Equality and Asymmetry in Treaty-Based Investment Arbitration: Counterclaims by Host States

This contribution addresses the topical issue of the host State’s right to submit a counterclaim in treaty-based investment arbitration in light of the principle of equality, especially equality of arms in the international process. While the traditional approach of arbitral tribunals has upheld a strict limitation of the opportunity to present counterclaims, respondent States have recently intensified their attempts to avail themselves of such remedies in investment arbitration. The prospective trend in the arbitral case law may accommodate more liberal solutions as to the practicability for sovereigns to enforce investor’s commitments at the international level vis-à-vis the domestic level of court litigation, also and decisively due to the insertion in international investment agreements of innovative substantive provisions establishing obligations also upon foreign entrepreneurs. Such solutions are analysed herein under the jurisdictional, admissibility and merits perspective. Interestingly, the study of counterclaims by States in treaty-based investment arbitration, which involves procedural as well as substantive issues, seems to be currently embedded in the broader phenomena of the advancement of the “business and human rights movement”. To this extent, investor-State dispute settlement may constitute a viable international arena for the enforcement of human rights related claims.