Investor Presentaiton
136
INVESTOR-STATE DISPUTE SETTLEMENT: A SEQUEL
domestic law and international law. It took the view that instead of
applying a hierarchical order between domestic and international
law, each of them should prevail in its own sphere of application
and, in case of conflict, the provision more favourable to the
investor should prevail. Under this approach, each law must be
applied in its own ambit.
155
In cases to date, international arbitral tribunals have tended to
use international law to serve “supplementary" and "corrective"
functions. The supplementary function means that in the event of a
gap in the applicable domestic law, arbitrators might turn to
international law to fill the gap. The corrective function authorizes
arbitrators, in their application of international law, to set aside the
applicable domestic law when it, or an action taken under it, violates
international law. 156
Yet, there is no clear hierarchy in the application of various
rules and much depends on how a particular tribunal exercises its
discretion in this regard.
155
• The provisions of the BIT;
•
Dispositions of any specific engagement undertaken with the
investor;
General rules and principles of international law.
Ibid., para. 99.
156 ICSID, 1968, pp. 803, 984-985. The following references provide
useful insight into the different views of and on-going discussion among
commentators on the relationship between domestic laws and international
law: Reisman, 2000 (suggesting that international law should be used only
to supplement domestic laws); Klöckner v. Cameroon, ICSID Case No.
ARB/81/2, Decision on the Application for Annulment, 3 May 1985; Amco
Asia v. Indonesia, ICSID Case No. ARB/81/1, Decision on the Application
for Annulment, 16 May 1986 (discussing the doctrine of the supplemental
and corrective function of international law vs. domestic law); Gaillard and
Banifatemi, 2008.
UNCTAD Series on International Investment Agreements IIView entire presentation