The plea of illegality in investment treaty arbitration

There is support in the investment treaty cases for the proposition that the lawfulness of the acquisition of the investment is a condition precedent for the conferral of adjudicative power upon the tribunal. This jurisdictional approach to the plea of illegality is justified by reference to three arguments: (i) an express provision of the treaty provides that lawfulness of the acquisition of the investment is a precondition to arbitration; (ii) the notion that investment law should give effect to general principles such as good faith or the maxim that a claimant should not be able to profit from its own wrongs; or (iii) the notion that investment law should respect the integrity of the law of the host State. The thesis defended in this article is that none of these arguments justifies a jurisdictional approach to the plea of illegality, which instead must be considered as a question of admissibility or a question on the merits of the case. A comprehensive road map for dealing with different types of pleas of illegality in investment treaty arbitration is set out at the conclusion to this article.