Prof. Yueming YAN has published an article entitled “Corruption and the (Un)Clean Hands Doctrine in Investor-State Arbitration: Definitional and Reciprocity Challenges” in the ICSID Review – Foreign Investment Law Journal (Oxford University Press).

Abstract: In this Note, I undertake a comprehensive exploration of the ‘unclean hands’ doctrine in international law and practice and its application in investor-State arbitration. First, I demonstrate that the ‘unclean hands’ doctrine is ill-defined in international law and practice, with multiple sources claimed. Its scope is a matter of significant debate, particularly as the International Court of Justice has consistently decided not to dismiss claims based on this doctrine. Second, even if we acknowledge its existence in international law, this doctrine essentially prevents an applicant from pursuing claims against a party’s non-performance when the other party itself has failed to fulfil a related or reciprocal obligation, in fact and in law. In the context of international investment disputes, particularly those involving issues such as corruption, I argue that the ‘unclean hands’ doctrine has limited application. This is because there is generally no reciprocal relationship between an alleged investment treaty breach conduct (such as unlawful expropriation) and the act of corruption (between the investor and officials of the host State). Instead, I posit that when a host State raises a ‘clean hands’ defence, it should be dismissed on the grounds of its own ‘unclean hands’, as giving a bribe and receiving a bribe inherently constitute a pair of reciprocal actions. Consequently, the recent trend among some tribunals to dismiss investment treaty claims based on the claimant’s ‘unclean hands’ upon discovering corruption is an improper application of a legally dubious doctrine.

Read the article here.