Assessing Investor Misconduct In Mining Disputes – Legality Requirements, Clean Hands, and Contributory Fault

Mining projects are generally large-scale transnational investments, prone to cause conflict between investors, host State regulators, local communities, and environmental organisations. For that reason, mining companies are regular claimants in investment arbitrations. Concerns have been raised, however, that the system of investment protection is unfairly beneficial to the investor, because it protects investors against host State misconduct but does not provide any remedies for misconduct by the investor. Yet international investment law contains several means that could potentially address this issue. In my paper, I will address three procedural tools (the compliance-with-the-law requirement, the clean hands doctrine, and the notion of contributory fault) and see whether and how they have been applied in recent investment arbitration cases lodged by mining corporations.

The compliance-with-the-law requirement is found in many investment treaties, stipulating that only investments made in compliance with domestic law qualify for protection under the investment treaty. Such compliance should arguably include observance of the rights of indigenous peoples and environmental rules. Along similar lines, the doctrine of clean hands could be invoked to argue that a mining company that has engaged in irresponsible behaviour should not be entitled to invoke investment treaty protection. Finally, the notion of contributory fault could be invoked at the damages phase of arbitration proceedings, once a breach by the respondent State has been established, in order to reduce the damages to be awarded. These three avenues have the potential to address the misconduct of mining companies involved in an investment arbitration claim. My paper will compare the three tools and analyse whether they have been able to provide remedies against misconduct by mining companies.