The “clean hands” doctrine in investment Arbitration and its applicability to the Ecuadorian legal system

Abstract

The Clean Hands doctrine is currently applied in international investment arbitration. Tis doctrine has the effect that arbitration tribunals declare their lack of competence over to process the dispute proposed by the investor and the host State. This doctrine could be applied when: a) the investment is illegal; and, b) when arbitrators fnd acts of corruption such as embezzlement, bribes or influence peddling. The article analyses, in frst place, how under a case law basis, the doctrine has been applied in different international investment arbitration procedures, concluding that there is no consensus on the nature of the doctrine —whether or not it constitutes a customary law principle— under international law nor about the required test standard. Second, the paper analyzes whether the Clean Hands doctrine could be applied or not in disputes on public contracts under Ecuadorian law.

Keywords

• Clean hands doctrine; Investment arbitration; Illegal investments; Corruption