.18
2. The Causes of the Controversy

Several practical reasons explain why this issue is so controversial, and can
be found by studying the buyer’s perspective, as well as the seller’s
perspective, given the contractual solution is not widely used.
a. Issues from a Buyer’s Perspective

Naturally, buyers tend to be pro-sandbagging.19 Indeed, from the buyer’s
perspective, an important concern emerges parallel to extensive due
diligence: if the sandbagging practice is not allowed, the buyer will claim
that the more he knows about the company, the more his warranty will be
inefficient.20 Practitioners’ common parlance for this is: “[s]ilence may not
be golden,”21 “[k]nowledge is [n]ot [n]ecessarily [p]ower,”22 or “a little
11. Id.
12. Miziolek & Angelakos, supra note 7, at 30.
13. See Melinda Davis Lux, M&A Indemnification Provisions: Are You Drafting Unenforceable
Time Limits?, 28 S. C. LAW 18, (2017).
14. THERESE H. MAYNARD, MERGERS AND ACQUISITIONS: CASES, MATERIALS, AND
PROBLEMS, 319, 943 (Aspen Publishers 2009).
15. Id. at 320.
16. Id.
17. Management Buyout, CORPORATE FINANCE INSTITUTE, https://corporatefinanceinstitute.
com/resources/knowledge/finance/management-buyout-mbo/ (last visited Oct. 8, 2017) (As it is
the case in a Management Buyout (MBO), for instance.).
18. Luke P. Iovine III, Sandbagging in M&A Deals: Silence May Not be Golden, 16 M&A LAW 1,
10 (2012).
19. See id.
20. See generally West & Shah, supra note 6.
21. Iovine, supra note 18, at 10.
THE YEAR IN REVIEW
knowledge can be a dangerous thing.”23 In an anti-sandbagging approach,

because of due diligence, many elements will remain out of the warranty as
the buyer is supposed to know of the breaches represented.24 Due diligence
conducted prior to closing is so thorough that it could be claimed by the
seller that the buyer is supposed to know almost everything.25 In an anti-
sandbagging context, this serves to undermine the representations and
warranties.26 Such a consequence would be unfair for the buyer, especially
because knowing the existence of some misrepresentations does not
necessarily include the knowledge of their impact.27
Permitting the sandbagging practice allows the buyer to isolate a risk
without jeopardizing the entire operation.28 Thus, if a buyer discovers some
elements that will constitute a breach of representations from the seller but
doesn’t know yet the potential impact, he can still claim afterward a
compensation based only on the consequences of this misrepresentation.
This compensation is seen as a correction of the price initially paid.
Also, buyers frequently argue that they bought a so-called sandbagging-
right with the price of the acquisition.29 The sandbagging-right means the
buyers paid for a right to rely on the information disclosed by the sellers;
thus, they are able to bring an indemnity claim in case of false information.30
This right exists regardless of their own previous knowledge.31 This idea
implies a specific definition to the due diligence, as in such cases these are
not only used for taking the decision to buy and at what price, but also to
determine if there exists some breaches that will allow a post-closing
indemnity claim.32
22. Brandon Cole, Knowledge is Not Necessarily Power: Sandbagging in New York M&A
Transactions 42 IOWA J. CORP. L. 445.
23. Jonathan Moncrieff, A Little Knowledge Can be a Dangerous Thing: Sandbagging Clauses in
Acquisition Agreements, STIKEMAN ELLIOT (Oct. 29, 2012), https://www.stikeman.com/en-ca/
kh/canadian-ma-law/sandbagging-clauses-in-acquisition-agreements-a-little-knowledge-can-
be-a-dangerous-thing.
24. DIDIER LECLERCQ, LES CONVENTIONS DE CESSION D’ACTIONS - ANALYSE JURIDIQUE ET
CONSEILS PRATIQUES DE RÉDACTION [SHARE TRANSFER AGREEMENTS - LEGAL ANALYSIS AND
ADVICE WRITING PRACTICES] p. 178 (Larcier ed. 2009).
25. THOMAS METZ, SELLING THE INTANGIBLE COMPANY: HOW TO NEGOTIATE AND
CAPTURE THE VALUE OF A GROWTH FIRM 201 (John Wiley & Sons, Inc. 2008).
26. See Iovine, supra note 18, at 4.
27. ALAIN COURET & PHILIPPE ROSENPICK, L’ARTICULATION ENTRE DÉCLARATIONS ET
CLAUSES DE GARANTIE D’ACTIF ET DE PASSIF [THE ARTICULATION BETWEEN
REPRESENTATIONS AND WARRANTIES] n°175 Droit et Patrimoine [Law and Estate] (2008).
28. West & Shah, supra note 6, at 3: “Rather than being forced to choose between negotiating
a price concession or terminating or attempting to terminate the deal in such circumstances, the
buyer may simply wish to enforce the benefit of the bargain it made by choosing to close the
transaction and seek indemnification based upon the specific, contractual representations and
warranties it negotiated with the seller.”
29. See Iovine, supra note 18.
30. Id.
31. Id.
32. Id.
THE YEAR IN REVIEW
Another issue frequently raised in favor of the buyer is that the knowledge
of the breach can occur between signing and closing, without letting buyers
cancel the closing. In such anti-sandbagging situations, the seller may
organize the discovering of the breach by the buyer before the closing, but
too late to avoid it, so the buyer won’t be able to use this breach for a legal
demand.33
b. Issues from a Seller’s Perspective

Naturally, sellers tend to be anti-sandbagging. Indeed, sellers argue that
in a pro-sandbagging context, all the due diligence made prior to the closing
has the sole objective of finding elements that constitute a breach of seller’s
representations.34 These elements would then be used as a basis for a
lawsuit after the closing. Sellers see this practice as particularly unfair, as the
buyer knew of the breaches and could have taken them into account while
negotiating the deal. As a consequence, in a pro-sandbagging context, sellers
believe the extensive due diligence of the buyers’ counsel is intrusive and
unfair, as the purpose can be to find breaches in the dispositions in order to
file a post-closing claim.35
Sellers will also argue the sandbagging practice is a denaturalization of the
purpose of due diligence. The original idea of this phase is to inform the
buyer of the current situation of the company.36 In this idea, a seller allows a
potential buyer to engage in due diligence to determine if they are for such a
transaction and at what price.37 If due diligence is used to find breaches in
order to bring a post-closing indemnification claim, the seller will feel
ripped off.
Sellers have become more sensitive about this issue as the buyer’s due
diligence investigations grew more extensive over the years.38
3. “Pro” and “Anti” Sandbagging Provisions

A contractual solution exists by including provisions to solve this
particular point.39 Sellers favor anti-sandbagging provisions stating that the
buyer cannot raise any demand, based on a breach, that he knew of before
the closing.40 Buyers favor pro-sandbagging provisions, also known as
knowledge savings provisions, stating that any previous knowledge of the
breach by the buyer does not constitute a waiver of any potential claim based
on this breach.
33. Id.
34. Id.
35. Miziolek & Angelakos, supra note 7, at 31.
36. Definition and Purposes of Due Diligence—Buyer’s Due Diligence, 1 CORP. COUNS. GD. TO
STRATEGIC ALLIANCES § 9:2, Westlaw (database updated Sept. 2016).
37. Id.
38. Maynard, supra note 14, at 399.
39. See West & Shah, supra note 6, at 5.
40. See id.
THE YEAR IN REVIEW
Despite their efficiency, these provisions are not widely used in M&A
practice.41 The American Bar Association (ABA) collects data yearly on this
issue, showing a significant number of transactions lack sandbagging
provisions.42 In 2014, the latest data available, only 35 percent of the
acquisitions surveyed in the United States included a pro-sandbagging
provision, 9 percent included an anti-sandbagging provision, and 56 percent
remained silent about this question.43 In 2004, the same study showed there
were more sandbagging provisions in acquisitions, but 39 percent remained
silent on this issue at that time.44 In Europe during 2014, 24 percent of the
transactions remained silent, 47 percent included an anti-sandbagging
provision, 8 percent included a representation stating the buyer didn’t have
any knowledge of a breach by the seller, and only 22 percent included a pro-
sandbagging clause.45 Thus, depending on the regional business culture, the
percentage of inclusion of a pro or anti sandbagging provision in the
acquisition process varies. Nonetheless, this leaves plenty of room for
operations that remain silent on this issue.
The context of the negotiations prior to closing explains why so many
acquisitions remain silent on the sandbagging issue. If the buyer raises the
inclusion of a pro-sandbagging practice clause in the purchase and sale
agreement, the seller will suspect the buyer discovered some
misrepresentation. If the seller has such doubt, he will certainly not accept
any pro-sandbagging provision, but rather try to include an anti-
sandbagging provision to avoid any risk. In consequence, talking about a
pro-sandbagging provision for the buyer might lead to the opposite effect of
what he was looking for.46 Eventually, most of the parties will find it safer to
remain silent on this issue, giving room for the application of the default
state rule.47
4. A Problem That Remains Sensitive in Different Legal Systems: French

and U.S. Courts
Given these perspectives, the sandbagging act of the buyer is a very
common issue in practice, regardless of the legal system. Taking the
example of state courts in the United States (common law) and French
courts (civil law), different grounds are used depending on the system, but
41. See id.

42. M&A Negotiation Trends: Insights from the 2015 Private Target Deal Points Study, ABA BUS.
LAW SECT. (Mar. 10, 2016), https://www.americanbar.org/groups/business_law/events_cle/in_
the_know/archive/201603.html.
43. Id.
44. Id.
45. 2015 European M&A Deal Points Study, ABA BUS. LAW SEC. (Jan. 30, 2016), https://
www.americanbar.org/content/aba/tools/digitalassetabstract.html/content/dam/aba/administra
tive/business_law/deal_points/2015_eu_study.pdf.
46. Leclercq, supra note 24.
47. Stacey A. Shadden, How to Sandbag Your Opponent in the Unsuspecting World of High Stakes
Acquisitions, 47 CREIGHTON L. R. 459, 475 (2014).
THE YEAR IN REVIEW
the same issue remains. The French courts have an evolving approach, but
must balance the contractual good faith and the binding force of contract.48
State courts in the United States diverge in their approaches, considering the
indemnity claim either on a contract or tort basis.49
a. French Courts: Balance Between Contractual Good Faith and
Binding Force of Contracts
Despite an evolution in favor of the sandbagging practice in 2007, French
jurisprudence compels practitioners to be very careful. Indeed, the
sandbagging behavior of a buyer is mostly seen as contractual bad faith, even
if the binding force of the contract usually prevails.
The French Civil Code provides, as in the majority of civil law systems, a
very widely interpreted principle of contractual good faith. At the beginning
of the nineteenth century, the first version of the French Civil Code, the
Napoleonic Code, include article 1134 al. 3, dedicated to the principle of
bonne foi—good faith—in contract.50 This article remained unchanged in the
French Civil Code until October 2016 when it was replaced by article
1104.51 This principle is interpreted broadly, including pre-contractual
good faith,52 which commands the parties to be loyal in the negotiation and
execution of the contract. This interpretation is broader than good faith
applied solely to the execution of the contract. Therefore, in a civil law
system, sandbagging practices can be challenged based on the good faith
principle.
The jurisprudence of the Cour de Cassation, France’s highest civil court, on
sandbagging related issues is often hard to interpret.53 For instance, the
Cour de Cassation confirmed the decision of the Court of Appeal, applying
the principle of good faith in the contract to avoid the sandbagging
practice.54 Yet, the very same court in a different case made a very strict
application of the binding force of the warranty and allowed sandbagging.55
48. Solene Rowan, The New French Law of Contract, LSE RES. ONLINE, (May 2017) http://
eprints.lse.ac.uk/75815/.
49. See West & Shah, supra note 6, at 3.
50. Code Civil [C. civ.] [Civil Code] art. 1134 (Fr.) (“Les conventions légalement formées
tiennent lieu de loi à ceux qui les ont faites. Elles ne peuvent être révoquées que de leur
consentement mutuel, ou pour les causes que la loi autorise. Elles doivent être exécutées de
bonne foi”) [“Agreements lawfully entered into take the place of the law for those who have
made them. They may be revoked only by [their] mutual consent, or for causes authorized by
law. They must be performed in good faith.”].
51. Code Civil [C. civ.] [Civil Code] art. 1104 (Fr.) (“Les contrats doivent être négociés,
formés et executés de bonne foi. Cette disposition est d’ordre public”) [“Contracts must be
negotiated, trained and executed in good faith. This provision is of public order.”].
52. Philippe le Tourneau & Matthieu Poumarède, Bonne foi [Good Faith], RÉPERTOIRE DE
DROIT CIVIL [DIRECTORY OF CIVIL LAW] (2017) n. 27.
53. Couret & Rosenpick, supra note 27.
54. Cour de cassation [Cass.] [supreme court for judicial matters] 2e civ., Oct. 11, 2005, Bull.
civ. IV, No. 03-11390 (Fr.).
55. See generally Cour de cassation [Cass.] [supreme court for judicial matters] 2e civ., Oct. 11,
2005, Bull. civ. IV, No. 95-15191 (Fr.).
THE YEAR IN REVIEW
In 2007, the Cour de Cassation eventually ruled that the binding force of
contracts prevailed over the principle of good faith in regard to sandbagging
practice:
If the rule according to which conventions must be performed in good
faith allows the judge to condemn the unfair use of a contractual right,
this doesn’t allow him to affect the substance of the rights and
obligations legally agreed between the parties.56
In this decision, the Cour de Cassation put in place a hierarchy between the
principle of good faith and the binding force of contract, in favor of the
latter.57 It is important to note the question of whether the buyer acted in
good or bad faith does not belong to the Cour de Cassation, who only rules on
the application of the law without qualification of the facts.58 In
consequence, the Cour de Cassation cannot hold the sandbagging practice was
performed in good or bad faith, but can rule on the hierarchy between
binding force of contract and contractual good faith, two principles that are
opposed in the sandbagging cases.59 The fact that contractual good faith
finally appeared less relevant than the binding force of contract in
sandbagging cases creates a hierarchy of those principles. Consequently, the
sandbagging practice is allowed because of the prevalence of the binding
force of contracts over the good faith principle even when seen as unfair by
the courts.
Although some other decisions followed the 2007 decision, the
uncertainty remained due to the fact that these were factual cases and the
traditional preponderance of the good faith principle.60 Some authors
recommended potential solutions, such as using the good faith principle to
make a difference between knowledge of the breach and knowledge of the
impact of the breach,61 or between knowledge of the breach and knowledge
of the scope of the breach.62 The courts have not yet used these solutions,
56. Cour de cassation [Cass.] [supreme court for judicial matters] 2e civ., Jul. 10, 2007, Bull.
civ. IV, No. 06-14768 (Fr.) (“[S]i la règle selon laquelle les conventions doivent être exécutées de
bonne foi permet au juge de sanctionner l’usage déloyal d’une prérogative contractuelle, elle ne
l’autorise pas à porter atteinte à la substance même des droits et obligations légalement
convenus entre les parties”) [“[I]f the rule that agreements are to be executed in good faith
permits the judge to sanction the unfair use of a contractual prerogative, it does not authorize it
to infringe the rights and duties legally agreed between the parties.”].
57. Xavier Delpech, Le devoir de bonne foi n’écarte pas la force obligatoire du contrat [The duty of
good faith does not preclude the binding force of the contract], 2007 D. A. J. 2839.
58. Cour de Cassation, The Role of the Court of Cassation (Jun. 15, 2000), https://www.courdecas
sation.fr/IMG/File/The%20role%20of%20the%20Court%20of%20cassation%2025_10_
2010%20Version%20definitive.pdf.
59. Id.
60. Cour de cassation [Cass.] [supreme court for judicial matters] 2e civ., Mar. 15, 2011, Bull.
civ. IV, No. 09-13299 (Fr.); Bruno Dondero, Garantie de passif et bonne foi [Guarantee of liabilities
and good faith] REVUE DES SOCIÉTÉS [COMPANY LAW REVIEW] 334 (2009).
61. Leclercq, supra note 24, at 179.
62. Couret, & Rosenpick, supra note 27.
THE YEAR IN REVIEW
and extreme caution remains, leading practitioners to be careful with this

issue.63
b. U.S. State Courts: On What Should the Buyer Have Relied?

Even if the U.S. legal system also integrated a contractual good faith
principle,64 the issue of the sandbagging buyer depends on other legal
grounds.
The historical law of warranty in the United States was mainly in tort, and
evolved into a specific legal framework that some authors qualify as a:
“curious hybrid, born of the illicit intercourse of tort and contract.”65 Given
these tort grounds, the courts used to consider that the representations in
M&A operations were not part of the contract, so the demands based on
their breaches were actions in tort.66 Thus, the sandbagging practice was
rejected by the U.S. state courts because of the principle of reliance in tort
actions. In accordance with that principle, the buyer is supposed to have
relied on his own investigations—those that led him to the knowledge of the
breach—rather than the warranty of the seller.67 If the buyer investigates
and knows some representations are not correct, he cannot rely on them, but
he must rely on his own investigation and thus, cannot claim any indemnity
afterwards on the basis of the warranty. In that sense, the buyer waives any
potential claim by closing the deal with the knowledge of the breach.68
Despite the fact the representations are included in the contract, many
courts still rely upon a tort approach.69 This leads to discrepancies on the
question of the necessity of reliance for a demand based on the breach of a
contractual warranty or representation.70
In some states, such as Delaware, a modern rule emerged based on a
contract law approach.71 In this approach, the buyer doesn’t only buy the
company, but also buys the warranty. The price paid by the buyer includes
“the cost of a sandbagging right.”72 Naturally, this approach leads to pro-
sandbagging decisions.
To understand these discrepancies, we can differentiate two types of
reliance: the reliance in the traditional rule that implies the reliance of the
buyer on its own investigation, in a tort action; and the reliance in the
modern rule that implies the reliance of the buyer on the warranty he
63. Pierre-Menno de Girard & Charles-Audouin Pascaud, Garanties de passif: “1134, alinéa
1er” contre “1134, alinéa 3”: combat de titans ou subtile alliance?, 2009 D. A. J. 2233-37.
64. RESTATEMENT (SECOND) OF CONTRACTS § 205 (1981); U.C.C. § 2-103.
65. WILLIAM L. PROSSER, HANDBOOK OF THE LAW OF TORTS 651 (3d ed. 1964).
66. West & Shah, supra note 26, at 4.
67. See e.g., Assocs. of San Lazaro v. San Lazaro Park Properties, 864 P.2d 111, 115 (Colo.
1993).
68. Whitehead, supra note 1, at 1084.
69. West & Shah, supra note 6, at 5.
70. Id. at 4-5.
71. Whitehead, supra note 1, at 1081.
72. Id. at 1085.
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purchased, in a contract-based action.73 In other words, the “buyer’s

reliance on the truthfulness of a seller’s warranty,” versus the “reliance on a
promise necessary for the formation of a warranty.”74
It is important to note that the majority of the M&A transactions in the
United States elect New York and Delaware laws.75 Even though Delaware
courts have a clear pro-sandbagging approach, New York courts have a more
complex system, adopting a contractual approach that does not necessarily
lead to pro-sandbagging solutions. In CBS Inc. v. Zif Davis Publishing Co.,
the court adopted a contract approach and accepted the sandbagging
practice, but only because the deal was closed, and the court made clear the
buyer did not waive its claim regarding the specific breach.76 The reason for
this is because the buyer mentioned the breach to the seller before closing
the deal, but the buyer denied it.77 In subsequent cases based on New York
law, such as Galli v. Metz, the court rejected sandbagging practices even
while adopting a contractual approach:
Where a buyer closes on a contract in the full knowledge and
acceptance of facts disclosed by the seller which would constitute a
breach of warranty under the terms of the contract, the buyer should be
foreclosed from later asserting the breach. In that situation, unless the
buyer expressly preserves his rights under the warranties (as CBS did in
Ziff-Davis), we think the buyer has waived the breach.78
Thus, the court considered that the buyer waived its claim when he had
knowledge of the breach before closing.79
In other decisions, courts applying New York law considered questions
such as the origin of the knowledge of the buyer and the effects of the
common knowledge.80 Eventually, if the knowledge of the breach comes
from an explicit disclosure of the seller, the buyer has waived its claim.81
The New York case law, thus, implies a specific system in that the origin of
73. Matthew J. Duchemin, Whether Reliance on the Warranty is Required in a Common Law
Action for Breach of an Express Warranty, 82 MARQ. L. REV. 689, 707 (1999).
74. Id. at 689.
75. John C. Coates, Managing Dispute Through Contract: Evidence from M&A, 2 HARV. BUS. L.
REV. 295, 322 (2012); see also Iovine, supra note 21, at 10.
76. CBS Inc. v. Ziff-Davis Publ’g Co., 75 N.Y.2d 496, 503, 506 (1990).
77. Id. at 500-01.
78. Galli v. Metz, 973 F.2d 145, 151 (2d Cir. 1992).
79. Iovine, supra note 18, at 10 (“If the seller affirmatively discloses the existence of the breach
(as opposed to the buyer discovering the breach itself or through a third party) then the premise
that the buyer believed it was purchasing the seller’s promise as to the truth of the
representations is not as solid and the buyer may not be permitted to recover for that breach if
the buyer elects to close anyway.”).
80. See Rogath v. Siebenmann, 129 F.3d 261, 264-66 (2d Cir. 1997).
81. Frederick R. Fucci, Arbitration in M&A Transactions: Laws of New York and Delaware, Part
II, 71 DISP. RESOL. J., 1, 16-17 (2016).
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the buyer’s knowledge, as well as the communication of such knowledge to

the seller, play a major role.82
Courts are divided on this controversial issue, between states that adopt
the modern rule, and states that apply the traditional rule.83 Furthermore,
the reasoning and law principles that lead a specific jurisdiction to accept
sandbagging are not always the same.84 Some states, such as Delaware,
adopt a contractual approach that leads to pro-sandbagging solutions, but
New York adopts a contractual approach that does not automatically lead to
pro-sandbagging decisions.85 In consequence, the sandbagging judgment by
the courts are not easily predictable in function of the state default rule.86
The decision will depend on the jurisdictions that have had the opportunity
to consider this issue.87 These discrepancies reflect the controversial aspect
of this issue. Accordingly, practitioners should remain cautious.
II. The Particularity of the Good Faith Principle in ICA

In M&A, representation and warranty provisions typically include an
arbitration clause. This makes ICA the preferred dispute resolution
method.88 Yet, precedents of national courts are not binding for
international arbitrators, they massively use the contractual good faith
principle, which has a different meaning for international arbitration cases as
if it was used before national courts.
A. STARE DECISIS FROM NATIONAL COURTS AND ICA

Judges from different legal systems apply different legal grounds, such as
the good faith principle, to sandbagging practice cases. The question left to
determine is whether, in a case of the application of a national law that
includes the principle of good faith, but whose national courts never used it
in the appreciation of the sandbagging practice, the international arbitrators
may use it or not. In more generic terms, this is the common question of
“whether [the arbitrators] should follow the case law of domestic courts of
the jurisdiction whose law applies to the contract before them.”89 We are
not talking about the common debate of binding precedent between arbitral
82. Id.
83. Whitehead, supra note 1, at 1084-85.
84. Miziolek & Angelakos, supra note 7, at 31-34.
85. Id.
86. Iovine, supra note 18, at 10 (“Even though this so-called ‘pro-sandbagging’ default rule in
Delaware and New York may mean that a majority of buyers will have some right to sandbag,
even if an acquisition agreement is silent on the issue, buyers should be aware that sandbagging
case law has only recently started to evolve and these default rules continue to have some
ambiguities.”).
87. Duchemin, supra note 72, at 689.
88. Gessel Kalinowska vel Kalisz, supra note 2, at 32.
89. Klaus Peter Berger, To What Extent Should Arbitrators Respect Domestic Case Law? The
German Experience Regarding The Law On Standard Terms, 32 ARB. INT’L 243, 243 (2016).
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awards. Instead, we are talking about determining whether international

arbitrators should take into account the case law of the national courts
applying the applicable law.
The role of precedents is one of the main differences between the
construction and use of the two legal systems studied here: common law and
civil law. If common law incorporates a strong binding precedent principle
that applies to its courts, civil law countries usually do not include such
principle.90 In civil law countries, precedents from higher courts usually play
an important role in the interpretation of the law because lower courts try to
respect such interpretation in order to avoid having decisions undermined.91
However, international arbitral tribunals are created on a case-by-case basis,
and produce only one award regarding the case for which they are created.92
They do not have any previous decisions and thus, cannot have any concern
regarding the inconsistency or consistency of their award with their previous
one.93 Additionally, the award taken by an international arbitral tribunal is
not supposed to be subject to review by national courts.94 In consequence,
such tribunals should not be concerned, as domestic judges are, by the risk of
having their award reversed by a higher court.95 Furthermore, the awards
remain generally confidential and unpublished in such a way that should
prevent the creation of any case law in ICA.96 Finally, one of the reasons for
choosing ICA to resolve disputes can be to have an application of the law
adapted to fit the needs of international business—a feature that doesn’t
belong to the domestic courts—while also allowing the international
arbitrators to disengage from national case law.97
In consequence, even if international arbitrators frequently used court
precedents, like U.S. judges,98 case law is not binding, and the arbitrators are
not compelled to follow domestic decisions if the situation requires a
different solution.
B. THE SPECIFICITY OF THE CONTRACTUAL GOOD FAITH

PRINCIPLE IN ICA
The principle of contractual good faith, that might apply to sandbagging
cases, as shown by the precedent developments, is very specific in ICA. It
90. Id. at 250.

91. Id.
92. Id. at 253.
93. Id. at 252.
94. Id.
95. Id. (“[A]rbitrators—unlike judges—are appointed for the resolution of only a single
dispute and issue final decisions that are not subject to appeal, i.e. a ‘révision au fond’ of their
rulings by the competent domestic courts in setting aside proceedings at the seat of the
arbitration is not permissible.”).
96. Id. (“In addition, their awards are usually not published and they, therefore, need not and
cannot be concerned with the consistency of their decisions with other awards.”).
97. See id. at 252-57.
98. Id. at 252.
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became a major concept of international law widely used by international

arbitrators, and is very flexible when used in ICA.
1. Contractual Good Faith: A Major Concept of International Law

Due to the development of international treaties and international trade,
the principle of contractual good faith is now recognized as a fundamental
principle in international law.99 The Vienna Convention of the Law of
Treaties introduced the general principle of good faith regarding
performance of treaties in 1969.100 The United Nations Convention on
Contracts for the International Sale of Goods included the contractual good
faith principle in 1980.101 The International Court of Justice also referred to
the contractual good faith in some of its decisions.102 Regarding
international trade, contractual good faith was included in the UNIDROIT
Principles in article 1.7, which provides:
Art. 1.7: (Good Faith and Fair Dealing)
(1) Each party must act in accordance with good faith and fair dealing
in international trade.
(2) The parties may not exclude or limit this duty.103
This inclusion in the UNIDROIT Principles reflects unanimous
recognition of contractual good faith at an international trade level.
2. Contractual Good Faith: Widely Used by the International Arbitrators

The wide use of the principle of good faith by international arbitrators is
well-known.104 This principle is so frequently used in ICA that the parties
cannot pretend to avoid it.105 International arbitrators refer to the good faith
99. Bernardo M. Cremades, Good Faith in International Arbitration, 27 AM. U. INT’L L. REV.
761, 780-81 (2012).
100. Vienna Convention on the Law of Treaties, art. 26, May 23, 1969, 1155 U.N.T.S. 331
(“Noting that the principles of free consent and of good faith and the pacta sunt servanda rule
are universally recognized . . .”); see also Channel Tunnel Group Ltd. v. U.K., 2003-06 PCA
Case Repository, Partial Award, 1, 25 (Perm. Ct. Arb. 2007) (noting that the parties agreed to
use the Vienna Convention of the law of treaties as a guide to the interpretation of both the
treaty and the international contract).
101. United Nations Convention on Contracts for the International Sale of Goods art.
7(1),1980, 10 U.S.T. 56997 (“In the interpretation of this Convention, regard is to be had to its
international character and to the need to promote uniformity in its application and the
observance of good faith in international trade.”).
102. Cremades, supra note 99, at 780.
103. International Institute for the Unification of Priv. Law [UNIDROIT], Principles of
International Commercial Contracts, art. 1.7 (2010), http://www.unidroit.org/english/principles/
contracts/principles2010/integralversionprinciples2010-e.pdf.
104. Pierre Mayer, Le Principe de Bonne foi devant les Arbitres du Commerce International,
FESTSCHRIFT PIERRE LALIVE, BASEL, FRANKFURT, 543, 543 (1993).
105. Céline Cros, La bonne foi est un principe général du commerce international que les parties ne
peuvent ni exclure ni modifier, LE MONDE DU DROIT (Dec. 14, 2000), http://
www.lemondedudroit.fr/affaires-internationales-international/146812.html.
THE YEAR IN REVIEW
principle via the application of a national law or via the application of the
principles of international law.106 They can also apply it despite the
requirements of the applicable national law.107 UNIDROIT Principles are
part of the lex mercatoria that is used as legal basis by international
arbitrators,108 and as seen above, include a good faith principle.109 In fact,
these principles usually imply material rules of the lex mercatoria, and the
principle of good faith is the most used UNIDROIT principle to create
some material rules. Indeed, as Pierre Mayer mentions, around half of the
lex mercatoria principles pointed out by Lord Mustill110 can be directly linked
to the principle of good faith. Therefore, the principle of good faith appears
to be “the principle of the principles.”111 In this sense, the principle of good
faith serves as the basis for other rules and even other general principles,
thus, becoming “one of the richest sources of lex mercatoria.”112 Eventually,
the good faith principle became a rule used as a basis for an international
arbitration demand, starting with the Norsolor case.113
3. Contractual Good Faith: A Flexible Principle When Used in ICA

The notion of good faith and its use as a principle can vary depending on
the legal system where it is applied, and whether it is applied in either a
national or international context. This is true even inside the same legal
system.114
106. Mayer, supra note 104, at 548.

107. See also JOSHUA KARTON, THE CULTURE OF INTERNATIONAL ARBITRATION AND THE
EVOLUTION OF CONTRACT LAW 94 (6th ed., 2013) (“Another aspect of arbitral lawlessness is
arbitrator’s reliance on “good faith” as a purported general principle of international
commercial law, even when applying the substantive law of a country that contains no general
requirement of good faith.”); Larry A. Di Matteo, The CISG and the Presumption of Enforceability:
Unintended Contractual Liability in International Business Dealings, 22 YALE J. INT’L L. 111, 145
(1997).
108. Karton, supra note 107, at 141 (“When transnational law is invoked, tribunals almost
invariably point to a codified instrument, such as the UNIDROIT Principles, CISG,
INCOTERMS, or UCP 600. Codified instruments appeal to international arbitrators because
they represent an international consensus. More importantly, they are predictable, and
therefore, palatable to commercial parties, which crave certainty.”).
109. UNIDROIT Principles, supra note 103.
110. Michael Mustill, The New Lex Mercatoria: The First Twenty-Five Years, 4 ARB. INT’L 86, 86-
119 (1988).
111. Mayer, supra note 104, at 554 (“[E]nviron la moitié des vingt principes de lalex mercatoria
cités par LORD MUSTILL dans son article aux Mélanges Wilberforce ont été expressément
rattachés au principe supérieur de la bonne foi, qui apparaı̂t ainsi comme le principe des
principes.”).
112. EMMANUEL GAILLARD, FOUCHARD GAILLARD GOLDMAN ON INTERNATIONAL
COMMERCIAL ARBITRATION 820 (Emmanuel Gaillard & John Savage eds., 1999).
113. Cremades, supra note 99, at 783.
114. Pedro J. Martinez-Fraga, Good Faith, Bad Faith, But Not Losing Faith: A Commentary on the
2010 IBA Rules on the Taking of Evidence in International Arbitration, 43 GEO. J. INT’L L. 387, 412
(2012) (“At the very outset, the concept of good faith is contingent upon the legal tradition,
culture, and system in which it appears. The challenge in interpreting the concept of good faith
goes far beyond even the fundamental civil/common law divide because even within the
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These changes are a consequence of the subjectivity of the good faith

principle, which has to be interpreted in the context of the case. Indeed, the
perception of good faith itself necessarily implies subjectivism, and
therefore, uncertainty.115 Thus, at an international level—particularly in
international commercial arbitration where each arbitral award is
independent from the others excluding any doctrine of precedent or stare
decisis—the subjectivism of the good faith principle comes into play.116
This subjectivism of the good faith principle is also an explanation of its
success in ICA, and its worthwhile elasticity.117 Pierre Mayer explained the
reasons for such usage that come from this subjectivism. According to him,
the good faith principle is used by the arbitrators as a way for them to add
equity in their decisions.118 Yet, only the subjectivity of this principle,
especially when put in relation to the context of the case, allows arbitrators
to add some equity in a law-based decision. Thus, arbitrators may use the
good faith principle to adapt the application of the law to the equity required
by the international practice, giving this principle a more dynamic role,
“unknown (or unseen) in the law.”119 Some awards have stated in this sense,
using the principle of good faith to challenge the strict application of other
legal rules.120
The purpose of ICA in itself explains the use of a flexible good faith
principle by international arbitrators. As already stated by Philippe
Fouchard in 1965, the interest of international arbitration is to find
satisfactory outcomes for international litigation cases according to rules that
belong to international trade, and to apply rules that are more adapted than
the national laws.121 Thus, ICA became the main way to determine and
apply international business law, and one of its virtues is its capacity to
provide laws adapted to fit the needs of international trade.122 Also, as
framework of civil law jurisdictions, different meanings of good faith are recurring and readily
discernible.”).
115. JACQUES FLOUR ET. AL, LES OBLIGATIONS, 1. L’ACTE JURIDIQUE, 402 (Dalloz eds. 2014)
(“La notion même de bonne foi est entachée d’une irreductible incertitude et d’un
incompressible subjectivisme”).
116. Pierre Mayer, The Role of the UNIDROIT Principles in ICC Arbitration Practice, ICC
INTERNATIONAL COURT OF ARBITRATION BULLETIN, 105, 111 (Emmanuel Jolivet ed., 2002).
117. Ejan Mackaay et al., L’économie de la bonne foi contractuelle, 422, 433 (2003) (“l’élasticité
louable’ du principe”) [“the laudable elasticity of the principle”].
118. Mayer, supra note 104, at 543.
119. Id. “La seconde cause est propre à la place que tient la bonne foi dans la lex mercatoria.
Celle ci ne se borne pas à recevoir en son sein les solutions consacrées par les droits étatiques;
elle donne au principe de bonne foi un rôle plus dynamique, inconnu (ou invisible) dans le
droit” [The second cause is peculiar to the place of good faith in the lex mercatoria. This is not
limited to receiving within itself the solutions consecrated by state rights; it gives the principle
of good faith a more dynamic role, unknown (or invisible) in law.].
120. See Award in ICC case no. 4761, Clunet 1012, 1015, 1017 (1987); ICC case no. 6129, 1047
(1990); Isabelle Barrière Brousse, Efficacité du contrat et arbitrage commercial international,
L’efficacité du contrat, Dalloz, 2011, at 84; Mayer, supra note 104, at 543.
121. PHILIPPE FOUCHARD, L’ARBITRAGE COMMERCIAL INTERNATIONAL (Dalloz, 1965).
122. ERIC LOQUIN, L’ARBITRAGE DU COMMERCE INTERNATIONAL (Joly eds. 2015).
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briefly explained in the introduction, one of the main reasons for the choice
of international arbitration as a litigation resolution is that it will usually
reflect international practices. Indeed, the simple choice of international
arbitration frequently implies the will of the parties to have a decision
adapted to the current practices of the international trade. In a more general
sense, international commercial arbitration prevents legal uncertainty in
international operations. National rules do not always fit the needs of
international transactions, so international arbitrators have elaborated
transnational material rules, inspired by their national system, international
conventions, or practices in international trade.123 To reach such
adaptability, a flexible good faith principle is an efficient tool for
international arbitrators.
III. Consequences Regarding the Sandbagging Practice in ICA

Given the use and specificities of the good faith principle before
international arbitrators, it is more likely to be applied to reject sandbagging
practice in ICA; however, the pacta sunt servanda principle still remains a
major basis of international trade. Finally, international practice and needs
could involve less bad faith qualification for sandbagging buyers’ acts.
A. CONTRACTUAL GOOD FAITH USED TO REJECT SANDBAGGING

CASES IN ICA
Given the uncertainty that remains regarding sandbagging practice in the
national systems, international arbitrators can easily use the good faith
principle to match the rule of law with the expected behavior, in good faith
of the parties in sandbagging cases. This is more likely to occur when
arbitrators think the behavior of the sandbagging buyer is unfair, and
therefore, want to reject his claim. Indeed, they would prefer the binding
force of contract—pacta sunt servanda principle—if they want to decide that a
sandbagging claim is fair.
B. THE PREVALENCE OF THE PACTA SUNT SERVANDA PRINCIPLE

One of the most recognized principles in international contract law is the
binding force of the contract—pacta sunt servanda principle. As already
mentioned, the good faith principle is frequently linked to the pacta sunt
servanda principle when highlighting their importance and unanimous
recognition among the legal systems.124 In fact, the good faith principle is
frequently perceived as linked to the pacta sunt servanda principle in order to
determine what a party shall expect in the execution of the contract in good
faith from the other party.125 We can note regarding international
123. Barrière Brousse, supra note 120, at 84.

124. Emmanuel Gaillard, Trente ans de Lex Mercatoria Pour une application sélective de la méthode
des principes généraux du droit, 1 J. DU DROIT INT’L 5, 7 (1995).
125. Id.
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conventions, the good faith principle is inserted inside the article relating to
the pacta sunt servanda principle in the Vienna Convention: “Every treaty in
force is binding upon the parties to it and must be performed by them in
good faith.”126 The statements of the parties of this Convention, already
mentioned, also link these two principles: “Noting that the principles of free
consent and of good faith and the pacta sunt servanda rule are universally
recognized.”127 This principle is also present in the UNIDROIT Principles:
“A contract validly entered into is binding upon the parties. It can only be
modified or terminated in accordance with its terms or by agreement or as
otherwise provided in these Principles.”128
Thus, even when deciding that the behavior of the sandbagging buyer
qualifies as contractual bad faith, arbitrators will always have to balance the
good faith principle with the binding force of the contract. They might
decide, in function of the cases, that the binding force of the contract
prevails over the principle of good faith, as did the French Cour de Cassation
in its 2007 decision.129
Not surprisingly, the available awards show that international arbitration
usually favors the application of the contract,130 even if it is sometimes
challenged by the good faith principle in order to maintain a certain balance
between the obligations of the parties.131
C. EVOLUTION OF THE PRACTICE: SANDBAGGING COULD BE MORE

AND MORE GOOD FAITH
In the ICA context, and today, the sandbagging behavior of a buyer will
not necessarily be considered bad faith. Indeed, as stated above, a
consequence of the subjective notion of good faith in ICA is to allow the
international arbitrator the ability to adapt his decision to the international
practice. Yet, some courts allow sandbagging because of the binding force of
contracts (regardless of its good or bad faith qualification).132 Once legally
admitted, this practice will be regarded as less and less unfair. In
consequence, the application of the contractual good faith principle can also
lead to pro-sandbagging repercussions in ICA, as the sandbagging action of
the buyer might be seen as less and less unfair in practice.
IV. Conclusion
Two main concluding observations can be inferred from the above. First,
the wide use of the good faith principle by the international arbitrators, and
its application regardless of the will of the parties or the applicable law, make
126. Vienna Convention on the Law of Treaties, supra note 100, at art. 26.
127. Id. at 323.
128. UNIDROIT Principles, supra note 103, at art. 1.3.
129. Cour de cassation [Cass.], supra note 56.
130. Brousse, supra note 120; see also Award in ICC case No 3327, Clunet 971 (1982).
131. See Brousse, supra note 120.
132. Cour de cassation [Cass.], supra note 56.
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its consideration inevitable in a sandbagging practice case, especially given

the controversial nature of this issue. Second, because of the evolution of
the international practice and the pacta sunt servanda principle, the
application of the good faith principle in ICA does not necessarily imply a
sanction of the sandbagging practice. Still, practitioners should keep in
mind that the consideration of the good faith principle might occur in
sandbagging cases before international arbitrators, and should therefore take
it into account in their strategy when counseling a client.133
133. Cremades, supra note 99, at 766 (“For those who set the parties’ strategy when a case arises
in which good faith may play a material role, the major question to ask is whether or not the
legal culture and training of the potential arbitrators might condition their ultimate decision.
Counsel must be aware of the various angles that can be given to good faith in legal argument,
as well as in the arbitrators’ decision-making process.”).
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Nation-building in Abu Dhabi and the U.A.E.
Through Global Best Practices
VALERIE J. PELTON*
I. Introduction
The United Arab Emirates (U.A.E.) emerged from the British colonial
era1 to forge a modern nation in 1971 with an economy built on the
burgeoning oil industry. Over the course of forty years, the emergence of
Abu Dhabi and the U.A.E. as regional and global economic powers was
based, in part, on the strategic vision of the first President of the U.A.E. and
Ruler of Abu Dhabi, H.H. Sheikh Khalifa bin Zayed Al Nahyan, in
establishing a framework of government suited to the needs and culture of
the U.A.E. and Abu Dhabi, and, in part, on economic planning and
development initiatives.2 A firm commitment to rule of law was established
through early adoption of global business best practices as the framework for
transformation into a stable and prosperous nation. To better understand
the significance of the U.A.E.’s efforts to peacefully develop into a modern
* Valerie J. Pelton is an attorney, mediator and former U.S. Air Force (“USAF”) Officer
who has represented U.S. and international technology, telecommunications and aerospace
companies in Europe, Asia, and the Persian Gulf. She currently works for the U.S. Postal
Service (“USPS”). Prior to practicing law, Ms. Pelton served as a USAF Officer in the areas of
Signals Intelligence and Adversary Electronic Combat Operations. She is admitted to practice
in Virginia, New Jersey, California and the District of Columbia. Ms. Pelton was awarded an
LL.M. with Highest Honors in National Security & U.S. Foreign Relations Law from The
George Washington University (“GWU”) Law School, a Masters Certificate in Government
Contracting from the GWU Business School, a J.D. from Whittier College, an M.A. in
Political Science by the University of Nevada at Las Vegas and a dual baccalaureate in Modern
European Studies and French from Vanderbilt University. She is active in Washington area
business, legal and sailing groups, and enjoys studying Mandarin, dancing Argentine tango, and
sailing Flying Scots. In addition, she is published in the Journal of Air Law and Commerce and the
Journal of World Energy Law & Business.
The views expressed in this Article are the author’s, and do not necessarily represent the views
of USPS or the United States.
1. Saif Mohammad Obaid Bin-Abood, Britain’s Withdrawal from the Gulf: With Particular
Reference to the Emirates, 80, Apr. 1992, (unpublished Ph.D. dissertation, University of
Durham) (on file with University of Durham Faculty of Social Science at Durham E-Theses
Online, available at http://etheses.dur.ac.uk/6021/).
2. MOHAMMED AL FAHIM, FROM RAGS TO RICHES: A STORY OF ABU DHABI, 135–136
(2001).
THE YEAR IN REVIEW
nation by adopting and adapting international business best practices, it is

helpful to understand its colonial past.
II. Overview of U.A.E. Federal Structure

Before the U.A.E. formed as a federation of semi-autonomous emirates3
on December 2, 1971,4 it was under British colonial rule as Trucial Oman
for 151 years.5 Trucial Oman was a colonial administrative entity resulting
from a series of treaties, beginning in 1820 with a peace treaty signed at the
conclusion of British naval and military engagements against the Qasimi
Confederation, ostensibly ending the slave trade and piracy while securing
vital sea routes to India and access to the lucrative pearl trade.6 It was
governed from India until 1947, then directly administered through a
Political Resident, who administered justice in and over the external affairs
of Trucial Oman as head of the Trucial States Council until 1965, when
leadership was turned over to its constituent sheikhdoms.7
A. FORMATION OF THE U.A.E.

In 1968, faced with mounting domestic economic pressures and the
spiraling cost of maintaining British interests against the rising tide of
nationalist movements throughout Africa and the Muslim world, the British
government announced its intention to withdraw from the U.A.E. in 1971.8
It was very important to Sheikh Zayed that the U.A.E.’s federal law and
governmental institutions have an Emirati character while maintaining
continuity with existing commercial and legal structures and preventing
economic and political volatility (including potential land grabs by
neighboring nations such as Iran and Saudi Arabia),9 which would disrupt
3. Abu Dhabi, Dubai, Sharjah, Ajman, Umm Al Quwain, Fujairah and Ras Al Khaimah have
sovereignty over their own territories and territorial waters in all matters which are not reserved
to the UAE federal government under the UAE constitution. CONSTITUTION Dec. 2, 1971, art.
3 (U.A.E.).
4. CONSTITUTION Dec. 2, 1971, art. 152 (U.A.E.).
5. A. AQIL. KAZIM, THE UNITED ARAB EMIRATES A.D. 600 TO THE PRESENT: A SOCIO-
DISCURSIVE TRANSFORMATION IN THE ARABIAN GULF, 1–2 (2000).
6. Id. at 137-145.
7. India won its independence in 1947. A Political Agent (based initially in Sharjah and then
Dubai) and a Political Officer (based in Abu Dhabi, later raised to the level of Political Agent in
1961), reported to the Political Resident (based initially in Bushire and then Bahrain). Id. at
137.
8. Symposium, 2004 Society for Historians of American Foreign Relations (SHAFR) Conference,
Tore T. Petersen, Richard Nixon Confronts the Persian Gulf, 1969-1972, (Nov. 18, 2004), http://h-
net.msu.edu/cgi-bin/logbrowse.pl?trx=vx&list=h-diplo&month=0411&week=c&msg=FLdWfd
Onga0sEnrD61m8bg&user=&pw= [hereinafter Petersen]. See generally, TORE T. PETERSEN,
RICHARD NIXON, GREAT BRITAIN AND THE ANGLO-AMERICAN ALIGNMENT IN THE PERSIAN
GULF AND ARABIAN PENINSULA: MAKING ALLIES OUT OF CLIENTS, (Sussex Academic, Press
2009).
9. Petersen, at 3-4.
THE YEAR IN REVIEW
2018] RULE OF LAW IN THE UAE 89
vital trade with the United Kingdom before it could diversify its
international trade.10 To do so without creating or falling prey to instability
and unrest, Sheikh Zayed11 believed that the emirates of Abu Dhabi, Dubai,
Sharjah, Ajman, Umm Al Quwain, Fujairah, Ras Al Khaimah, Bahrain, and
Qatar would need to overcome historic rivalries and band together under a
federal constitutional framework to survive.12 In addition, eighteen years
before the U.A.E. was formed, after his first visits in 1953 to the United
Kingdom, the United States, France, and other nations, Sheikh Zayed
became “convinced of the urgent need in his own emirate for reforms that
could facilitate the growth and development of his country so as to bridge
the vast gap that separated it from the outside world.”13
B. THE U.A.E. CONSTITUTION

On the heels of the British government’s announcement of its pending
withdrawal, Sheikh Zayed looked for a jurist who understood the legacy
British colonial legal system as well as the importance of local political and
cultural identities to form a solid basis for a new Arab nation. Given his
long-standing belief that the gap between the emirates and the international
community need to be bridged, it was no surprise that Sheikh Zayed selected
Judge Adi Nasib Al Bitar14 to craft the U.A.E. Constitution. The
importance of having a well-qualified, culturally-attuned Arab jurist who was
trusted by the British government, Dubai’s British ex-patriot community,
and Emirati rulers involved early in the process of shaping the U.A.E.’s legal
framework, cannot be over-emphasized as a fundamental best practice in
peaceful nation-building.
At a time when the British authorities were targeted by Jewish nationalist
violence, Judge Al Bitar was an eminent Palestinian jurist who trained at the
Jerusalem Law Classes, which was conceived as a legal bulwark against the
Zionism-inspired curricula of the Tel Aviv School of Law and Economics at
a time when the British authorities were targeted by Jewish nationalist
violence.15 Having worked as an attorney and a judge in British courts in
Palestine and Sudan, and having seen the instability, violence, and civil
10. Jonathan Gornall, Sun sets on British Empire as U.A.E. Raises its Flag, THE NATIONAL, Dec.
2, 2011, https://www.thenational.ae/uae/sun-sets-on-british-empire-as-uae-raises-its-flag-
1.574721.
11. Sheikh Zayed was Abu Dhabi’s ruler from 1966 to 2004 and the UAE’s first President.
Library of Congress-Federal Research Division, Country Profile: United Arab Emirates (July,
2007), 19, https://www.loc.gov/rr/frd/cs/profiles/UAE.pdf.
12. Gornall, supra note 10.
13. Id.
14. Judge Al Bitar became the Legal Advisor to the Government of Dubai and was responsible
for establishing its initial Civil Laws and Civil Courts before serving as the Civil Courts’ Chief
Justice. Adi Bitar, WIKIPEDIA (2017), http://en.wikipedia.org/wiki/Adi_Bitar (last visited Sept.
28, 2017).
15. See generally Assaf Likhovski, The Case of Mandatory Palestine, in The History of Law in a
Multicultural Society: Israel 1917-1967, in COLONIALISM, NATIONALISM AND LEGAL
EDUCATION, 75–93, (2002).
THE YEAR IN REVIEW
unrest that both Jewish and Arab nationalist movements respectively

engendered in Palestine and Sudan, Judge Al Bitar likely understood the
importance of devising a legal framework which would affect non-violent
union of emirates with distinct tribal, cultural, and economic differences
while preserving their unique characters, independence, and territories from
predations of neighboring states. It is also likely that the turmoil,
internecine warfare, and instability, which followed in the wake of
retrenchment by colonial powers in Southeast Asia, Africa, and the Muslim
world constituted practical lessons in the dangers of disunity, over-rapid
change, and use of military force versus the benefits of seeking consensus,
gradually escalating change, and using economic power for the public
welfare.
Combined with the practical experience of crafting Dubai’s constitution,
Judge Al Bitar’s understanding of the complex tribal, cultural, and regional
relationships, rivalries, and differences led him to devise the 1971 interim
constitution as a form of legal compromise. This pragmatic solution allowed
each of the emirates time to adjust to the idea of a federation, to accede or
secede, to retain their individual cultural and political identities while
forging a new national identity, to participate in all federal institutions, and
to benefit from the influx of capital and federally-funded social welfare and
infrastructure programs. Conceived as a temporary, renewable, five-year16
constitution for a nine-state federation,17 only six emirates formed the
U.A.E. in 1971 as Bahrain and Qatar elected not to join, and as Ras al
Khaimah delayed accession and adoption of the U.A.E. Constitution until
February 10, 1972.18
In 1996, the Federal National Council (FNC) and the Federal Supreme
Council (FSC) amended the 1971 constitution to make it permanent.19 The
primary reason adoption of the permanent constitution was delayed until
199620 was that Dubai was reluctant to agree to consolidation of its armed
forces into the U.A.E.’s armed forces and to subject its court system to
federal jurisdiction; however, with the guarantee that its court system and
laws would remain independent from federal Supreme Court jurisdiction,
and facing mounting economic pressures resulting from near exhaustion of
its oil reserves, Dubai agreed to the constitution becoming permanent.21
Since 1971, the U.A.E. Constitution has been amended only a few times:
in 1972 when Ras Al Khaimah acceded and the FSC was authorized to set
the number of seats on the FNC each new member emirate would be
allocated,22 in five-year increments extending the 1971 constitution
16. Country Profile, supra note 11, at 3.

17. KAZIM, supra note 5, at 321.
18. Fed. Supreme Council Res. No. 2 of 1972; see also supra note 4.
19. Fed. Supreme Council Res. regarding the Const. amend. 1 of 1996.
20. CONST. AMEND. NO. (1) OF 1996, Dec. 2, 1996 (U.A.E.).
21. Gerald Butt, Oil and Gas in the UAE, in UNITED ARAB EMIRATES: A NEW PERSPECTIVE,
242-243 (Trident Press, 2001).
22. DECLARATION OF CONST. AMEND NO. (1) Feb. 10, 1972 (U.A.E.).
THE YEAR IN REVIEW
beginning in 1976 until 1996 when it became permanent and established

Abu Dhabi as its capital,23 and in 2004 when the U.A.E. federal government
assumed sole responsibility for enacting laws pertaining to:
Work relation and social securities, real estate ownership and
expropriation for public interest; handover of criminals; banking;
insurance of all kinds; protection of fauna & flora; major legislations
related to Penal Code, Civil & Commercial Transactions Code,
Companies Law, Code of Procedures before the civil and penal courts;
protection of moral, technical and industrial property rights;
copyrights, printings and publication rights; import of weapons and
ammunitions unless the same was for the use of the Armed Forces or
Security Forces of any Emirate - other aviation affairs which are not
within the Federation executive competencies; determination of
territorial waters and organization of navigation overseas; organization
and method of establishing financial free zones and scope of excluding
the same from the implementation of the Federal Legislations
provisions.24
In 2011, the World Justice Project (WJP) Rule of Law index ranked the
U.A.E. thirteenth and the United States twentieth in its survey of sixty-six
countries based on “limited government powers, absence of corruption,
order and security, fundamental rights, open government, regulatory
enforcement, access to civil justice and effective criminal justice.”25 The
legal underpinning for the WJP’s assessment is the U.A.E. constitutional
guarantees of certain rights and freedoms, many of which are similar to
those conferred by the U.S. Constitution. It is also a reflection of the
U.A.E.’s federal government incorporating the best practice of giving “top
priority to the rule of law and justice” as well as adapting global legal and
judicial standards to meet the present and future needs of Emiratis and a
majority ex-patriot population.26 An example of an adaptation consistent
with Emirati business and cultural practices is the fundamental principle of
equal treatment before the law of all U.A.E. citizens without regard to “race,
nationality, religious belief or social status.”27 The U.A.E.’s constitutional
guarantee of personal liberty is similar to the Fourth and Eighth
Amendments28 to the U.S. Constitution in that “[n]o person may be
arrested, searched, detained or imprisoned except in accordance with the
provisions of law . . . [or] subjected to torture or to degrading treatment.”29
The U.A.E. Constitution also incorporates the right of someone accused of a
25. U.A.E. Scores Top Rank in Rule of Law Index, KHAJLEEJ TIMES, July 6, 2011, https://
www.khaleejtimes.com/article/20110706/ARTICLE/307069974/1002.
26. Id.
27. CONSTITUTION Dec. 2, 1971, III, art. 25 (U.A.E.).
28. U.S. CONST. amend. IV, VIII.
THE YEAR IN REVIEW
crime to be “presumed innocent until proven guilty in a legal fair trial,”30 the
right to counsel, and the provision of counsel, as well as banning “[p]hysical
and moral abuse”31 of the accused. Other freedoms guaranteed under the
U.A.E. Constitution include free speech,32 the right to privacy,33 free
exercise of religion,34 and freedom of association.35 Similar to the
Thirteenth Amendment of the U.S. Constitution,36 Article Thirty-Four of
the U.A.E. Constitution guarantees that “[n]o person may be subjected to
force[d] labour except in exceptional circumstances provided by the law and
in return for compensation. No person may be enslaved.” The U.S.
Constitution’s Fourth Amendment37 warrant requirement is similar to
Article Thirty-Six of the U.A.E. Constitution’s provision that “[h]abitations
shall be inviolable . . . [and] may not be entered without the permission of
their inhabitants except in accordance with the provisions of the law and in
the circumstances laid down therein.”
C. CONTEMPORARY STRUCTURE
As presently constituted, the principal components of the U.A.E.’s federal

government are the FSC, the President and Vice-President of the Union,
the Federal Council of Ministers (FCM), the FNC, and the Federal
Supreme Court (Supreme Court). Reflecting the rapid expansion of
business, finance, and construction in the U.A.E., its federal government
expanded from a handful of ministries essential to its initial existence and the
welfare of Emirati nationals (e.g., Finance and Industry, Defense, Internal
Affairs, Information, Education, Justice, Health, Foreign Affairs, Planning,
Labor and Social Affairs, Agriculture, and Electricity and Water) to include
ministries of Transportation, Islamic Affairs,38 Trade and Economy,
Petroleum and Mineral Resources, Housing and Public Works, and Higher
Education.39 By 1996, areas previously within the purview of each emirate
(i.e., justice, police, armed forces, health, education, information, and culture
as well as national anthems, postage, currencies, military uniforms, flags,
passports, and citizenship) were consolidated under the federal
government.40
30. Id. at art. 28.

31. Id.
32. Id. at arts. 30–31.
33. Id. at art. 31.
34. Id. at art. 32.
36. U.S. CONST. amend. XIII.
37. U.S. CONST. amend. IV.
38. The General Authority of Islamic Affairs & Endowments (“AWQAF”) established
pursuant to Federal Law No. 29 of 2006, available at http://sdi.abudhabi.ae/Sites/SDI/Content/
AR/PDF/stakeholders-awqaf,property=pdf.pdf.
40. Id. at 332-333.
THE YEAR IN REVIEW
The U.A.E. federal government “allows substantial informal citizen

participation and consensus-building,” driven in part by its rapid growth and
business-oriented government structure, the cultural practice of seeking
consensus, and the openness of Emirati society.41 In 2006, the U.A.E. began
“at the federal and local levels, to reform the political system in the U.A.E.
in order to make it more responsive to the needs of the country’s population
and to ensure that it is better equipped to cope with the challenges of
development,”42 while “[s]imilar programmes . . . [were] launched at the
local level in the individual emirates.”43 This process accelerated in 2011
when “the government altered rules for the September 2011 election process
. . . [to] allow more citizens to participate in the voting.”44 In addition to
these reforms, U.A.E. citizens can “express their concerns directly to the
leadership through consultative mechanisms, such as the open majlis
(councils) held by many U.A.E. leaders.”45
1. Role of the Federal Supreme Council

As established under the U.A.E. Constitution,46 the FSC is the self-
regulating body to which the Council of Ministers reports and has
constitutional authority for formulating general U.A.E. policies and
approving federal legislation.47 In addition to being charged with
“consideration of all matters which leads to the achievement of the goals of
the Union and the common interest of the member emirates[,]”48 it is
specifically charged with:
[. . .]endorsing the various federal laws prior to their issuance including
laws of the annual general budget of the federation and the closing
accounts; sanctioning the decrees on matters that by virtue of the
provisions of the constitution are subject to the ratification and approval
of the [FSC] . . . prior to issuance of such decrees by the president of the
council; ratification of treaties and international agreements . . . by
decree; approving the appointment of the prime minister of the
federation, accepting his resignation, and requesting him to resign upon
the suggestion of the President of the Federation; approving the
appointment of the president and the judges of the Supreme Federal
Court, accepting their resignations, and dismissing them in the cases
specified by the constitution . . . by decrees; supreme control over the
41. KENNETH KATZMAN, THE UNITED ARAB EMIRATES (U.A.E.): ISSUES FOR U.S. POLICY,
summ. 2, (Congressional Research Service, May 23, 2011).
42. Political System, UAEINTERACT.COM, http://www.uaeinteract.com/government/political_
system.asp (last visited Sept. 28, 2017).
43. Id.
44. KATZMAN, supra note 41, at 2.
45. Id. at 3.
46. CONSTITUTION Dec. 2, 1971, IV, ch. I (U.A.E.).
47. Supreme Council of the Union, UNITED ARAB EMIRATES THE CABINET (2017), https://
www.uaecabinet.ae/ar/federal-supreme-council.
48. CONSTITUTION Dec. 2, 1971, IV, ch. I, art. 47 (U.A.E.).
THE YEAR IN REVIEW
affairs of the federation in general; and any other relevant

responsibilities stipulated in the constitution or in the federal laws.49
The rulers of each emirate are the members of the FSC, while the rulers of
Abu Dhabi and Dubai respectively have held and been re-elected to the
positions of President and Vice President of the U.A.E. every five years since
1971.50 For substantive FSC resolutions to be binding on all seven emirates,
according to the FSC’s by-laws, there must be consensus among five of the
seven emirates (two of which must be Abu Dhabi and Dubai).51 The
consensual nature of FSC resolutions and the utilization of consensus-
building to peacefully resolve issues while balancing the interests of the
emirates from which a majority of the funding for federal social welfare
enterprises and government institutions is derived, and recognizing the
needs and interests of all of the emirates, is characteristic of the way in which
Emirati culture and tradition infuse the U.A.E.’s non-violent approach to
nation-building and are embedded in the U.A.E. Constitution.
2. Role of the Federal Council of Ministers

As the U.A.E.’s constitutional executive authority,52 the FCM, headed by a
Prime Minister, is responsible for developing all federal legislation and its
membership is comprised of the Ministers of Foreign Affairs; Interior;
Defense; Finance, Economy, and Industry; Justice; Education; Public
Health; Public Works and Agriculture; Communications, Post, Telegraph
and Telephones; Labor and Social Affairs; Information; and Planning.53 The
FCM can also bypass the FNC if it “determines that there is a need to enact
legislation during a period in which the [FNC] is not in session . . . despite
the fact that the U.A.E.’s legislative process requires proposed legislation to
pass from the [FCM] to the [FNC].”54 While the U.A.E.’s President has
sole authority in choosing the Prime Minister (typically the Vice President
and ruler of Dubai), it is typically done in consultation with the FSC.55
Although the Prime Minister selects members of the Cabinet, the slate of
Cabinet members is subject to presidential review and ratification.56
The requirement that Ministers “be chosen from among citizens of the
Union known for their competence and experience”57 is significant, not only
as an example of the way in which business best practices are widely accepted
and incorporated into Emirati government structure and practices, but also
as it reflects a commitment to use neutral, professional merit factors rather
49. Supreme Council of the Union, supra note 47.

51. Supreme Council of the Union, supra note 47.
52. CONSTITUTION Dec. 2, 1971, IV, ch. 3 art. 60 (U.A.E.).
53. Id. art. 58; see also KAZIM, supra note 5, at 329.
55. Political System, supra note 42.
56. Id.
57. CONSTITUTION Dec. 2, 1971, IV, ch. III, art. 56.
THE YEAR IN REVIEW
than tribal, familial, or geographical considerations to develop a professional

cadre of government executives and to avoid the practice of stacking the
deck with friends and relatives from the home emirates of the President and
the Prime Minister. By professionalizing the corps of ministers at the
outset, while ensuring the Prime Minister would be from Dubai, the U.A.E.
Constitution struck a balance, which recognized the importance of creating
opportunities for talented citizens from all emirates as well as the
importance of Dubai to the U.A.E.’s economic success.
Another best practice drawn from business corporate governance
standards, which was incorporated in the U.A.E. Constitution, relates to
financial conflicts of interest and insider trading. While in office, the
members of the FCM:
[M]ay not practice any professional, commercial or financial occupation
or enter into any commercial transactions with the Government of the
Union or the Governments of the Emirates or combine with their office
the membership of the board of directors of any financial or commercial
company” and “may not combine with their office more than one
official post in any of the Emirates and shall relinquish all other local
official posts.58
Ministers are constitutionally required to totally renounce personal benefits
and must not exploit their official posts to serve their personal benefit or the
benefits of people related to them personally.59 By comparison, members of
the U.S. Congress were not barred from taking advantage of insider
information gained by virtue of their offices until the passage of the Stop
Trading on Congressional Knowledge Act of 2012.60
3. Role of the Federal National Council

The FNC is not a legislative body; however, it can “raise certain public
issues, discuss the national budget, and monitor how monies are spent.”61
Prior to 2006, the forty-member FNC was comprised of political appointees
selected by the rulers of each emirate according to a constitutional scheme of
apportionment.62 As part of the political reforms instituted in 2006 by the
U.A.E. President to make the U.A.E. “more responsive to the needs of the
country’s population and to ensure that it is better equipped to cope with the
challenges of development[,]”63 each emirate established local councils
“convened by the rulers of each emirate, numbering 100 persons per FNC
58. Id. at art. 62.

59. Id. at art. 63.
60. Stop Trading on Congressional Knowledge Act of 2012, Pub. L. No. 112-105, 126 Stat.
291 (Westlaw); see also Stop Trading on Congressional Knowledge Act, H.R. 1148, 112th Cong.
(1st Sess. 2011), available at https://www.congress.gov/112/bills/hr1148/BILLS-112hr1148ih.
pdf.
62. CONSTITUTION Dec. 2, 1971, IV, ch. IV, art. 68.
THE YEAR IN REVIEW
seat. So, for example, the Abu Dhabi electoral council would be 100 x 8 =
800 electors, and the total U.A.E.-wide electorate would be 4,000 persons.
However, the Election Commission approved a slightly larger 6,595-person
electorate, or about 160 persons per FNC seat.”64
The business best practice of diversity is something built into the U.A.E.
Constitution, which guarantees equal treatment of all U.A.E. citizens, male
and female, before the law without respect to “race, nationality, religious
belief or social status[,]”65 employment,66 public office,67 and claiming of
titles and access to education.68 Emirati women play an important role in
business and government, as reflected by the fact that 1,162 of the Election
Commission electors were women in 2006.69 In addition, sixty-five of the
452 candidates for the twenty FNC seats were sought by female candidates,
40 percent of the elected seats were filled by women (Abu Dhabi elected one
female candidate and seven others were appointed,) and women comprised
20 percent of the FNC’s total membership.70 To put this in context of the
U.S. Senate, the U.S. Senate did not reach the landmark level of 20 percent
of its members being female until after the 2012 election cycle of the 113th
Congress.71 On March 8, 2011, as evidence of its commitment to increasing
enfranchisement and a more representative government, the U.A.E.
government announced that it would triple the size of the electorate.72
4. Role of the Federal Supreme Court

Based in Abu Dhabi, the U.A.E.’s Supreme Court was established by
Federal Law No. (10) of 1973.73 It is comprised of a President and up to five
judges nominated by the FSC with the approval of the U.A.E.’s President,
all of whom are appointed for life (barring resignation or removal for age,
illness, incompetence, or other reasons).74 Its members are sworn to “render
justice without fear or favor and . . .” to “be loyal to the Constitution and the
laws of the Union.”75 The U.A.E. Supreme Court is the final court of
appeals for all cases heard in the courts of first instance and the court of
appeals, and its decisions are “final and binding upon all.”76 When drafting

66. Id. at art. 34.
67. Id. at art. 35.
68. WOMEN IN THE UAE (2017), http://www.uae-embassy.org/about-uae/women-uae.
70. Id. at 4.
71. Ashley Parker, Day of Records and Firsts as 133th Congress Opens, N.Y. TIMES (Jan. 4, 2013),
http://www.nytimes.com/2013/01/04/us/first-day-of-113th-congress-brings-more-women-to-
capitol.html.
73. The Federal Judiciary, THE OFFICIAL PORTAL OF THE UAE GOVERNMENT (2017), https://
government.ae/en/about-the-uae/the-uae-government/the-federal-judiciary.
75. CONSTITUTION Dec. 2, 1971, IV, ch. V, art. 98 (U.A.E.).
76. Id. at art. 101.
THE YEAR IN REVIEW
the U.A.E. Constitution, Judge Al Bitar included the international judicial

best practices he incorporated in devising Dubai’s constitution, legal system,
and judiciary. As a result, the U.A.E. Supreme Court is independent, and
the justices are not “subject to any authority but the law and their own
conscience.”77 Apart from the independence of the Supreme Court, the
U.A.E. has on-going legal and judicial best practice initiatives, including
international training exchange programs with countries such as Jordan.78
As enumerated in the U.A.E. Constitution, the Supreme Court has
jurisdiction over disputes between the emirates, disputes between one or
more emirates and the U.A.E. government, the constitutionality of federal
and local laws, legislation and regulations, constitutional interpretation, and
jurisdictional issues between—and among—federal and local judges.79 It
also has jurisdiction to investigate misconduct by ministers and senior
federal officials, and to try offences against the Federation “such as crimes
relat[ed] to internal or external security, forgery of the official records or
seals of any of the Union authorities and counterfeiting of currency.”80 But
Dubai and Ras al Khaimah each retain separate independent court systems
which are not subject to U.A.E. Federal Supreme Court jurisdiction.81
III. U.A.E. Goals Driving Transformation
The U.A.E. aspires to be not just a model for regional development, but
“one of the best countries in the world by 2021.”82 The U.A.E. has emerged
as the regional center of innovation as a result of its “open business
environment, fast-paced development, media savvy, and assertive global
ambitions.”83 Quite simply, the U.A.E. wants to “become one of the best
governments in providing quality services, nurturing creative minds,
building national talent, innovating solutions and adopting international best
practices [and for the U.A.E.’s] . . . government practices to be a
benchmark that other countries adopt and emulate.”84 Serving as a model
for the U.A.E. federal government’s subsequent modernization and
restructuring initiative, Abu Dhabi undertook a government-wide review in
2005 and began a “restructuring program with the aim of boosting efficiency
77. Id. at art. 94.

78. UAE, Jordan Hold Judicial Talks, U.A.E. INTERACT (Apr. 3, 2010), https://uaeinteract.com/
news/default3.asp?ID=326#39968.
79. CONSTITUTION, Dec. 2, 1971, IV, ch. V, art. 99 (U.A.E.).
80. Id.
81. The Federal Judiciary, THE OFFICIAL PORTAL OF THE UAE GOVERNMENT (2017), https://
government.ae/en/about-the-uae/the-uae-government/the-federal-judiciary.
82. U.A.E. National Charter 2021, GOV’T OF DUBAI (June 10, 2017), http://dubai.ae/en/Lists/
FAQ%20List/DispForm.aspx?ID=51 [hereinafter Vision 2021].
83. AAMIR A. REHMAN, DUBAI & CO.: GLOBAL STRATEGIES FOR DOING BUSINESS IN THE
GULF STATES 101 (McGraw-Hill, 1st ed. 2008).
84. Shaikh Mohammed Unveils Federal Government Strategy, KHALEEJ TIMES (Apr. 17, 2017),
https://www.khaleejtimes.com/article/20070417/ARTICLE/304179929/1002.
THE YEAR IN REVIEW
and enhancing Government productivity to ensure improvement in how the

Government serves the needs of its people and visitors.”85
Like a well-run international company, Abu Dhabi utilized due diligence
processes to identify and establish key goals for transforming their
government from a service provider to a regulator.86 It focused on
developing laws and policies which would ensure sustained economic
growth, including the promotion of lower-level decision-making,
streamlining government processes, elimination of agency overlap, and
improvement of government-wide coordination in order to:
[i]ncrease efficiency and reduce the cost of service provision; [r]educe
the level of hidden unemployment and improve the performance of
Government overall; [i]ncrease the rate of Emiratization, in the public
and private sectors; [o]utsource non-core services to the private sector
and increase private sector involvement in service-delivery; [i]ncrease
the efficient use of technology as a key enabler in all Departments and
Government entities; [d]evelop effective performance measurement and
evaluation systems in all Government Departments and entities.87
In response to the Abu Dhabi Policy Agenda 2007/2008 heralding “the
beginning of a new era for [its] Government and public sector, in terms of
accountability and transparency.”88 Abu Dhabi established goals for
ensuring a safe and “secure society and a dynamic open economy.”89 The
goals of:
[p]remium education, healthcare and infrastructure assets; [a] large
empowered private sector; [t]he creation of a sustainable knowledge
based economy; [a]n optimal transparent regulatory environment;
[c]omplete international and domestic security; [a] continuation of
strong and diverse international relationships; Emirate resource
optimization; [and] . . . [a] significant and ongoing contribution to the
federation of the United Arab Emirates90
act as a roadmap for the future of Abu Dhabi and the U.A.E. They are also
goals that other governments can adapt, emulate, and strive to achieve.
A. ABU DHABI ECONOMIC VISION 2030

Given the U.A.E.’s forty-year history of developing governmental and
economic infrastructure plans to achieve its economic goals, it is no surprise
that the Chairman of the Executive Council and Crown Prince of Abu
85. The General Secretariat of the Executive Council, Restructuring Government, POL’Y
AGENDA 2007-2008 THE EMIRATE OF ABU DHABI, at 67.
86. Id.
87. Id. at 67, 68.
88. Id. at 4.
89. Id. at 9.
90. Id.
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Dhabi, H.H. Sheikh Mohamed bin Zayed Al Nahyan, tasked the General
Secretariat of the Executive Council, the Abu Dhabi Council for Economic
Development and the Department of Planning and Economy in 2006 to
develop “a long-term roadmap for economic progress . . . aligning all
policies and plans” to transform the Emirate’s economy as articulated in the
Abu Dhabi Policy Agenda 2007/2008.91 The result was a development of
the Abu Dhabi Economic Vision 2030 (the 2030 Plan), with its stated of goal
of building “a sustainable and diversified, high value economy by 2030.”92
As part of the 2030 Plan, Abu Dhabi conducted an in-depth analysis of
economic diversification, focusing on economies that were able to
successfully stimulate robust non-oil sector growth.93 The countries which
the U.A.E. government sees as having successful economic diversification
models for emulation and adaptation to further its own economic
transformation include Norway, Singapore, New Zealand, and Ireland.94 All
four countries were used as models for the adaptation and benchmarking
against the 2030 Plan.95 New Zealand is the model for developing small to
medium-sized businesses; Ireland is the model for developing a diversified
knowledge-based economy and attracting foreign investment; Singapore is
the model for economic development and diversification of finance and
commerce; and Norway is the model for diversifying its economy away from
dependence on oil.96
B. U.A.E. GOVERNMENT STRATEGY 2011-2013
On February 28, 2010, the U.A.E. announced the basis on which it would
develop its strategic and operational plans: the U.A.E. Government Strategy
2011-2013 (the “U.A.E. Strategy”).97 One of the U.A.E. Strategy’s seven
goals is to ensure that “all Government work is conducted according to a set
of guiding principles that puts citizens first and promotes an accountable,
91. Summary of Mandate, THE ABU DHABI ECONOMIC VISION 2030, 1 (2008).
92. Id. at 10.
93. Id. at 28-30.
94. Id. at 30; see also Neil Parmar, A Vision of Abu Dhabi’s 2030 Future in Focus, THE NAT’L,
(Aug. 1, 2011), https://www.thenational.ae/business/a-vision-of-abu-dhabi-s-2030-future-in-
focus-1.424407.
95. See generally Neil Parmar, A Vision of Abu Dhabi’s 2030 Future in Focus, THE NAT’L, (Aug.
1, 2011), https://www.thenational.ae/business/a-vision-of-abu-dhabi-s-2030-future-in-focus-
1.424407.
96. The Abu Dhabi Economic Vision 2030, THE VISION 9-10 (2008); see also Abdullah Rashid,
Norway Eyes Investments in Abu Dhabi Energy: Oslo Delegation will Discuss Economic Relationship,
GULF NEWS (Apr. 14, 2010), http://gulfnews.com/business/economy/norway-eyes-
investments-in-abu-dhabi-energy-1.611426; Norwegian Tribute U.A.E. Orientation to Establish
Renewable Energy Industry, UAE INTERACT (Apr. 17, 2010), http://www.uaeinteract.com/docs/
Norwegian_tribute_UAE_orientation_to_establish_renewable_energy_industry/40616.htm.
97. Getting Familiar with the Dubai Strategic Plan, GOV’T OF DUBAI (Jan. 25, 2015), http://
www.dubai.ae/en/Lists/Articles/DispForm.aspx?ID=108&category=businesses.
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lean, innovative, and forward-looking Government.”98 The U.A.E.’s

strategy relies on seven general principles which include “devising effective
regulations and integrated policies by successful planning and enforcement
. . . [as well as] transparency and accountable governance mechanisms”99
throughout the federal government. A key focus of the U.A.E. Strategy is to
“[maintain continuous cooperation between federal and local authorities”100
so that the federal government is focused on developing legislation which
promotes the economic and social welfare of the nation and its citizens,
while the “local governments are responsible for implementing most
activities that support the development of the country.”101
Apart from streamlining governmental regulatory, policy, and decision-
making roles, and processes to shape a more effective, responsive, and
efficient government, the U.A.E. Strategy is also focused on enacting
legislation to meet the government’s economic and social welfare goals. To
do so, the U.A.E. government is implementing international best practices
to overhaul and modernize its judicial system, in order to make it more
transparent and professional, while:
implementing the most advanced IT programmes to improve judicial
records management, amending judicial procedure texts to ensure
prompt and efficient judgments, translating regulations and legislations
into English, activating the role of the Institute for Judicial Training
and Studies and develop partnerships with renowned international
judicial institutes and focus on information technology, commercial and
financial oriented training.102
C. U.A.E. VISION 2021

On February 7, 2010, the U.A.E. Cabinet approved Vision 2021, a
national charter designed to make the U.A.E. “one of the best countries in
the world by 2021,” which is when it celebrates its fiftieth anniversary.103
The main goals of Vision 2021 are to:
[e]nsure that UAE nationals have ambition and [a] sense of
responsibility, are capable of drawing the future with confidence and
participate effectively in a sustainable socio-economic environment
based on stability, solidarity, moderate Islamic values and national
heritage[,]. . . [e]nsure a strong union with a common destiny that
protects Emiratis and advocates balanced development to make the
UAE an effective power[,] . . . [d]evelop a knowledge-based economy
98. Highlights of the U.A.E. Government Strategy 2011-2013, U.A.E. GOV’T STRATEGY, 2011,
at 6.
99. Id.
100. Government Strategy, supra note 84.
101. Id.
102. Id.
103. U.A.E. VISION 2021, supra note 83, at 7.
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that will be diverse and flexible, and led by skilled Emiratis [and] . . .
[e]nsure prosperity for UAE nationals, who should enjoy a long life,
good health, quality education and other government services.104
IV. U.A.E. Legal Reform

Legal reform in the U.A.E. is not a new concept, but rather a continuous
process that began during the post-World War II colonial era, and has
accelerated since independence, because the U.A.E. began to realize the
economic benefits of oil production, and started to use its newfound wealth
to transform the lives of its citizens and its economy. After World War II, a
British political agent served as a judge over Her Britannic Majesty’s Court
for the Trucial States, which had jurisdiction over “British subjects, British-
protected persons, and non-natives living in Trucial Oman. . . [and appeals]
were made first to the Chief Court for the Arabian Gulf, and then to the Full
Court for the Arabian Gulf.”105 The latter court was “presided over by
British judges or attorneys of at least nine years standing.”106 While local
nationals were subjected to the local rulers’ tribunals to adjudicate civil and
criminal matters in accordance with varying schools of Sharia (Islamic law)
or Urf (a form of Islamic common law based on tribal custom and usage),107
civil cases involving local nationals and non-nationals subject to British
jurisdiction were tried in a joint court presided over by the ruling sheikh and
a British court judge in the sheikhdom which the matter arose.108 After
1960, foreign nationals who were from Arab or Muslim states which were
not British Commonwealth states were made subject to the jurisdiction of
local tribunals pursuant to the Trucial States Transfer Regulation.109
Beginning in 1968 when the British announced their intention to withdraw
from the region, Abu Dhabi began drafting the Penal Code, Code of
Criminal Procedure, and civil codes. They also began developing a police
force.110 Today, federal legislation is the principal source of law as the “court
system is usually inquisitorial, unbound by precedent.”111
A. THE ROLE OF BUSINESS IN LEGAL REFORM

While the influence of British trade and business interests in Trucial
Oman after World War II played a significant role in the development of

105. KAZIM, supra note 5, at 213-215.
106. Id. at 215.
107. Hafiz Adbul Ghani, ‘Urf -o-Âdah (Custom and Usage) as a Source of Islamic Law, 1 AM. INT’L
J. OF CONTEM. RES., 178, 178 (2011).
108. KAZIM, supra note 5, at 214-215.
109. Id. at 215.
110. Id. at 264.
111. Faizal P. Latheef, United Arab Emirates: Legal System and Practice in the U.A.E., MONDAQ
(Nov. 16, 2011), http://www.mondaq.com/x/153788/Arbitration+Dispute+Resolution/Legal+
System+And+Practice+In+The+UAE.
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both Dubai and the U.A.E.’s legal systems, international business standards
are driving modernization and legal reform in the U.A.E. today. From 1960
until he was deposed by the British in 1966, Sheikh Shakbut of Abu Dhabi
modeled Abu Dhabi’s health, social services, “customs, labor affairs, public
works and passports . . . on that which the Sheikh of Kuwait [initiated].”112
With the appointment of Sheikh Zayed as ruler of Abu Dhabi in 1966, Abu
Dhabi began a series of large-scale development and modernization projects
ranging from construction of roads, an airport, and port facilities to the
expansion of Abu Dhabi’s defense force to include adding aviation and naval
capabilities and issuing decrees forming thirty-three administrative agencies
in just four years.113 These projects were carried out by British—and other
international firms—who brought their business and legal standards with
them “for quality, business processes, and people management,”114 as well as
intolerance of corruption and bribery, a culture of business transparency,
and a belief in the rule of law and enforcement of contracts.
Apart from the positive influence of global business and legal standards
adapted and incorporated into the U.A.E. constitution, the U.A.E.
systematically evaluates and adopts global business’ best practices in
furtherance of its strategic vision. For example, as a measure of its
commitment to business’ best practices of transparency and accountability,
Article 62 of the Constitution was amended in 2008 to ban the prime
minister, his deputies, or any other federal minister from engaging in any
professional or commercial job, or any business transactions with the federal
government or local governments while still in office.115 In addition, to
implement and support adoption and institutionalization of business’ best
practices throughout the U.A.E., the U.A.E. federal government is
expanding, developing, and implementing the necessary legal and regulatory
framework.
Unsurprisingly, two prominent examples of its legal reform efforts are in
the banking and financial services sectors. Specifically, the U.A.E.’s central
banks:
introduced regulations in line with global best practices to prevent
money laundering and adhere to strict know-your-client requirements
. . . [while] [c]orporate governance standards are rapidly evolving as
public listings become more common and family businesses bring in
outsiders as professional management.116
In addition, the U.A.E. undertook a three-year reform initiative from 2007
to 2010 in education, health, justice, and government services “patterned on

113. Id. at 263-264.
114. REHMAN, supra note 83, at 281.
115. CONSTITUTION Dec. 2, 1971 ch. III, art. 62 (U.A.E.).
116. REHMAN, supra note 83, at 281-282.
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the private sector’s style, . . . [which] proved successful in many countries

such as Singapore and New Zealand.”117 In 2013, the U.A.E.:
introduced a set of legislative, judicial and executive measures and
ratified a number of Arab and international anti-corruption conventions
within its efforts to fight corruption . . . [including] the United
Nations Convention against Transnational Organized Crime, the
International Convention against Corruption and the Arab Anti-
corruption Convention.118
As part of the U.A.E.’s governmental modernization and reform efforts, the
U.A.E. has adopted business’ best practices such as fostering a “culture that
spurs creativity, innovation, dedication and productivity.” It is also
developing
[n]ew laws and administrative and financial systems and structure[s] . . .
to nurture this new culture with ministries becoming productive entities
competing in performance at the international level . . . in addition to
adopting certain arrangements that are similar to managing board of
directors in private sector companies . . . [designed to foster]
institutional decision making and [which] promotes accountability . . .
[as well as implementing reforms such as a merit-based promotion
system] . . . underpinned by complete transparency.119
Importantly, another instance where global business is driving reform is the
practice of law in the U.A.E. Prior to August 26, 2011, when Dubai required
attorney licensing to “weed out the conflicts of interest, shoddy advice and
inappropriate fees,”120 only law firms had to register. Since 2011, at least in
Dubai, ex-patriot attorneys must “hold a valid licence with their home
regulator while also being licensed individually with the Dubai Ruler’s
Court.”121 While ex-patriot members of international firms “maintain
membership in their home bar associations or at least have had some level of
education,”122 that has not been the case for local practitioners. To address
the problem and regulate practice standards, the U.A.E. Ministry of Justice
implemented its first code of ethics for attorneys in 2012, and developed
standards for training and qualification that allow a lawyer to provide legal
117. U.A.E. to Adapt Private Sector Systems to New Style of Governance – Top Official, UAE
INTERACT (May 22, 2007), http://www.uaeinteract.com/docs/UAE_to_adapt_private_sector_
systems_to_new_style_of_governance_-_top_official/25426.htm.
118. UAE Introduced Raft of Anti-Corruption Measures: Al Awadi, U.A.E. INTERACT (Mar. 17,
2013), http://www.uaeinteract.com/docs/UAE_introduced_raft_of_anti-corruption_
measures_Al_Awadi/54058.htm.
119. Government Strategy, supra note 84.
120. Awad Mustafa, Code of Ethics to Regulate Attorneys, THE NAT’L (Nov. 1, 2011), https://
www.thenational.ae/uae/code-of-ethics-to-regulate-lawyers-1.433334.
121. Lucy Hicks, New licensing requirements for Dubai based attorneys, THE L. SOC’Y OF
ENGLAND AND WALES (July 27, 2011), http://international.lawsociety.org.uk/node/11456.
122. Mustafa, supra note 120.
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services such as “pleading cases, providing legal opinions and advice and
drafting contracts.”123
B. RULE OF LAW INITIATIVES
To achieve the goals of the Vision 2021, the U.A.E. has accelerated and
expanded its efforts to obtain international assistance at all levels, including
the rule of law. While the U.A.E. “follows the civil law system, inspired by
the Roman and French legal systems and the Egyptian civil codes of law,”124
there are many links to British common law, particularly in Dubai, and with
respect to commercial and financial laws. For example, Dubai and the
United Kingdom entered into a non-binding guidance memorandum on
January 23, 2013 to:
bring clarity and confidence to the [reciprocal] relationship between
[the Commercial Court of England and Wales and the Dubai
International Financial Center courts because,] . . . [w]ithout a clear
understanding of enforcement and judicial procedures across borders,
businesses are unable to form and nurture the international trade
relationships needed to fuel economic growth.125
In keeping with Vision 2021 and the U.A.E. Strategy’s goals of modernizing
and professionalizing its legal and judicial system, the American Bar
Association’s (ABA) Rule of Law Initiative is actively working with the
U.A.E. As part of the U.S. Department of State’s Middle East Partnership
Initiative,126 the ABA worked with attorneys in the U.A.E. to develop
continuing legal education (CLE) guidelines.127 It also cooperated with the
U.A.E.’s Institute for Training and Judicial Studies (ITJS), the Ministry of
Justice, the Federal Institute for Training and Judicial Studies, and the
government of Dubai’s Legal Affairs Department (DLAD)128 to provide
123. Id.
124. Latheef, supra note 111.
125. UK-UAE Trade Ties Strengthened with Memorandum Between Commercial Courts, THE L.
SOC’Y OF ENGLAND AND WALES (Jan. 24, 2013), http://international.lawsociety.org.uk/node/
12653.
126. About MEPI, THE U.S.-MIDDLE EAST PARTNERSHIP INITIATIVE (MEPI) (2017), https://
mepi.state.gov/about-mepi/.
127. American Bar Association Rule of Law Initiative, Promoting the Rule of Law: Our Work in
Africa, Asia, Europe & Eurasia, Latin America & The Caribbean and the Middle East & North Africa,
22 (2012). See also Am. Bar Association Rule of Law Initiative, Program Helps Boost Continuing
Legal Education in the UAE (Jan. 2013), https://www.americanbar.org/advocacy/rule_of_law/
where_we_work/middle_east/united_arab_emirates/news/news_uae_program_boost_continu
ing_legal_education_0113.html.
128. The DLAD was established pursuant to Dubai Law No. (32) of 2008. It is charged with
ensuring excellence in Governmental legal work and enhancing “the level of legal services . . . in
line with international best practice.” The Government of Dubai Legal Affairs Department,
DUBAI.AE (Nov. 18, 2017), http://www.dubai.ae/en/Lists/GovernmentDepartments/DispForm.
aspx?ID=49&category=government.
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CLE opportunities for attorneys and prosecutors.129 Additionally, the ABA

formed a CLE consortium of regional and international law firms that
“include[s] judicial training institutes, bar associations and justice
ministries.”130 By employing CLE training to improve the quality of judicial
proceedings, prosecutorial and private attorney training on practical and
substantive areas of law—such as anti-money laundering, asset recovery,
cyber-crime, victim’s rights, preservation of evidence, corruption, asset
tracking, and prosecuting financial institutions–131 the ABA assisted the
U.A.E. in strengthening its legal and judicial system so that it can operate
effectively at an international level. In Dubai, the ABA collaborated with
DLAD to train government attorneys on legislative drafting and the
implementation of guidelines for Dubai’s mandatory attorney licensing CLE
program, as well as assisting both DLAD and ITJS with law practice
management training.132 The result is Dubai has a robust CLPD program.133
In addition to collaborating with the British and American legal and
judicial communities, the United Nations Development Program has
provided technical assistance and policy support for public administration
development and modernization, such as providing support for institutional
development projects.134 The U.A.E.’s drive to be the best, combined with
its determination to build upon practices contributing to its status as an
international business hub, and an openness to learning and adapting best
practices collectively contributed to the U.A.E.’s annual high ranking on the
WJP Rule of Law Index. In 2011, the WJP ranked the U.A.E. thirteenth
out of sixty-six countries assessed for absence of corruption, effective
criminal justice, government accountability, and judicial independence as a
check on government powers. In 2016, it was ranked fifteenth for
corruption globally out of 113 countries.135 Additionally, the U.A.E.’s
practice of sanctioning government officials for misconduct, as well as its
constitutional protection of civil rights, access to justice, labor rights, free
speech and the exercise of religious rights, property rights, equality before
129. Am. Bar Association Rule of Law Initiative, United Arab Emirates (UAE) Programs (2017),
https://www.americanbar.org/advocacy/rule_of_law/where_we_work/middle_east/united_arab_
emirates/programs.html#legal_reform.
130. Supra note 127, at 23, 120.
131. Id. at 120-121.
132. Id. at 121.
133. Continuing Legal Professional Development Programme, THE GOVERNMENT OF DUBAI
LEGAL AFFAIRS DEPARTMENT (2017), http://training.legal.dubai.gov.ae/?lang=en.
134. Elissar Sarrouh (Government Institutions Reform Specialist), The UNDP Role in Public
Administration Reforms In the Arab Region, Expert Consultative Meeting on Pub. Admin. and
Pub. Acct. Dev., With Stress on Elec. Tools, 15-16 (June 2003); see also Stephen A. Ronaghan
(Policy Analyst & Project Coordinator), Benchmarking E-government: A Global Perspective,
U.N. Div. for Pub. Econ. & Pub. Admin. & Am. Soc’y for Pub. Admin., 14 (May 2002).
135. World Justice Project Rule of Law Index 2016, World Justice Project at 23, 151 (2016), https:/
/worldjusticeproject.org/sites/default/files/documents/RoLI_Final-Digital_0.pdf.
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the law, and right to counsel added to its ranking.136 Having laws which are
“clear, stable and publicized” is another hallmark of the rule of law best
practice in the U.A.E.137 In 2016, the U.A.E. was ranked thirty-third
globally.138
C. GLOBAL BEST PRACTICES
Since its foundation, the U.A.E. has relied on international business

norms, such as benchmarking and the use of best practices, to shape its laws
and policies. One innovative example of nation-building through the use of
technological best practices is at the heart of the U.A.E.’s efforts to make the
government accessible to U.A.E. residents and nationals. In 2002, the
United Nations Department of Economics and Social Affairs ranked the
U.A.E. twenty-first in the world for “utilizing the internet and the world-
wide-web for delivering government information and services to citizens.”139
In 2016, it was twenty-ninth globally for e-government development.140 As
part of the U.A.E.’s government modernization and reform initiative in
2003, the U.A.E. began implementing “quality management, budgeting and
accounting reforms, procurement reform, and e-government [best practices
to] . . . improve government cost-effectiveness and efficiency, and improve
public service delivery . . . [and] to facilitate, and even drive, public
administration reform.”141 When it instituted electronic voting in 2006, the
U.A.E. became the “first Arab country in the region to implement such an
advanced system.”142 The electronic voting initiative undertaken by the
U.A.E. in its 2011 FNC elections was cited as a best practice, and was
employed because it was “one of the most efficient in ensuring a safe,
effective and convenient election process.”143
As a tangible example of how utilization of best practices contributed to
building the U.A.E. into an emerging world leader, the 2012 World
136. U.A.E. Scores Top Rank in Rule of Law Index, KHALEEJ TIMES (July 11, 2011), http://
www.khaleejtimes.com/DisplayArticle09.asp?xfile=data/theuae/2011/July/theuae_July158.xml
&section=theuae.
137. Id.
138. UAE Among Top Nations on ‘Rule of Law’ Index; 2016 WJP Rule of Law Index, EMIRATES
NEWS 24/7 (Nov. 17, 2017), http://www.emiratesnews247.com/uae-among-top-nations-on-
rule-of-law/.
139. Sarrouh, supra note 134, at 15-16; see also Ronaghan, supra note 134, at 42.
140. United Nations E-Government Survey 2016: E-Government in Support of Sustainable
Development, U.N. DEP’T. ECON. AND SOC. AFFAIRS (2016), http://workspace.unpan.org/sites/
Internet/Documents/UNPAN96407.pdf.
141. Sarrouh, supra note 134, at 15.
142. Id.
143. Samir Salama, Emirates ID Cards Mandatory for Members to Vote in FNC Elections, GULF
NEWS (June 22, 2011), http://gulfnews.com/news/uae/government/emirates-id-cards-
mandatory-for-members-to-vote-in-fnc-elections-1.824971.
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Economic Forum ranked the U.A.E. twenty-fourth of 144 countries.144 This

was in part due to its generally strong legal framework, transparency, solid
business ethics, lack of corruption, governmental efficiency, strong auditing
and reporting standards, and judicial independence.145 In 2017, the U.A.E.
ranked seventeenth globally.146 Underscoring the U.A.E.’s firmly rooted
culture of actively seeking and incorporating global best practices is its role
as a founding member, and as the 2012 Vice Chair of the Global Federation
of Competitiveness Councils, a nonprofit which seeks to develop “new
policies in order to foster and increase productivity, prosperity and
competitiveness throughout the world.”147
V. Conclusion
Abu Dhabi and the U.A.E. have benefited greatly from early adoption and
adaptation of global business best practices to peacefully build the U.A.E.
since its independence into a stable, prosperous, dynamic nation, and an
emerging global leader. The cultural acceptance of best practices in Emirati
society at every level of business and government ensures that they will
continue to play a positive role in building the nation and shaping its identity
through peaceful means.
144. Klaus Schwab & Xavier Sala-i-Martin, Global Competitiveness Report 2012-2013, World
Economic Forum (2012), at 35, available at http://www3.weforum.org/docs/WEF_Global
CompetitivenessReport_2012-13.pdf.
145. Id. at 357.
146. Klaus Schwab & Xavier Sala-i-Martin, Global Competitiveness Report 2017-2018, World
Economic Forum (2017), at 32, available at http://www3.weforum.org/docs/GCR2017-2018/05
FullReport/TheGlobalCompetitivenessReport2017%E2%80%932018.pdf.
147. Lisa Hanna, Global Leaders Gather to Share Strategy on Competitiveness: 3rd Annual GFCC
Meeting and Summit Underway in Dubai, (Nov. 27, 2012), available at http://www.compete.org/
gcc/news/global-leaders-gather-to-share-strategy-on-competitiveness/.
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THE YEAR IN REVIEW

Obligations: Latest Trends in Investment
Treaty Design
KLARA POLACKOVA VAN DER PLOEG1
I. Investment Treaties: A Regulatory Straightjacket?
The scope of states’ power to regulate in the public interest, within the
normative context of an applicable investment protection treaty, has been
the central issue of recent investor-state arbitration cases. This essentially
conceptual issue has important practical consequences. By imposing on host
states wide-ranging obligations for particular treatment of qualifying foreign
investors, investment treaties inherently curtail host states’ regulatory space.
Many regulatory actions that would have been permissible under a state’s
municipal law may constitute violations of applicable investment treaties, for
which the state may be held internationally responsible and liable to provide
sizable financial compensation to foreign investors.
The characteristic feature of cases centered around the scope of states’
regulatory autonomy is the elemental tension between investment
guarantees and a conflicting public interest which the host state aspires to
protect. The most notable of the recent arbitral decisions are the Philip
Morris tobacco packaging cases,2 in which the tobacco giant challenged,
unsuccessfully, the Australian and Uruguayan measures on tobacco
packaging.3 Australia and Uruguay introduced the tobacco packaging
requirements to protect public health through health warnings and
reduction in appeal; however, Philip Morris challenged the measures as
interfering with its property and trademark rights protected by the
applicable investment treaties.4
While the investment aspect of the Philip Morris saga seems dormant for
the time being, the issue of regulation in the public interest remains at the
forefront of the international investment law agenda and a core question of
1. The Graduate Institute of International and Development Studies. Research funding for
this Article was provided by the Swiss National Science Foundation, Project No. P1GEP1-
164860.
2. Philip Morris Asia Ltd. v. Commonwealth of Australia., UNCITRAL, PCA Case No.
2012-12, Award on Jurisdiction and Admissibility (Dec. 17, 2015); Philip Morris Brands Sàrl v.
Oriental Republic of Uruguay, ICSID Case No. ARB/10/07, Award (July 8, 2016).
3. Id. While the tribunal in the Australian proceedings dismissed the case on jurisdiction, the
tribunal in the Uruguay case rejected all of Philip Morris’ claims on merits.
4. Id.
THE YEAR IN REVIEW
many ongoing investor-state arbitrations.5 The pending case of Gabriel

Resources v. Romania is a pertinent example.6 The Romanian government,
regulators, and the Parliament have refused to approve the highly
controversial U.S. $2 billion dollar Rosia Montana mining project because of
its anticipated environmental and societal impacts.7 The foreign investor
alleges that the refusal amounted to a violation of the fair and equitable
treatment standard guaranteed under the applicable investment treaties and
has initiated arbitral proceedings to recover losses allegedly incurred.8
Another apposite example is the Vattenfall v. Germany case and its
investor-state arbitration component brought under the Energy Charter
Treaty (the “ECT”).9 Invoking the protection of public health and the
environment, the German government decided to stop the production of
nuclear energy in the country and to close down all nuclear power plants.
Vattenfall companies have asserted that the discontinuation of Vattenfall
power plants amounted to violations of the ECT and have reportedly been
claiming =C4.7 billion as compensation for losses allegedly suffered.10
II. Controversy of Investment Treaties and Investor-State

Dispute Settlement
The Philip Morris, Gabriel Resources, and Vattenfall cases have taken place
against the background of a broader debate on the legitimacy and acceptable
parameters of international investment protection and investor-state dispute
settlement (“ISDS”). ISDS has been an exceptionally vibrant area of
international dispute settlement over the last twenty-five years. However,
investment treaties and ISDS have been attracting growing concerns among
5. See generally AIKATERINI TITI, THE RIGHT TO REGULATE IN INTERNATIONAL

INVESTMENT LAW (2014); REASSERTION OF CONTROL OVER THE INVESTMENT TREATY
REGIME (Andreas Kulick ed., 2016); STEFFEN HINDELANG & MARKUS KRAJEWSKI, SHIFTING
PARADIGMS IN INTERNATIONAL INVESTMENT LAW: MORE BALANCED, LESS ISOLATED,
INCREASINGLY DIVERSIFIED (2016); Vera Korzun, The Right to Regulate in Investor-State
Arbitration: Slicing and Dicing Regulatory Carve-Outs, 50 VAND. J. TRANSNAT’L L. 355 (2017);
PEDRO J. MARTINEZ-FRAGA & C. RYAN REETZ, PUBLIC PURPOSE IN INTERNATIONAL LAW:
RETHINKING REGULATORY SOVEREIGNTY IN THE GLOBAL ERA (2015).
6. Gabriel Res. Ltd. v. Romania, ICSID Case No. ARB/15/31, Pending, https://
icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/15/31.
7. See, e.g., James Wilson, Gold explorer Gabriel Resources seeks arbitration with Romania,
FINANCIAL TIMES (Jan. 20, 2015), https://www.ft.com/content/81da52ae-a094-11e4-8ad8-
00144feab7de.
8. Press Release, Gabriel Res., Gabriel Files for Int’l Arbitration Against Rom. (July 21,
2015), http://www.italaw.com/sites/default/files/case-documents/italaw7870.pdf.
9. Vattenfall AB v. German Federal Republic, ICSID Case No. ARB/12/12, Pending, https://
icsid.worldbank.org/en/Pages/cases/casedetail.aspx?CaseNo=ARB/12/12.
10. Tom Jones, German Court Rules on Nuclear Phase-out as Vattenfall Award Draws Near,
GLOBAL ARBITRATION REVIEW, http://globalarbitrationreview.com/article/1078505/german-
court-rules-on-nuclear-phase-out-as-vattenfall-award-draws-near (last updated Dec. 8, 2016).
THE YEAR IN REVIEW
2018] PROTECTION OF REGULATORY AUTONOMY 111
states and the general public.11 Investment disputes have been putting under
scrutiny states’ general regulatory measures and measures taken in the public
interest.12 The amounts of damages that arbitral tribunals have awarded
regularly exceeded one billion dollars.13 Arbitral tribunals have also tended
to prioritize investment protection over other considerations and policy
objectives, such as the environment, public health, human rights, labor
standards, and financial stability.
Fairly or not, investment treaties, and ISDS in particular, have grown to
be viewed in many corners as flawed—biased in favor of investors and
unacceptably encroaching upon the legitimate uses of states’ regulatory
power—resulting in a legitimacy crisis of this body of law.14 Tellingly, the
European Commission has characterized ISDS as “outdated”15 and, citing a
lack of trust in the use of investor-state arbitration to settle investment
disputes, has been promoting a different model of investor-dispute
settlement in its recent negotiations.16
11. See, e.g., Investor-state Dispute Settlement: The Arbitration Game, THE ECONOMIST (Oct. 11,
2014), http://www.economist.com/news/finance-and-economics/21623756-governments-are-
souring-treaties-protect-foreign-investors-arbitration; Frank Mulder, et al., Schiedsgerichte–Die
Kläger-Clique, SPIEGEL ONLINE (Apr. 16, 2016), http://www.spiegel.de/wirtschaft/soziales/ttip-
schiedsgericht-streit-die-meisten-klaeger-kommen-aus-europa-a-1084640.html; Jonathan
Weisman, Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S., THE NEW YORK
TIMES, (Mar. 25, 2015), https://www.nytimes.com/2015/03/26/business/trans-pacific-partner
ship-seen-as-door-for-foreign-suits-against-us.html; Alan Beattie, Arbitration on Trial: the US
and UK’s Fear of the Supranational, FINANCIAL TIMES (May 2, 2017), https://www.ft.com/
content/e607c6b2-28f5-11e7-bc4b-5528796fe35c?mhq5j=E3.
12. United Nations Conference on Trade and Development (UNCTAD), Investor-State
Dispute Settlement: Review of Developments in 2016, 5 (Issue 1) (May 2017).
13. See, e.g., Occidental Petroleum Corp. v. Republic of Ecuador, ICSID Case No. ARB/06/
11, Award (Oct. 5, 2012) (US $1.77 billion plus interest awarded); Crystallex Int’l Corp. v.
Bolivarian Republic of Venezuela, ICSID Case No. ARB(AF)/11/2, Award (Apr. 4, 2016) (US
$1.2 billion plus interest awarded); Venezuela Holdings BV v. Bolivarian Republic of
Venezuela., ICSID Case No. ARB/07/27, Award (Oct. 9, 2014) (US $1.6 billion awarded; an
annulment tribunal, however, reduced the amount of damages by US $1.41 billion on Mar. 9,
2017). Note the outlier of the Yukos awards, in which the arbitral tribunals awarded total
damages to the claimants (shareholders of the Yukos Oil Company) of more than US $50
billion. Hulley Enterprises Ltd. v. Russian Federation, UNCITRAL, PCA Case No. AA 226,
Final Award (July 18, 2014); Yukos Universal Ltd. v. Russian Federation, UNCITRAL, PCA
Case No. AA 227, Final Award (July 18, 2014); Veteran Petroleum Ltd. v. Russian Federation,
UNCITRAL, PCA No. AA 228, Final Award (July 18, 2014).
14. See, e.g., THE BACKLASH AGAINST INVESTMENT ARBITRATION: PERCEPTIONS AND
REALITY (Michael Waibel et al ed., 2010); REASSERTION OF CONTROL OVER THE INVESTMENT
TREATY REGIME (Andreas Kulick ed., 2016).
15. Press Release, European Comm’n, E.U. and U.S. Publish TTIP State of Play Assessment,
¶ 4 (Jan. 17, 2017), http://trade.ec.europa.eu/doclib/press/index.cfm?id=1613.
16. Concept Paper, European Comm’n, Investment in TTIP and beyond–the path for reform
(2015), http://trade.ec.europa.eu/doclib/docs/2015/may/tradoc_153408.PDF; Douglas
Thomson, EU says “ISDS is dead” ahead of Japan trade deal, GLOBAL ARBITRATION REVIEW,
http://globalarbitrationreview.com/article/1144114/eu-says-%E2%80%9Cisds-is-dead%E2%
80%9D-ahead-of-japan-trade-deal (last updated July 6, 2017).
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III. Re-Calibration of International Investment Law

Against the background of what has often been described as the backlash
against investment arbitration, arbitral tribunals have been becoming more
sensitive to host states’ legitimate public policy objectives and more willing
to balance investor protection with other interests.17 The Philip Morris v.
Uruguay award, which upheld the legality of two tobacco-control measures
enacted by the Uruguayan government for the purpose of protecting public
health, provides an instructive example of investment tribunals’ ability and
willingness to give appropriate weight to sovereign regulatory goals.18
States have sought to intervene in the practice of investment arbitration
on the level of applicable treaty norms themselves. Indeed, the wording of
specific treaty provisions has been a key factor in case outcomes.19 Older
investment treaties have, on their face, prioritized investor protection over
other considerations (in contrast to the declared objective of protection of
investments to facilitate economic cooperation and prosperity, they would
regularly lack any explicit reference to other values and interests),20 and this
textual absence would then provide the basis for arbitral decision-making
taking place principally around the single axis of investment protection.
Some states, including South Africa, Indonesia, Bolivia, Ecuador, and
Venezuela, have gone so far as to cancel (some of) their investment treaties
without any replacement.21 Other states have been seeking to recalibrate the
balance between investor and state interests through novel treaty provisions,
which would provide an explicit basis for a more balanced understanding of
investment protection and a more nuanced arbitral approach in future
cases.22
IV. Treaty Provisions Protecting Host States’ Regulatory

Autonomy
In their recently negotiated treaties, states have firstly sought to safeguard
host states’ regulatory autonomy and legitimate regulatory space by
narrowing down and particularizing treaty guarantees, and by limiting the
opportunities for broad interpretation of any protections granted by arbitral
tribunals. The new types of provisions have most frequently included: (i) an
17. See David Schneiderman, Legitimacy and Reflexivity in International Investment Arbitration:
A New Self Restraint? Vol. 2 J. OF INT’L DISP. SETTLEMENT No. 2 (2011) (testing adaptation of
arbitral tribunals to legitimation concerns).
18. Tania Voon & Andrew Mitchell, Philip Morris vs. Tobacco Control: Two Wins for Public
Health, but Uncertainty Remains, COLUMBIA FDI PERSPECTIVES (2016), 2.
19. See, e.g., Investor-State Dispute Settlement: Review of Developments in 2016, supra note
12, 1; Bradly J. Condon, Treaty Structure and Public Interest Regulation in International Economic
Law, 17 J. INT’L ECON. L. 333 (2014).
20. See, e.g., Agreement on Encouragement and Reciprocal Invs., Neth.-Arg., Oct. 20, 1992.
21. See International Investment Agreements, UNCTAD, http://investmentpolicyhub.unctad.
org/IIA (last visited Sept. 20, 2017).
22. See Concept Paper, supra note 16.
THE YEAR IN REVIEW
explicit confirmation of the host state’s right to regulate; (ii) more precise
definitions of protected investments (for example, excluding specific assets,
such as sovereign bonds, from the definition of investment) and standards of
treatment (such as fair and equitable treatment and indirect expropriation);
(iii) affirmations of other (non-investment) values and concerns, such as the
protection of labor rights and the environment; (iv) general exceptions
clauses, removing specific policy areas or measures, such as the protection of
human rights, the environment, and essential security interests, from the
scope of the treaty; (v) more precise dispute settlement clauses, regulating
(and thus limiting) access to ISDS (for example, by making only some treaty
provisions subject to ISDS or by excluding certain policy areas from ISDS);
(vi) provisions curbing arbitral tribunals’ power to interpret the investment
treaty; and (vii) provisions on joint interpretations of the treaty by the treaty
parties, which are binding on arbitral tribunals.
The recently signed Comprehensive Economic and Trade Agreement
between Canada and the European Union (“CETA”)23 provides an example
of these innovations in investment treaty design. It explicitly reaffirms the
state parties’ right to regulate for legitimate policy objectives, “such as the
protection of public health, safety, the environment or public morals, social
or consumer protection, or the promotion and protection of cultural
diversity” (and in some detail elaborates the implications of this right).24 It
explicitly excludes commercial contracts for the sale of goods or services
from the scope of the covered investments.25 With respect to the standards
of treatment, the treaty particularizes the scope of the fair and equitable
treatment standard and provides a mechanism for the treaty party review of
its content;26 it specifies (and comparatively limits) the conditions for
compensable indirect expropriation,27 articulates precise terms for
calculation of compensation for expropriation, and excludes limitations on
intellectual property rights consistent with the Trade-Related Aspects of
Intellectual Property Rights (“TRIPS”) Agreement from the scope of
expropriation standard;28 it stipulates permissible regulatory restrictions on
the guarantee of free transfers relating to a covered investment;29 and the
most-favored-nation treatment standard explicitly excludes dispute
settlement from its scope.30 Particular measures are entirely removed from
the treaty protections.31 The settlement of investor-state disputes is not
entrusted to ad hoc arbitral tribunals; instead, the treaty establishes a standing
‘Tribunal.’32 The dispute settlement clauses prevent duplicate proceedings
23. Comprehensive Trade and Economic Agreement, Can.-E.U., Oct. 30, 2016.
24. Id. at Art. 8. 9.
25. Id. at Art. 8.1.
26. Id. at Art. 8.10.
27. Id. at Annex 8-A.
28. Id. at Art. 8.12.
29. Id. at Art. 8.13.3.
30. Id. at Art. 8.7.4.
31. Id. at Art. 8.14.
32. Id. at Art. 8.27.
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and frivolous and surprise claims,33 preclude investor claims if the respective
investment was made through “misrepresentation, concealment, corruption,
or conduct amounting to an abuse of process,”34 and limit the scope of
permissible claims for violations of the standards of treatment relating to the
restructuring of public debt.35 The treaty provides for a broad appeals
mechanism,36 and entirely removes the determination of the legality of a
host state measure under the host state’s domestic law from the Tribunal’s
jurisdiction.37 The treaty also establishes the ‘Joint Committee,’ a body
comprised of representatives of the European Union and Canada, to provide
binding interpretations of the treaty.38
Similar provisions may be found in the China-Australia Free Trade
Agreement (“ChAFTA”), which entered into force on December 20, 2015;39
the bilateral investment treaty (“BIT”) between Canada and Mongolia,
which entered into force on February 24, 2017;40 and other treaties.41
V. Treaty Provisions on Investor Obligations

In some recent investment treaties and model BITs, states have adopted
yet another strategy for rekindling the relationship between investors and
(host) states: the imposition of obligations on investors. This innovation is a
remarkable development from the perspective of international law structures
and treaty design. Historically, investment treaties have stipulated
obligations only for the treaty’s state parties, but not for investors. This
normative asymmetry matched the treaties’ original purpose of regulating
the relationship between developed and developing states.42 However, as the
dominant axis of the perceived operation (and assessment) of investment
33. Id. at Arts. 8.22, 8.24, 8.32-33.

34. Id. at Art. 8.18.3.
35. Id. at Annex 8-B.
36. Id. at Art. 8.28.
37. Id. at Art. 8.31.2.
38. Id. at Arts. 8.31.3 & 26.1.
39. Free Trade Agreement, Austl.-China, June 16, 2015; see Anthea Roberts & Richard
Braddock, Protecting Public Welfare Regulation Through Joint Treaty Party Control: a ChAFTA
Innovation, COLUMBIA FDI PERSPECTIVES (2016).
40. Agreement for the Promotion and Protection of Invs., Canada-Mongolia, Sept. 8, 2016,
Arts. 16–17.
41. Reciprocal Inv. Promotion and Protection Agreement, Morocco-Nigeria, Preamble, Dec.
3, 2016 [hereinafter Morocco-Nigeria BIT], Arts. 6(3), 12–13, 23; Inv. Agreement, H.K.-
China-Chile, Nov. 18, 2016, Arts. 15(1) & 18; The Reciprocal Promotion and Protection of
Invs., Argentina.-Qatar, Nov. 6, 2016, Art. 10; Inv. Promotion and Protection Agreement,
Nigeria-Singapore, Nov. 4, 2016, Art. 28; Agreement Concerning the Reciprocal Promotion
and Protection of Invs., Rwanda-Turkey, Nov. 3, 2016, Art. 5; Agreement on the Reciprocal
Promotion and Protection of Invs., Rwanda-Morocco, Oct. 19, 2016, Art. 2(5).
42. KATE MILES, THE ORIGINS OF INTERNATIONAL INVESTMENT LAW: EMPIRE,
ENVIRONMENT, AND THE SAFEGUARDING OF CAPITAL (Cambridge University Press 2013);
Lauge N. Skovgaard Poulsen, BOUNDED RATIONALITY AND ECONOMIC DIPLOMACY: THE
POLITICS OF INVESTMENT TREATIES IN DEVELOPING COUNTRIES (2015).
THE YEAR IN REVIEW
treaties shifted from the inter-state relationship of developed and developing

states to the relationship between investors and host states, the one-sided
nature of investment treaties has grown to be considered a structural flaw.43
While the imposition of obligations on investors—private or non-state
entities—through treaties could be seen as problematic from the perspective
of some basic categories of international law,44 states, other stakeholders, and
scholars have considered investment treaties to be an entirely suitable
vehicle for imposing such obligations.45 Western states seem to be more
reluctant to include investor obligations in their treaties, and such
obligations have to date mostly appeared in African treaties. Nevertheless,
this reluctance seems to originate in policy rather than legal concerns: the
states hesitate to subject the conduct of their investors to arbitral or other
review rather than consider it legally impossible to stipulate obligations for
investors in an investment treaty.
The treaties involving investor obligations most frequently stipulate: (i)
the obligation to comply with the host state’s law;46 (ii) the prohibition
against corruption;47 (iii) the obligation to seek implementation of
internationally recognized standards of corporate social responsibility;48 and
(iv) reporting obligations.49 The provisions explicitly address the investor or
its local corporate vehicle and are formulated in the language of obligation,
stating that the investor and/or the local vehicle “shall” or “shall not” engage
in a particular conduct.
43. See, e.g., Patrick Dumberry & Gabrielle Dumas-Aubin, How to Impose Human Rights
Obligations under Investment Treaties? Pragmatic Guidelines for the Amendment of BITs, 4
YEARBOOK ON INT’L INV. L. & POLICY 14 (2011).
44. See Klara Polackova Van der Ploeg, Treaty Obligations of Collective Non-State Entities: The
Case of the Deep Seabed Regime, NON-STATE ACTORS AND INT’L OBLIGATIONS: CREATION,
EVOLUTION AND ENFORCEMENT (James Summers & Alex Gough eds., 2018) (discussion of the
international law issues on another example of treaty obligations on non-state entities).
45. RUDOLF DOLZER & CHRISTOPH SCHREUER, PRINCIPLES OF INTERNATIONAL
INVESTMENT LAW, 25-26 (2nd ed. 2012); Dumberry & Dumas-Aubin, supra note 43;
UNCTAD, Investment Policy Framework for Sustainable Dev., U.N. Doc. UNCTAD/DIAE/
PCB/2015/5, 77 (2015) (referring to Investment Agreement for the Common Market for
Eastern and Southern Africa Common Inv. Area (May 23, 2007) [hereinafter COMESA
Investment Agreement], Art. 13 as an example of investor obligation).
46. Economic Community of West African States Supplementary Act A/SA.3/12/08, Dec. 19,
2008 [hereinafter ECOWAS Supplementary Act], Arts. 11(2) & 14(2); Morocco-Nigeria BIT,
supra note 41, Art. 24(1); Southern African Dev. Cmty. Protocol on Foreign Inv., Aug. 18, 2006
[hereinafter SADC Protocol], Annex 1, Art. 10; COMESA Investment Agreement, supra note
45, Art. 13; India Model BIT (2015), Art. 11(i).
47. ECOWAS Supplementary Act, supra note 46, Art. 13; Morocco-Nigeria BIT, supra note
41, Art. 17; India Model BIT, supra note 46, Art. 11(ii).
48. ECOWAS Supplementary Act, supra note 46, Art. 16; Inv. Cooperation & Facilitation
Agreement, Braz.-Malawi, June 25, 2015, Art. 9; Morocco-Nigeria BIT, supra note 41, Art. 19;
India Model BIT, supra note 46, Art. 12.
49. ECOWAS Supplementary Act, supra note 46, Art. 11(4); Morocco-Nigeria BIT, supra
note 41, Art. 21; India Model BIT, supra note 46, Art. 11(iv).
THE YEAR IN REVIEW
Several treaties contain even more elaborate provisions on investor

obligations, such as the 2008 Economic Community of West African States
(“ECOWAS”) Supplementary Act, which entered into force on January 19,
2009.50 In its third chapter entitled ‘Obligations and Duties of Investors and
Investments,’ the Act imposes further obligations on ‘Investors’ and
‘Investments’ (defined, e.g., as a “company” or “a corporate entity
constituted or organized under the applicable law of any ECOWAS Member
State” 51 and intended to cover the foreign investors’ local corporate vehicle).
Prior to establishment, the Investors and Investments are required to carry
out environmental and social impact assessments, while applying the
precautionary principle.52 Post-establishment, the Investors and
Investments must comply with extensive social impact, labor and human
rights obligations,53 and corporate governance requirements.54
Furthermore, the Investors are liable for any damages caused.55 Specifically,
the ECOWAS Supplementary Act obliges the Investors and Investments to
“uphold human rights in the workplace and in the community in which they
are located;”56 not to be complicit in violations of human rights by others;57
and to “act in accordance with fundamental labour standards as stipulated in
the ILO Declaration on Fundamental Principles and Rights of Work,
1998.”58 Similar provisions may also be found in the 2016 Morocco-Nigeria
BIT59 and in the 2012 Southern African Development Community
(“SADC”) Model BIT.60
The imposition of obligations on investors through investment treaties
has been championed by some influential non-governmental organizations
active in the investment policy area, most prominently the International
Institute for Sustainable Development (“IISD”). The IISD has been highly
successful in its advocacy efforts, with the ECOWAS Supplementary Act
essentially following verbatim the IISD Model International Agreement on
Investment for Sustainable Development, introduced in 2005.61 The IISD’s
affiliates were also involved in the formulation of other instruments, such as
the 2012 SADC Model BIT.62
50. ECOWAS Supplementary Act, supra note 46.

51. Id. at Art. 1(a) & (c).
52. Id. at Art. 12.
53. Id. at Art. 14.
54. Id. at Art. 15.
55. Id. at Art. 17.
56. Id. at Art. 14(2).
57. Id. at Art. 14(3).
58. Id. at Art. 14(4).
59. Morocco-Nigeria BIT, supra note 41, Arts. 14–15, 18–20.
60. SADC Protocol, supra note 46.
61. IISD Model International Agreement on Investment. for Sustainable Development, IISD (Apr.
2005), https://www.iisd.org/pdf/2005/investment_model_int_agreement.pdf.
62. For example, see Howard Mann, The SADC MODEL BIT Template: Investment for
Sustainable Development, IISD (Oct. 30, 2012), https://www.iisd.org/itn/2012/10/30/the-sadc-
model-bit-template-investment-for-sustainable-development, for an article by Mann, the
THE YEAR IN REVIEW
In contrast to the human rights field, where efforts to introduce

international norms imposing binding human rights obligations on
businesses have been highly controversial and to date largely unsuccessful,63
the advocacy campaign for articulation of international obligations on
corporations in investment treaties has not met with the same resistance.
Indeed, some international organizations, in particular the United Nations
Conference on Trade and Development (“UNCTAD”) and the
Commonwealth, have been recommending the inclusion of investor
obligations in investment treaties to address the problem of imbalance in the
rights and obligations of investors and states under these instruments.64 The
ambition to rebalance the rights and obligations of states and investors
through treaty design is also apparent in the very language of some treaties.65
As the inclusion of provisions setting forth obligations for investors is a
recent phenomenon, there is only limited experience with the operation of
these rules. Generally speaking, the provisions on investor obligations
provide a legal basis for host state claims against investors. The availability
of investor-state arbitration for enforcement of investor obligations,
however, does not follow as a matter of course. The investment treaty’s
dispute settlement clause and the procedural rules must be broad enough to
allow for the presentation of claims against the investor, either in the form
of: (i) arbitral proceedings initiated by the host state against the investor; or
(ii) the host state’s counterclaim in arbitral proceedings initiated against the
host state by the investor.
The ECOWAS Supplementary Act or the Morocco-Nigeria BIT contain
broad dispute settlement clauses capable of sustaining both a claim and a
counterclaim against an investor for a violation of its obligation under the
treaty.66 Other treaties, such as the Common Market for Eastern and
Southern Africa (“COMESA”) Investment Agreement, might contain more
narrowly worded dispute-settlement provisions and may limit arbitral
jurisdiction over alleged violations of investor obligations to counterclaims
Senior International Law Advisor to IISD, who referred to himself as a consultant to the SADC
Secretariat and Member States on the development of the SADC Model BIT.
63. Cf. U.N. Human Rights Office of the High Comm’r, Guiding Principles on Bus. &
Human Rights, U.N. Doc. HR/PUB/11/04 (2011) and U.N. Human Rights Council Res. 26/9,
Elaboration of an International Legally Binding Instrument on Transnational Corporations and
other Business Enterprises with respect to Human Rights, U.N. Doc. A/HRC/RES/26/9 (July
14, 2014).
64. UNCTAD, supra note 45, at 6, 8, 19, 28, 49, 72, 77–78, 85, 154; Commonwealth to Launch
Guide on Investment Agreements, THE COMMONWEALTH, http://thecommonwealth.org/media/
press-release/commonwealth-launch-guide-investment-agreements (last updated Oct. 22,
2012); J. Anthony VanDuzer et al., Integrating Sustainable Development into International
Investment Agreements: A Guide for Developing Countries, 252–407.
65. For example, the Morocco-Nigeria BIT, supra note 41, Preamble declares to seek “an
overall balance of the rights and obligations among the State Parties, the investors, and the
investments under this Agreement.”
66. ECOWAS Supplementary Act, supra note 46, Art. 33(1); Morocco-Nigeria BIT, supra
note 41, Art. 27.
THE YEAR IN REVIEW
or defenses on merits.67 The most frequently used arbitral rules, the

International Centre for Settlement of Investment Disputes (“ICSID”) and
the United Nations Commission on International Trade Law
(“UNCITRAL”) rules, do not present any difficulty in this respect, as they
are indifferent with respect to the identity of the claimant party and both
allow for counterclaims.68
Each of the procedural avenues nevertheless poses potential issues.
Counterclaims must generally be sufficiently connected to the investor
claim. In case the violation of the investor obligation is unrelated to the
substance of the investor’s claim, arbitral tribunals have regularly refused to
hear the counterclaim.69 That said, the special provision in the COMESA
Investment Agreement arguably modifies this general rule.70 With respect
to the possibility to initiate investment arbitration proceedings against
investors, the most difficult issue relates to the existence of the agreement to
arbitrate. This classic arbitral doctrine requires both parties to the arbitral
proceedings to consent to the arbitral tribunal’s jurisdiction. In a treaty
context, the arbitral practice has construed the arbitration agreement to be
formed in two steps: (i) the host state presents its binding offer to arbitrate in
the dispute settlement provision of the investment treaty; and (ii) the
investor accepts this offer at the latest in its request for arbitration, thereby
perfecting the arbitration agreement. In proceedings initiated by the host
state, the investor’s written consent (e.g., required by the ICSID
Convention) would be missing.71
When investment arbitration is unavailable, the enforcement of investor
obligations would be limited to other judicial fora, such as domestic or
regional courts (if possible under the applicable procedural rules). Notably,
under some of the investment treaties discussed, certain types of claims
against investors are reserved for a specific forum, as is the case with civil
liability claims under the ECOWAS Supplementary Act and the 2016
Morocco-Nigeria BIT, which are reserved for the courts of the investor’s
home state.72
VI. Conclusion: The New Generation of Investment Protection

Treaties
The reformation of investment treaties to explicitly guarantee states’
regulatory autonomy and respect not only for investment protection, but
67. COMESA Investment Agreement, supra note 45, Art. 28(9).

68. ICSID Convention, Article 46; ICSID Arbitration Rules, Art. 40; UNCITRAL
Arbitration Rules, Article 19(3).
69. Cf. Urbaser S.A. v. Argentine Republic, ICSID Case No. ARB/07/26, Award, ¶ 1151 (Dec.
8, 2016) (The tribunal considered sufficient a factual link of the principal claim and the
counterclaim relating to the same investment and the same concession.).
70. COMESA Investment Agreement, supra note 45, Art. 28.
71. ICSID Convention, Art. 25.
72. ECOWAS Supplementary Act, supra note 46, Art. 17; Morocco-Nigeria BIT, supra note
41, Art. 20.
THE YEAR IN REVIEW
also for other public interests, will necessarily alter the operation of these
treaties and the output of ISDS. Arbitral tribunals will be forced to engage
with the diverging protected values, as the treaty language now makes it
clear that the investment framework involves regard of interests beyond
investment protection. Still, the new treaty provisions might not in
themselves resolve all criticism of ISDS, as the complaints have also involved
the more general arbitral competence to review governmental policies as
such and the lack of arbitral deference in doing so.
The imposition of binding obligations on investors further changes the
investment treaties’ dynamics by effectively getting away from the normative
asymmetry of investment treaties. While previously investors may have had
obligations under investment contracts or domestic laws, they now have
obligations directly under international law. The investor rights and
investor obligations coming from the same normative source will
presumably make it easier to assert investor responsibility for any non-
compliance. The provisions on investor obligations will no doubt also affect
the interpretation of investor rights under the treaties. Whether states will
employ these provisions to act on the offensive rather than only the
defensive in ISDS or whether they will prefer dealing with investor non-
compliance domestically remains to be seen. Nevertheless, investment
treaties have now become—somewhat paradoxically—the first international
law instruments to explicitly set forth binding labor and human rights
obligations on corporations.

THE YEAR IN REVIEW

inl51-1_cv_inl51-1_cv 1/19/2018 11:35 AM Page 2
THE YEAR IN REVIEW


A TRIANNUAL PUBLICATION OF THE ABA/SECTION OF INTERNATIONAL LAW
ARTICLES
Rehabilitation in Article 14 of the Convention Against

Torture and Other Cruel, Inhuman, or Degrading
T H E I N T E R N AT I O N A L L AW Y E R
Treatment or Punishment . . . . . . . . . . . . . . . . . . . . . . . . . . . . Nora Sveaass,
Felice Gaer,
Precarious Employment? Varying Approaches to Foreign
Sovereign Immunity in Labor Disputes . . . . . . . . . . . . . . . . . . Richard Garnett
The State of Investor-State Arbitration: A Reality Check
of the Issues, Trends, and Directions in Asia-Pacific . . . . . . . . . . Julien Chaisse
and Rahul Donde
When Contractual Good Faith Meets a Controversial
M&A Issue: The Sandbagging Practice in International
Arbitration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Maxime Panhard
Nation-building in Abu Dhabi and the U.A.E. Through
Global Best Practices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Valerie J. Pelton
Obligations: Latest Trends in Investment Treaty
Design . . . . . . . . . . . . . . . . . . . . . . . . . . . . . Klara Polackova Van der Ploeg
AMERICAN BAR ASSOCIATION

321 N. CLARK STREET
CHICAGO, ILLINOIS 60610


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inl51-1_cv_inl51-1_cv 1/19/2018 11:35 AM Page 2

THE YEAR IN REVIEW

VOLUME 51 • NUMBER 1 • 2018

VOLUME 51 • NUMBER 1 • 2018

Rehabilitation in Article 14 of the Convention Against

AMERICAN BAR ASSOCIATION

PUBLISHED IN COOPERATION WITH

PUBLISHED IN COOPERATION WITH

THE INTERNATIONAL LAWYER

PATRICIA S. HEARD BEVERLY CARO DURÉUS

EXTERNAL ADVISORY BOARD

RAQUEL ALDANA ALBERT CHEN WILLIAM B.T. MOCK JR.

MADS ANDENAS DON S. DE AMICIS JOHN F. MURPHY

DOUGLAS W. ARNER PATRICK DEL DUCA JOHN E. NOYES

ROSS P. BUCKLEY MICHAEL A. FAMMLER ROBERT RENDELL

RICHARD M. BUXBAUM HILARY K. JOSEPHS LAUREL S. TERRY

RODRIGO OLIVARES CAMINAL MARILYN J. KAMAN GEORGE WALKER

ROBERT RENDELL ROBERT E. LUTZ

SMU FACULTY ADVISORY BOARD

ANTHONY COLANGELO JOHN LOWE JOSHUA C. TATE

THE INTERNATIONAL LAW REVIEW ASSOCIATION

PUBLISHED IN COOPERATION WITH

Administrative Managing Editor Year-In-Review Managing Editor

MADELEINE BAILEY SYDNEY NUTT

PUBLISHED IN COOPERATION WITH

THE INTERNATIONAL LAWYER

SECTION OF INTERNATIONAL LAW

PUBLISHED IN COOPERATION WITH

Members of the Council:

PUBLISHED IN COOPERATION WITH

THE INTERNATIONAL LAWYER

Precarious Employment? Varying

The State of Investor-State Arbitration:

When Contractual Good Faith

Rule of Law in the U.A.E.:

Protection of Regulatory Autonomy

PUBLISHED IN COOPERATION WITH

Rehabilitation in Article 14 of the Convention

* Nora Sveaass is Associate Professor at the Department of Psychology at the University of

2 THE INTERNATIONAL LAWYER [VOL. 51, NO. 1

committee jurisprudence, which argues, inter alia, that ill-treatment as

2018] REHABILITATION IN ARTICLE 14 3

In the following pages, the scope of the obligation to provide

II. The Right to Rehabilitation Under International Law

8. CAT, supra note 1, art. 14, ¶ 1.

4 THE INTERNATIONAL LAWYER [VOL. 51, NO. 1

Comments, and reports of United Nations special procedures, but

1990, 2220 U.N.T.S. 3, available at http://www.ohchr.org/Documents/ProfessionalInterest/

2018] REHABILITATION IN ARTICLE 14 5

them, has been frequently raised.22 GC 3 establishes that it should be a

22. See CLARA SANDOVAL VILLALBA, REHABILITATION AS A FORM OF REPARATION UNDER

6 THE INTERNATIONAL LAWYER [VOL. 51, NO. 1

III. Defining the Scope and Obligation of the Right to Redress

30. Gaer, supra note 2.

2018] REHABILITATION IN ARTICLE 14 7

members, stakeholders, experts, and academics to submit their comments

33. The adoption of GC 3, referred to as a “key document” regarding States’ obligations

8 THE INTERNATIONAL LAWYER [VOL. 51, NO. 1

truth or justice, if attempts to provide fair compensation or other measures

A. PROCEDURAL AND SUBSTANTIVE OBLIGATIONS ARE ESSENTIAL

GC 3 “identifies both procedural and substantive obligations to provide

38. Gaer, supra note 2, at 7 (quoting GC 3, supra note 2, ¶ 6).

2018] REHABILITATION IN ARTICLE 14 9