State of Confusion: The Doctrine of 'Clean Hands' in Investment Arbitration After the Yukos Award

Abstract

This article examines the controversial question of the clean hands doctrine in investment arbitration and how tribunals have analyzed this concept. Many tribunals have concluded that they lacked jurisdiction over a claim (or that it was inadmissible) because an investor had made its investment in violation of the host State’s laws. This article argues that this legality requirement is a manifestation of the clean hands doctrine. The main focus of the article is a critical review of the recent Yukos award. It assesses the Tribunal’s conclusion that the doctrine should not be considered as a general principle of law and its rejection of the application of the doctrine to violations committed by an investor during the post-establishment phase of its investment. The article argues that a number of investment tribunals have in fact already applied the clean hands doctrine in their awards to bar the admissibility of claims.