chapter 21

Evidence and the Principle of Good Faith in

Investment Arbitration: Finding Meaning in
Public International Law
Emily Sipiorski

i Introduction

Investment arbitration is a relatively young field of dispute resolution, and

therefore, available precedent for taking decisions can be limited in com-
parison to more developed areas of international law. Often situations arise
in which the language of either the treaties or the rules simply offer limited
or no guidance. By reaching into broader principles of public international
law, tribunals are able to supplement the limited guidance provided. In this
respect, tribunals reach into public international law, in particular decisions
by the International Court of Justice, to support decisions—using both the
reasoning of earlier public international law tribunals as well as the larger
principles of public international law. The use of the principle of good faith
is a critical example of this interaction. As will be discussed below, good
faith allows interaction with the ideal of a fair trial as well as procedural fair-
ness. In the submission of evidence, the idea of a fair trial as well as the
principle of good faith frequently act as guiding principles in decisions on
evidence.
As a more defined field of law, public international law gives authority to the
development of investment arbitration. This grounding, however, does not
mean that investment arbitration mirrors public international law. Instead,
tribunals often apply these principles and the reasoning of international tribu-
nals but within the confines of the investment arbitration context—thus giv-
ing it a distinct interpretation and application. Cross-referencing with public
international law serves usefully as a background to strengthen the field of
investment arbitration.
The following chapter first identifies the background to the general idea of
the fair trial and the principle of good faith as supported in public interna-
tional law as well as the application by tribunals. Then the analysis turns to
how the application of these general principles has been developed in the
investment arbitration context.

© koninklijke brill nv, leiden, ���6 | doi 10.1163/9789004298712_022 Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
348 Sipiorski

ii The Principles Guiding Evidentiary Submissions in Public

International Law

A Good Faith in Public International Law

Good faith has been well-recognized as a general principle of international
law.1 Supporting its place as a general principle, Kotzur has noted that ‘[g]ood
faith belongs to the very few legal principles which do find resemblances in
more or less all legal systems and legal cultures.’2 The basic meaning of good
faith varies, however, in its application in international and national contexts.3
The principle arises throughout legal codes and decisions as a means of ensur-
ing fairness. Yet, the principle cannot be simply defined. Notably, Bin Cheng
indicated that good faith ‘eludes definition’.4 Such clear definition is arguably a

1 Bin Cheng, General Principles of Law as applied by International Courts and Tribunals
(Cambridge: Cambridge University Press, 1953, reprinted 1994), 103 ff. (noting the relevance
of good faith in inter alia treaty formation, treaty performance, and the exercise of rights);
James Crawford, Brownlie’s Principles of Public International Law, 8th ed. (Oxford: Oxford
University Press, 2012) 377 ff. (noting the application of good faith in treaty relations);
Anthony D’Amato, ‘Good Faith’, in: Encyclopedia of Public International Law (1992), 599–601
(stating that ‘[t]he principle of good faith requires parties to a transaction to deal honestly
and fairly with each other, to represent their motives and purposes truthfully, and to refrain
from taking unfair advantage that might result from a literal and unintended interpretation
of the agreement between them.’); Markus Kotzur, ‘Good Faith (Bona fides)’, in: Max Planck
Encyclopedia of Public International Law (2009) (stating that ‘[b]ona fides takes a most promi-
nent place among the general principles as specified in Art. 38(1)(c) Statute of the
International Court of Justice’); Andrew Mitchell, ‘Good Faith in wto Dispute Settlement’, 7
Melbourne Journal of International Law 341 (2006), 341 (tracing its origins in modern inter-
national law to the drafting of the Statute of the Permanent Court of International Justice);
J.F. O’Connor, Good Faith in International Law, (Aldershot: Darmouth, 1991), 2 (describing
good faith as ‘the foundation of all law […]’); M. Virally, ‘Review Essay: Good Faith in Public
International Law’, 77 American Journal of International Law 130 (1983), 130 (‘It is commonly
understood by international lawyers that a requirement of good faith in various contexts is a
well-established principle of international law and even one of the most fundamental ones’);
Elisabeth Zoller, La Bonne Foi en Droit International Public, (Paris: A. Pédone, 1977).
2 Kotzur, in Max Planck Encyclopedia of Public International Law.
3 Peter Schlechtriem, Good Faith in German Law and in International Uniform Laws: ‘If the
principle of good faith and fair dealing is indeed common to all legal systems based on the
values of western civilization, then it should be easy to find a common core of concrete rules
derived from this principle. […] But I have looked in vain for a monograph […] which would
report and compare in detail the various manifestations of the principle and its applications
and understanding in the legal systems of the Western world […].’
4 Bin Cheng, General Principles of Law as Applied by Courts and Tribunals, 105. Cremades
further contemplates the complexity of defining with specific state examples. After stating
that good faith has been applied in the international arbitration context, he further notes

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 349

necessity for achieving some of the most basic aspects of procedural fairness
and the fair trial: consistency.
One rule transcends the cacophony of definitions. Namely, the principle
never stands alone, but rather is applied with respect to other obligations. This
perspective on good faith was specifically noted by the icj in the Cameroon v.
Nigeria decision: ‘Although the principle of good faith is one of the basic prin-
ciples governing the creation and performance of legal obligations […] it is not
in itself a source of obligation where none would otherwise exist.’5 The icj has
further considered the principle as part of the basic ‘[t]rust and confidence
inherent in international co-operation.’6
Good faith is most frequently referenced in legal codes governing contracts—
both in the international and domestic context.7 In these explicit references to
good faith, the principle typically seeks to achieve fairness—the inevitable
pairing with the idea of ‘fair dealing’.8
More complicated are the applications of the principle of good faith where
the legal code does not provide for such explicit application. Instead, the court
or tribunal considers it necessary as a means of achieving justice. In a sense, it
is a recognition that the mere language of the treaty or contract is simply insuf-
ficient in its application for justice to be achieved. Thus, the court or tribunal

that ‘[n]evertheless, it is not clear what the concept of good faith actually means. […] In the
Anglo-Saxon sphere, doctrine and jurisprudence demonstrate a radical rejection of good
faith that they hold to be ‘abhorrent’ with the adversarial spirit, which must govern in the
world of contracts. Naturally, this rejection has been mitigated in the legal system of the
United States, where there is no shortage of voices advocating good faith as the great recent
discovery in u.s. law. In other legal systems, good faith is questioned as are, in general, any
standards which may lead to arbitrariness by judicial or arbitral decision-makers.’ (citations
deleted) Cremades, Good Faith in International Arbitration, 766.
5 Cameroon v. Nigeria, Preliminary Objections Judgment, icj Reports, 1998, para. 38.
6 Nuclear Tests (New Zealand v. France), icj Reports 457, 1974, para. 49.
7 For consideration of the principle in the international or plurilateral context, see cisg Art.
7(1) provides ‘[i]n the interpretation of this Convention, regard is to be had to its interna-
tional character and to the need to provide uniformity in its application and the observance
of good faith in international trade.’; Principles of European Contract Law, Art. 1:201(1): ‘Each
party must act in accordance with good faith and fair dealing. In the domestic context, see
Restatement of the Law Second, Contracts, Section 205: ‘Every contract imposes upon each
party a duty of good faith and fair dealing in its performance and its enforcement.’; German
Civil Code, Section 242: ‘Der Schuldner ist verpflictet, die Leistung so zu bewirken, wie Treu und
Glauben mit Rücksicht auf die Berkehrssittee es erfordern.’; French Civil Code Art. 1134(3).
8 UNIDROIT Principles of International Commercial Contracts Art. 1.7: ‘(1) Each party must act
in accordance with good faith and fair dealing in international trade. (2) The parties may not
exclude or limit this duty.’

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
350 Sipiorski

turns to the principle of good faith—applied with another obligation—to

reach a fair conclusion. Thus, when it is applied in this context, it is up to that
court or tribunal to determine its necessity. Nothing specifically directs such
application.

B Good Faith in Investment Arbitration

Good faith has been frequently referenced by tribunals in reaching decisions.
However, the application of the principle lacks consistency.9 At times, tribu-
nals apply good faith based on the provision of the treaty: i.e., the bilateral
investment treaty (bit) requires that the host state provide fair and equitable
treatment, which in turn implies conduct in good faith.10 Other times, the

9 See generally, A.F.M. Maniruzzaman, ‘The Concept of Good Faith in International

Investment Law—The Arbitrator’s Dilemma’, 89 Amicus Curiae: Journal of the Society for
Advanced Legal Studies (2012), 18 (describing good faith as ‘a subject of perennial contro-
versy since it was derived from the Roman legal equivalent “bonas fides”.’); Eric De
Brabandere, ‘“Good Faith”, “Abuse of Process” and the Initiation of Investment Treaty
Claims’, 3 (3) Journal of International Dispute Settlement 609 (2012), 609 ff.; Martha Belete
Hailu, ‘Good Faith (Lack of) in Investment Arbitration and the Conduct of the Ethiopian
Government in the Salini Case: Exercise of Legitimate Right or ‘Exhibit A’ for Guerrilla
Tactics?’, 6 Virtual Library, http://vi.unctad.org/resources-mainmenu-64/digital library?i=
VA&op=all&q=hailu&act=search&option=com_gslink 2012.
10 Roland Kläger, ‘Fair and Equitable Treatment’ in International Investment Law, (Cambridge:
Cambridge University Press, 2013) 130 ff. (“the principle of good faith has met with wide
recognition in the discussion regarding the concept of fair and equitable treatment […] In
their analysis of a possible breach of fair and equitable treatment, arbitral tribunals fre-
quently highlight good faith as a guiding principle in the relationship between the inves-
tor and the host state.”); Rudolf Dolzer/Christoph Schreuer, Principles of International
Investment Law, 2nd ed. (Oxford: Oxford University Press, 2012) XX; Genin and Others v.
Estonia, icsid Case No. arb/99/2, Award, 25 June 2001, para. 367 (stating that ‘Article ii(3)
(a) of the BIT requires the signatory governments to treat foreign investment in a “fair and
equitable” way. […] Acts that would violate this minimum standard would include acts
showing a willful neglect of duty, an insufficiency of action falling far below international
standards, or even subjective bad faith.’); Mondev International Ltd v. United States of
America, icsid Arbitration No. arb(af)/99/2, Award, 11 October 2002, para. 116 (‘To the
modern eye, what is unfair or inequitable need not equate with the outrageous or the
egregious. In particular, a State may treat foreign investment unfairly and inequitably
without necessarily acting in bad faith.’); Tecnicas Medioambientales Tecmed S.A. v. The
United Mexican States, icsid Case No. arb(af)/00/2, Award, 29 May 2003, para. 153 (‘The
Arbitral Tribunal finds that the commitment of fair and equitable treatment included in
Article 4(1) of the Agreement is an expression and part of the bona fide principle recog-
nized in international law, although bad faith from the State is not required for its viola-
tion[.]’); Waste Management v. United Mexican States, icsid Case No. arb(af)/00/3,

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 351

t­ ribunal links obligations to act in good faith to the investor’s requirement to

comply with the laws of the host state.11 Other tribunals find for application of

Award, 30 April 2004, para. 138 (noting that “[a] basic obligation of the State under Article
1105(1) [of the nafta] is to act in good faith and form, and not deliberately to set out to
destroy or frustrate the investment by improper means.”); Bayindir Insaat Turizm
Ticaret ve Sanayi A.S. v. Islamic Republic of Pakistan, icsid Case No. ARB/03/29, Award,
14 November 2005, para. 237 (referring to the interpretation of the fair and equitable treat-
ment obligation as stated in Tecmed); Saluka Investments B.V. v. The Czech Republic,
UNCITRAL, Partial Award, 17 March 2006, para. 307 (‘A foreign investor protected by the
Treaty may in any case properly expect that the Czech Republic implements its policies
bona fide by conduct that is, as far as it affects the investors’ investment, reasonably justifi-
able by public policies and that such conduct does not manifestly violate the require-
ments of consistency, transparency, even-handedness and nondiscrimination. In
particular, any differential treatment of a foreign investor must not be based on unreason-
able distinctions and demands, and must be justified by showing that it bears a reason-
able relationship to rational policies not motivated by a preference for other investments
over the foreign-owned investment.’); Sempra Energy International v. Argentine Republic,
icsid Case No. ARB/02/16, Award, 28 September 2007, paras. 291–292, 297 (contrasting
the positions of the parties by noting that the claimant “explains that while this particular
standard [of fair and equitable treatment] originates in the obligation of good faith under
international law, it has gradually acquired a specific meaning in the light of decisions
and treaties, and requires, inter alia, a treatment compatible with the expectations of for-
eign investors, the observance of arrangements on which the investor has relied in mak-
ing the investment, and the maintenance of a stable legal and business framework.” While
noting that the respondent considers that ‘fair and equitable treatment is a standard
indistinguishable from the customary international minimum standard[.]’ Ultimately,
the tribunal maintains with respect to the fair and equitable treatment standard that ‘[t]
he principle of good faith is thus relied on as the common guiding beacon that will orient
the understanding and interpretation of obligations, just as happens under civil codes.’);
Frontier Petroleum Services Ltd. v. The Czech Republic, UNCITRAL, Final Award, 12
November 2010, para. 301 (‘It follows from these authorities that action by the host state
that is not in good faith is at variance with the fair and equitable treatment promise.
However, not every violation of the standard of fair and equitable treatment requires bad
faith.’).
11 Dolzer/Schreuer, Principles of International Investment Law; Plama Consortium Limited v.
Republic of Bulgaria, icsid Case No. ARB/03/24, Award, 27 August 2008, para. 135 (‘the
Arbitral Tribunal considers that this situation [deliberate concealment amounting to
fraud] does not involve the ‘strawman’ provision set out in the Bulgarian Privatization
Law, the Tribunal is of the view that this behavior is contrary to other provisions of
Bulgarian law and to international law and that it, therefore, precludes the application of
the protections of the ect.’); Phoenix Action, Ltd. v. Czech Republic, icsid Case No.
ARB/06/5, Award, 15 April 2009, para. 106 (‘States cannot be deemed to offer access to the
icsid dispute settlement mechanism to investments not made in good faith.’); Gustav F

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
352 Sipiorski

good faith based on the language of the relevant convention which provides
for applicable provisions of public international law.12 Still more generally,
some tribunals require consideration of the icsid Convention or the treaty,
international agreements respectively, with deference to general principles of
law.13 In other instances, the tribunal simply disregards any relevance of good
faith and analyzes the actions based strictly on the express language of the
treaty or concession agreement.14 These applications encompass both a sub-
stantive perspective to good faith—considering the host state’s obligations to
the investors—as well as procedural good faith with reference to the arbitral
proceedings specifically.15

W Hamester v. Republic of Ghana, icsid Case No. arb/07/24, Award, 18 June 2010, para. 123
(‘An investment will not be protected if it has been created in violation of national or
international principles of good faith; by way of corruption, fraud, or deceitful conduct; or
if its creation itself constitutes a misuse of the international investment protection under
the icsid Convention. It will also not be protected if it is made in violation of the host
State’s law […]’).
12 icsid Convention, Art. 42(1) which provides: ‘The Tribunal shall decide a dispute in
accordance with such rules of law as may be agreed by the parties. In the absence of such
agreement, the Tribunal shall apply the law of the Contracting State party to the dispute
(including its rules on the conflict of laws) and such rules of international law as may be
applicable.’ adc Affiliate Ltd. v. Republic of Hungary, Award, 2 October 2006, para. 290.
13 Inceysa Vallisoletana, S.L. v. Republic of El Salvador, icsid Case No. arb/03/26, Award, 2
August 2006, para. 230 ff.; Phoenix v. Czech Republic, paras. 77, 100 ff. Cremades, Good Faith
in International Arbitration, 761 ff. Cremades contends that ‘[i]t is difficult to find any
international arbitration award not based on, or that does not at least mention, good
faith.’ This statement is most likely too broad and unqualified, but perhaps refers to be
implicit and explicit references to good faith.
14 For an analogous consideration in national/constitutional interpretation, consider
Scalia/Garner, Reading Law: the Interpretation of Legal Texts, St Paul 2012.
15 An important distinction should be made between procedural aspects of good faith—for
example, interpreting treaty language—and substantive application of good faith.
Substantive good faith impacts the obligations of the parties and their rights. Both aspects
of good faith will be covered in this study. See also De Brabandere, ‘Good Faith’, ‘Abuse of
Process’ and the Initiation of Investment Treaty Claims, XX (‘From a substantive perspec-
tive, ‘good faith’ often is used to assess the conduct of the host State. From a procedural
perspective, ‘good faith’ likewise plays a significant role in relation to the conduct of the
arbitral proceedings, linked to the obligation to arbitrate fairly.’). The Abaclat tribunal
generally distinguished procedural good faith from ‘material good faith’. Noting that
material good faith had been approached by tribunals in two ways: ‘(i) It can be seen as an
issue of consent and thus of jurisdiction, where the consent of the Host State cannot be
considered to extend to investments done under circumstances breaching the principle
of good faith; (ii) It can be seen as an issue relating to the merits, where the key question

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 353

C Fair Trial
Good faith can be closely associated with the general right to a fair trial—and
the inevitable association with fair dealing during the process of dispute reso-
lution. Parties’ right to a fair trial is equally well accepted in international law.16
A fair trial includes the right to a ‘fair and public hearing by an independent

is whether the circumstances in which the relevant investment was made are meant to be
protected by the relevant BIT.’ In contrast, the tribunal noted that the two approaches to
procedural good faith by tribunals included ‘(i) It can be seen as an issue of consent and
thus of jurisdiction, where one party considers procedural aspects to be key components
of the consent of the Host State; or (ii) It can be seen as an issue of admissibility, where
the key question is whether the way in which the investor initiated the proceedings,
although in accordance with the applicable provisions, aim to obtain a protection, which
he is—under the principle of good faith—not entitled to claim.’ See Abaclat and others v.
Argentina, icsid Case No. ARB/07/5, Decision on Jurisdiction and Admissibility, 4 August
2011, para. 648 ff. (holding that ‘tfa’s role in the proceedings [did] not amount to an abuse
of rights which would justify dismissing Claimants’ claim for lack of admissibility.’).
16 Universal Declaration of Human Rights, Art. 10; International Covenant on Civil and
Political Rights, Art. 14: “All persons shall be equal before the courts and tribunals. In the
determination of nay criminal charge against him, or of his rights and obligations in a suit
at law, everyone shall be entitled to a fair and public hearing by a competent, indepen-
dent and impartial tribunal established by law.”; European Convention on Human Rights,
Art. 6: providing in part “In the determination of his civil rights and obligations or of any
criminal charge against him, everyone is entitled to a fair and public hearing within a
reasonable time by an independent and impartial tribunal established by law […]
Everyone charged with a criminal offence has the following minimum rights: […] (d) to
examine or have examined witnesses against him and to obtain the attendance and
examination of witnesses on his behalf under the same conditions as witnesses against
him.”; Legal Status of Eastern Greenland Case, Art. 6; United States Constitution, 6th
Amendment, providing “In all criminal prosecutions, the accused shall enjoy the right to
a speedy and public trial, by an impartial jury of the State and district wherein the crime
shall have been committed, which district shall have been previously ascertained by law,
and to be informed of the nature and cause of the accusation; to be confronted with the
witnesses against him; to have compulsory process for obtaining witnesses in his favor,
and to have the Assistance of Counsel for his defence.”; Bin Cheng, General Principles of
Law as Applied by International Courts and Tribunals, 295–299. See also Patrick Robinson,
The Right to a Fair Trial in International Law, with Specific Reference to the Work of the
icty, Berkeley Journal of International Law Publicist 2 (2009), 1–11, 1–2. The historical
origins of this right to a fair trial can be linked to the Lex Duadecim Tabularum, the written
code of laws of the Roman Republic from 455 B.C. as well as to the Magna Carta, signed
in 1215, which provided in part that “No freeman shall be taken, or imprisoned, or dis-
seized, or outlawed, or exiled, or in any way harmed—nor will we go upon or send upon
him—save by the lawful judgment of his peers or by the law of the land.”

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
354 Sipiorski

and impartial tribunal’17 as well as the general idea of equality before the court.
The European Convention on Human Rights notes the right to have witnesses
and examine the opposing parties’ witnesses.18 An early discussion of this idea
of the right to be heard occurred in the Salvador Commercial Co. Case (1902).
The court noted the importance of due process and considered that the ‘oppor-
tunity to be heard’ was intrinsically part of that right.19 Disputes in which this
right has not been respected have resulted in either annulment or the consid-
eration as such.20
The opportunity to be heard includes both presentation of the witnesses as
well as evidence. The tribunal in Germany v. Venezuela stated that ‘[i]n its
wider and universal sense [evidence] embraces all means by which any alleged
fact, the truth of which is submitted to examination, may be established or
disproved.’21 Thus, this right to submit evidence is inextricably connected to
the right of a fair trial.

D Discretion of the Courts in Evidentiary Submissions

International courts generally leave substantial discretion to the judges to
determine when evidence can be submitted and how much weight should be
given to the respective evidence.22 The icj has maintained that ’within the
limits of its Statute and Rules, [the Court] has freedom in estimating the
value of various elements of evidence, though it is clear that general princi-
ples of judicial procedure necessarily govern the determination of what can
be regarded as proved.’23 The Iran-us Claims Tribunal consistently held that
the parties had the responsibility of presenting evidence in order to prove

17 Universal Declaration of Human Rights, Art. 10: “Everyone is entitled in full equality to a
fair and public hearing by an independent and impartial tribunal, in the determination of
his rights and obligations and of any criminal charge against him.”; International Covenant
on Civil and Political Rights, Art. 14.
18 European Convention on Human Rights, Art. 6.
19 U.S.F.R. (1902), p. 838, p. 871 as cited in Cheng, General Principles of Law as Applied by
International Courts and Tribunals, 291.
20 Cheng, General Principles of Law as Applied by International Courts and Tribunals, 291 et
seq.; Umpire Cases, Granadine-United States Claims Commission (1857), questioning the
regularity of the proceeding following failure for certain evidence to be considered.
21 Germany v. Venezuela, Venezuelan Arbitrations, Hague Tribunal (1903), 622.
22 Pauwelyn, Evidence, Proof and Persuasion in wto Dispute Settlement: Who Bears the
Burden?, Journal of International Economic Law 1 (1998), 227–258, 230.
23 icj, Case concerning Military and Paramilitary Activities in and against Nicaragua, Merits,
Judgment of 27 June 1986, icj Reports at 40, para. 60 (1986).

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 355

the claim.24 Tribunal Rules, Article 25, paras. 5–6 regulate the oral submis-
sion of evidence during the hearing and allows the tribunal to weigh the evi-
dence that is presented.25
In wto law, Art. 11 dsu requires that the panel make an objective assess-
ment of the facts before it. Art. 13 dsu provides that the panel has the ‘right to
seek information and technical advice from any individual or body which it
deems appropriate’. Article 13(2) specifically provides for the use of experts by
the panel. However, rules instructing the panel on which evidence to include
or exclude do not exist. The panel in Argentina-Footwear held that the rules of
procedures of panels do not prohibit the practice of submitting additional evi-
dence after the first hearing of the panel. Until the wto Members agree on
different and more specific rules on this regard, our main concern is to ensure
that ‘due process’ is respected and that all parties to a dispute are given all the
opportunities to defend their position to the fullest extent possible.26
The presentation of evidence by the opposing party is a key aspect of the
party’s good faith behavior in presentation of evidence.27 In this regard, the
panel in Argentina-Footwear noted that

[i]t is often said that the idea of peaceful settlement of disputes before inter-
national tribunals is largely based on the premise of co-operation of the liti-
gating parties. In this context the most important result of the rule of
col­laboration appears to be that the adversary is obligated to provide the
tribunal with relevant documents which are in its sole possession. This obli-
gation does not arise until the claimant has done its best to secure evidence
and has actually produced some prima facie evidence in support of its case.28

There is a close linkage between parties’ good faith actions and the general right
to a fair trial in the wto context. Thus, good faith often becomes a principle
relied upon in the international context to ensure that the fair trial is preserved.

24 Islamic Republic of Iran v. United States, Case A/I5, Award No. 529-A15 (ii:A & ii:B)-FT,
May 6, 1992, 28 Iran-U.S. Cl. Trib. Rep. 139 (1992). See also Howard Needles Tammen &
Bergendoff v. Islamic Republic of Iran, Award No. 244-68-2, 8 11 Iran-U.S. Cl. Trib. Rep. 336
(1986); and Fluor Corp. v. Islamic Republic of Iran, Order of November 13, 1987, 18 Iran-U.S.
Cl. Trib. Rep. 68 (1988).
25 Marossi, The Necessity for Discovery of Evidence in Fact-Finding Process of International
Tribunals, Journal of International Arbitration 26(4), 511–531 (2009), 512 et seq.
26 Argentina-Footwear, Panel Report, para. 6.55.
27 Pauwelyn, Evidence, Proof and Persuasion in wto Dispute Settlement: Who Bears the
Burden?, Journal of International Economic Law 1 (1998), 234; see also Kazazi, Burden of Proof
and Related Issues, A Study on Evidence Before International Tribunals (1996), 371–372.
28 Para. 6.40.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
356 Sipiorski

iii Evidence in Investment Arbitration

Because of the very openness and freedom involved in the submission of evi-
dence, tribunals reach into the aforementioned broader principles to give
legitimacy and merit to the respective decisions. This same reliance occurs in
investment arbitration to achieve similar ends. The rules guiding investment
arbitration implicitly ensure that parties have a fair trial. This right to a fair trial
is not expressly provided for in investment arbitration conventions or treaties
but has been recognized by tribunals.29 The fair trial as applied in the invest-
ment arbitration context includes a right to be heard as expressed in public
international law, and is thus related to the right to present evidence and wit-
nesses to ‘understand the truth of the matter at hand’.30
The requirement emerges in the broader aspects of the general provisions
regarding annulment. Arbitral tribunals have applied this ground as a reason
for dismissal, including inability to present relevant evidence.31 In particular,
the Fraport Annulment Committee considered that ‘[i]f an arbitral tribunal
fails to accord such a right [to submit evidence], then its award will be subject
to annulment.’32 An award can be annulled, for example under the icsid
Convention, where ‘there has been a serious departure from a fundamental
rule of procedure’.33 Such warning creates substantial room for interpretation
when few specific guidelines are available for how procedural fairness shall be

29 Fraport v. Philippines, icsid Case No. arb/03/25, Annulment Proceeding, paras. 197–199;
MINE V. Guinea, Decision on Annulment, 22 December 1989, 4 icsid Reports, para. 5.06
as cited in Fraport v. Philippines, Annulment Proceeding, para. 198; Cheng, General
Principles of Law as Applied by International Courts and Tribunals, 295–299.
30 Statute of the icj Art. 43 provides for the submission and presentation of evidence; see
also Patrick Robinson, The Right to a Fair Trial in International Law, with Specific
Reference to the Work of the icty, Berkeley Journal of International Law Publicist 2
(2009), 1–11, 2: ‘In modern times, they refer to the right to be heard and to defend oneself,
the right to be subject to the rule of law, and the right to have one’s case adjudicated by an
independent and impartial tribunal.’
31 Fraport v. Philippines, icsid Case No. arb/03/25, Annulment Proceeding, 23 December
2010.
32 Fraport v. Philippines, icsid Case No. arb/03/25, Annulment Proceeding, 23 December
2010, para. 200.
33 icsid Convention Art. 52(1)(d); see also UNCITRAL Art. 34(2)(a)(ii). Although not directly
applicable in the investment arbitration context, with regard to international arbitration,
the Art. V(1)(b) of the 1958 Convention on the Recognition and Enforcement of Foreign
Arbitral Awards provides that an award can be dismissed where a party was “unable to
present his case.”

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 357

achieved. The seriousness of annulment results in tribunals ensuring that such

fundamental rules are followed. In the Fraport annulment decision, the tribu-
nal also noted that

The requirement that the parties be heard is undoubtedly accepted as a

fundamental rule of procedure, a serious failure of which could merit
annulment. It was expressly referred to as an example of such a rule by
the framers of the icsid Convention and was accepted as such by both
parties to the present annulment proceeding. The right to be heard has
been recognised as a fundamental rule of procedure applicable to inter-
national arbitral proceedings generally.

The lack of guidance, however, regarding these rules leads tribunals to con-
sider standard rules of procedure in public international law. In this regard,
tribunals frequently turn to the general idea of a fair trial and principle of good
faith. As it has been considered in Fraport, basic rules as generally derived out
of good faith are part of the essential rubric to be applied. Tribunals ensure a
fair trial by generally relying on the principle of good faith.

A The Rules
Regulation of evidence is limited but detailed below with respect to icsid and
the iba Rules.
The language of relevant arbitral rules allow tribunals full discretion over
what and how evidence is submitted. Notably, the icsid Arbitration Rules
provide that tribunals make decisions based on evidence on a case-by-case
basis. Article 34(1) provides that ‘[t]he Tribunal shall be the judge of the admis-
sibility of any evidence adduced and its probative value.’34 In his commentary
on the icsid Convention, Schreuer has indicated that in this article ‘[t]he tri-
bunal has discretion in deciding on the relevance and admissibility of the evi-
dence adduced by the parties and in exercising the power to summon further
evidence and is not bound by the parties’ submission regarding the taking of
evidence.’35
Evidence collection and submission has generally been standardized
through the work of the International Bar Association (iba).36 The iba Rules
on the Taking of Evidence in International Arbitration were first introduced in

34 icsid Rules, Article 34(1).

35 Schreuer, The icsid Convention: A Commentary, 643.
36 This attempt to standardize the rules, does not equate to uniformity in application. On
this subject, see generally Pietrowski, Evidence in International Arbitration.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
358 Sipiorski

1983 and were replaced in 1999 with a set of rules designed to create order in a
system of relative disorder.37 New rules were again adopted in 2010.38 These
rules have only soft law authority in the work of the international tribunals—
the tribunals are not obliged to follow these rules. Often these rules of evidence
are used in parallel with rules provided by the arbitral institution.39
Good faith has been expressly included in the updated 2010 iba Rules on the
Taking of Evidence, but has not been defined.40 The Foreword of the Rules
expressly states ‘[t]he Rules are designed to be used in conjunction with, and
adopted together with, institutional, ad hoc or other rules or procedures gov-
erning international arbitrations.’ The Commentary on the 2010 Rules further
states that the iba Rules are intended to fill the gaps left by the institutional
rules of evidence.41 However, these rules have become the de facto code to be
followed in this context, especially in the investment arbitration context where
there is no parallel law of the seat to be followed or recognized by the
tribunal.42
Some of the key features of this document include the power of the tribunal
to determine which evidence to give the most consideration to: ‘The Arbitral
Tribunal shall determine the admissibility, relevance, materiality and weight
of evidence.’43 This is often a basic principle regarding the power that interna-
tional arbitral tribunals’ possess. The document also promotes the idea of flex-
ibility in the arbitral procedure generally.44 The Preamble of the Rules first
acknowledges the good faith requirements for collection of evidence:

37 See generally Hanotiau, The Conduct of the Hearings, in Newman/Hill (eds), The Leading
Arbitrators’ Guide to International Arbitration (2004), 369, 374; Strong/Dries, Witness
Statements under the iba Rules of Evidence: What to Do about Hearsay?, 304–305;
International Bar Association, available at <http://www.ibanet.org/LPD/Dispute
_Resolution_Section/Arbitration/IBA_Rules_Evidence/Overview.aspx>.
38 Shterngel, The Revised iba Rules on the Taking of Evidence in International Arbitration:
Focus on Document Production and Privilege, available at <http://www.whitecase.com/
idq/summer-2010-6/>.
39 Strong/Dries, Witness Statements under the iba Rules of Evidence: What to Do about
Hearsay?, 302.
40 See generally, Martinez-Fraga, Good Faith, Bad Faith, but Not Losing Faith: A Commentary
on the 2010 iba Rules on the Taking of Evidence in International Arbitration, 387.
41 Commentary on the New iba Rules of Evidence, available at <http://www.zivilprozessordnung
.ch/uploads/Commentary_New_IBA_Rules_of_Evidence.pdf>.
42 Lee, iba Rules on the Taking of Evidence in International Arbitration, Singapore International
Arbitration Blog, 18 July 2012, available at <http://singaporeinternationalarbitration.com/
2012/07/18/iba-rules-on-the-taking-of-evidence-in-international-arbitration/>.
43 2010 iba Rules of Evidence, Article 9(1).
44 Commentary on the New iba Rules on Evidence.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 359

‘ The taking of evidence shall be conducted on the principles that each Party
shall act in good faith and be entitled to know, reasonably in advance of any
Evidentiary Hearing or any fact or merits determination, the evidence on
which the other Parties rely.’45
Therefore, submission, collection and presentation of evidence, as an essen-
tial element of the procedure of an arbitral proceeding, is often assessed with
consideration of whether that evidence meets standards of good faith. Thus,
even when respecting the soft law provisions of the iba Rules, tribunals are
implicitly directed to recognize and apply principles of international law.
Tribunals have applied the principle of good faith to these elements of invest-
ment proceedings as a means of ensuring the fair trial requirements are met.

B The Cases: Applying the Good Faith Standard

This good faith standard has been expressly considered by several investment
panels. The edf v. Romania tribunal denied the admission of certain evidence
submitted to prove that officials had requested a bribe. In assessing the collec-
tion of evidence, the tribunal noted that ‘there are good reasons to believe that
those principles of good faith and procedural fairness have not been respected.’
The tribunal relied on the icj opinion in the Corfu Channel case as a basis
for its decision on submitting evidence illegally obtained. Similarly, in the
Methanex v. United States nafta arbitration applying the UNCITRAL Rules,
the tribunal concluded that unlawful collection of evidence was contrary to
the principle of good faith. In contrast, however, the tribunal did not make an
express reference to the use of the principle in public international law.
Nonetheless, the understanding applied by the tribunal closely reflected the
meaning derived from icj decisions.

1 Methanex
In the Methanex v. United States nafta arbitration applying the UNCITRAL
Rules, the tribunal concluded that unlawful collection of evidence was con-
trary to the principle of good faith. Thus, the tribunal applied good faith in the
international context as a means of recognizing behavior that would be crimi-
nal in the domestic context. In Methanex, the claimant made an attempt to
collect evidence in the dumpsters of the office building of one of the lobbyist
who had advocated for enactment of the law for environmental protection
which eventually resulted in the losses for Methanex. The claimant collected

45 2010 iba Rules on the Taking of Evidence in International Arbitration, available at <http://
www.ibanet.org/LPD/Dispute_Resolution_Section/Arbitration/IBA_Rules_Evidence/
Overview.aspx>.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
360 Sipiorski

this evidence to demonstrate the malign intent in the enactment of the law.46
Important in the consideration for the tribunal was that the claimant had
entered the property of Regent International to acquire the documents. Such
behavior was considered by the tribunal to be ‘wholly inappropriate.’47
‘[T]he Tribunal decided that this documentation was procured by Methanex
unlawfully; and that it would be wrong to allow Methanex to introduce this
documentation into these proceedings in violation of a general duty of good
faith imposed by the UNCITRAL Rules and, indeed, incumbent on all who par-
ticipate in international arbitration, without which it cannot operate.’48
Thus, the tribunal maintained that ‘successive and multiple acts of trespass’
exceeded the scope of documents meeting the good faith requirement, and
were consequently not considered by the tribunal in the proceeding.

2 edf v. Romania
As another example, in edf v. Romania, evidence submitted to support the
request of a bribe was denied admission. In assessing the collection of evi-
dence, the tribunal noted that ‘there are good reasons to believe that those
principles of good faith and procedural fairness have not been respected.’ In
edf v. Romania evidence was collected by one party in a manner in which the
tribunal considered exceeding standards of good faith. The claimant alleged
that a bribe had been solicited by the state. edf claimed that the solicitation
of the bribe, as requested by first the Prime Minister, then the State Secretary
under the Prime Minister and the Chief of Cabinet, was in fact an act of state.
The claimant denied agreeing to pay the bribe. Instead, they alleged that the
cancellation of their contract for operating duty-free services in the airport
and in-flight was directly linked to the refusal to pay the usd 2.5 million bribe
as requested. The claimant alleged that this bribe solicitation was violation of
the ‘fair and equitable treatment obligation owed to the claimant pursuant to
the bit, as well as a violation of international public policy, and that ‘exercising
a State’s discretion on the basis of corruption is a […] fundamental breach of
transparency and legitimate expectations’.49
The claimant attempted to prove the authenticity of this allegation with
oral testimony of one witness and by submitting an audio recording of a
request for a bribe that took place between a minister and one of the represen-
tatives for the claimant’s company. The audiotape was allegedly not discovered
by the claimant until shortly before the hearing was scheduled to take place at

46 Methanex, Part ii, Chapter G.

47 Methanex, Part ii, Chapter 1, para. 59.
48 Methanex, Part ii, Chapter 1, para. 58.
49 edf v. Romania, para. 221.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
Evidence and the Principle of Good Faith 361

the World Bank facilities in Washington. The icsid panel was asked to con-
sider whether this evidence could be submitted. The panel found that there
was no ‘clear and convincing’ evidence that the bribe had in fact been solicited
as alleged. The panel reasoned that because the allegations were against the
highest officials in the Romania government, they would require a standard of
‘clear and convincing’ evidence. The panel held that ‘[t]he evidence before the
tribunal in the instant case concerning the alleged solicitation of a bribe is far
from being clear and convincing.’50
The tribunal held that the authenticity of the tape could not be established and
the evidence was declared inadmissible.51 The tribunal made its decision not to
include the audio recording into evidence on the fact that it was ‘not authenti-
cated, [was] incomplete and [was] riddled with manipulations that rob it of all
evidentiary value.’52 In assessing the collection of evidence, the tribunal noted that

[g]ood faith and procedural fairness being among such principles, the
Tribunal should refuse to admit evidence into the proceedings if, depend-
ing on the circumstances under which it was obtained and tendered to the
other Party and the Tribunal, there are good reasons to believe that those
principles of good faith and procedural fairness have not been respected.53

The tribunal concluded that the recording must have been completed with an
on-the-body recorder, thus ‘the proffered audio was obtained illegally having
been made secretly in violation of the fundamental right of privacy of the per-
son recorded.’54 The Romanian Constitution in addition to Art. 12 of the
Universal Declaration of Human Rights and Art. 8 of the European Convention
on Human Rights, were sources cited for maintaining that a recording made
without the knowledge of the speaker is illegal.
The authenticity of the recording could not be established. Although the tri-
bunal noted that there is no ‘icsid rule of “minimally acceptable evidence”’55
and that icsid Arbitration Rule 34(1) and iba Rule Article 9(1) provide that the
arbitral tribunal may admit and give weight to evidence based on their
discretion,56 fundamental rules of procedure require that evidence be authentic.
Because there was no original recording submitted into evidence, the panel con-
sidered the authenticity of the reproduction based on expert evidence.

50 edf v. Romania, para. 221.

51 edf v. Romania, para. 225; Procedural Order No. 3 dated Aug. 29, 2008.
52 edf v. Romania, Procedural Order No. 3, para. 4.
53 edf v. Romania, Procedural Order No. 3, para. 47.
54 edf v. Romania, Procedural Order No. 3, para. 4.
55 edf v. Romania, Procedural Order No. 3, para. 12.
56 edf v. Romania, Procedural Order No. 3, para. 19.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford
362 Sipiorski

iv Discussion

As a means of regulating what and how evidence is submitted, arbitrators will

rely on the principle of good faith as understood by the icj. This cross-­reference
acts as a grounding for the field of investment arbitration. As a relatively new
field of dispute resolution in comparison to public international law, deriving
authority and basis for decisions from public international law allows for a
greater authority. This is particularly true in light of the lack of precedent in
investment arbitration. As earlier decisions merely act as a reference, the guid-
ance offered by a more developed field of law enables greater legitimacy for all
decisions, but in particular, difficult decisions that had not been formerly
approached in that context.
Without this application of public international law, investment arbitration
would not have the capacity to develop with the same strength. The system
forces reliance on the principles arising out of public international law by the
very language of the treaties and the conventions. This reliance not only
grounds the system but also allows for respect to the transformations that
occur within those principles over time. This in turn makes investment arbitra-
tion a form of dispute resolution more likely to endure.
Questions remain, however, regarding how investment tribunals transform
the interpretation of good faith for the purpose of rules of evidence specific to
investment arbitration. Is there a transformation or manipulation of the inter-
pretation that leaves decisions irrelevant in the field of public international
law? Or, is there a basis for the cross-reference of understandings? Although
there is a reliance and respect for the principles arising out of public interna-
tional law, there is also a certain transformation that occurs in the application
of the principle in another context. The laws being assessed, the parties, and
the issues at hand are all of sufficient variance that a new understanding of the
principles inevitably occurs.
Nonetheless, as the concepts of the fair trial and good faith continue to
develop in this context of investment arbitration, there is no imposition on
such interpretations being further developed by international courts. There is
a growing relevance of the interpretation of good faith in evidentiary matters
by investment tribunals that could eventually result in the further consider-
ation by other courts and tribunals. The basic elements regarding evidence are
similar: high levels of discretion given to the tribunal and the basic right to be
heard. Thus the level of subjectivity allowed by introducing the idea of good
faith into evidence submission further advances these more general notions of
justice.

Emily Sipiorski - 9789004298712

Downloaded from Brill.com05/15/2021 11:31:43AM
via Bodleian Libraries of the University of Oxford