Counterclaims under International Investment Arbitration

Abstract

Purpose: This study analyzes counterclaims arising in the course of international arbitration proceedings, especially investor-state arbitration. Research design, data, and methodology: This paper mainly relies on arbitration awards based on investment treaties to reveal how counterclaims have been dealt with in the investment arbitration context. Results: Although counterclaims are well known in international arbitral proceedings, they raise special issues when it comes to investment arbitration, especially when they are based on treaties that recognize only rights, and not obligations, of private parties. Conclusions: A counterclaim may be a way of rebalancing investment law by allowing states to file claims against investors. However, certain conditions that must be fulfilled are not easily combined with the special features of investment arbitration. Future investment treaties should provide explicit provisions for the obligations of investors based on which contracting states may bring counterclaims. This could be a way of addressing the drawbacks that have been recently formulated against investment arbitration.