In Accordance with Which Host State Laws? Restoring the ‘Defence’ of Investor Illegality in Investment Arbitration

This paper addresses three aspects of the 'defence' of investor illegality in investment treaty arbitration. Firstly, the paper takes issue with the suggestion made by some tribunals that investors must only comply with the 'fundamental principles' of host state law, rather than all of host state law.Secondly, the paper rejects the suggestion from other tribunals that investors must only comply with laws related to investment, and not other laws. Thirdly, the paper observes that, while estoppel arguments are often accepted by tribunals on questions of investor legality, these arguments are to some extent inconsistent with the frequent insistence that investment treaties seek to promote respect for legality and the rule of law. The third section of the paper also contends that estoppel arguments are limited, in that they cannot be taken to apply in cases of corruption or fraud, nor (perhaps) in cases of breach of fundamental host state laws