1 Denial of justice is traditionally defined as any gross miscarriage of justice by domestic courts resulting from the ill-functioning of the State’s judicial system. It may thus arise, broadly speaking, out of acts of the judiciary as well as of acts of the executive and the legislature affecting the administration of justice. A duty of States to ensure a proper administration of justice towards foreigners, whether in criminal, civil, or administrative cases, falls within the more general duty of protection of the person and property of foreigners laid down in customary international law (see also Aliens).
2 As far as treaties are concerned, while a few expressly use the term denial of justice, most bilateral investment treaties (‘BITs’; Investments, Bilateral Treaties) and several multinational free trade agreements, such as the North American Free Trade Agreement (1992) (‘NAFTA’), provide for fair and equitable treatment, an expression which is growingly understood as prohibiting denial of justice, and permit investors to bring claims of denial of justice against governments directly before arbitral tribunals, such as those constituted within the International Centre for Settlement of Investment Disputes (ICSID). Moreover, the right to a fair trial (Fair Trial, Right to, International Protection) embodied in human rights treaties, including Art. 14 International Covenant on Civil and Political Rights (1966); Art. 6 European Convention for the Protection of Human Rights and Fundamental Freedoms (1950) (‘ECHR’); and Art. 8 American Convention on Human Rights (1969) (‘ACHR’), specify and develop through the case law of their monitoring bodies the traditional concept of denial of justice, ensuring, inter alia, their application to everyone, whether citizen or foreigner. It has also been suggested that the notion of denial of justice may affect the admissibility of issues before the International Criminal Court (ICC) under Art. 17 Rome Statute of the International Criminal Court when a State is found unwilling or unable to genuinely carry out an investigation or prosecution.
3 If a denial of justice occurs, the State involved is in breach of the international rules protecting foreigners and is accordingly held internationally responsible (see also State Responsibility).
B. Historical Origin and Development
4 The origin of the denial of justice concept dates back to the Middle Ages in Europe when the central authority of both Papacy and Empire was being progressively outweighed by national sovereigns. At that time denial of justice (denegatio iustitiae) denoted a condition precedent of private reprisals. When people were ill-treated within a jurisdiction other than their own, they could appeal to all remedies locally available and, if these remedies proved unsatisfactory, they could turn to their sovereign to obtain an authorization, typically a letter of marque, allowing for the exercise of a private reprisal against the offender. It was common ground that reprisals were only permitted when a superior jurisdiction to be appealed to did not exist. The notion that reprisals could only be undertaken when a denial of justice had previously occurred was accepted in numerous laws and treaties which can be traced back to the early Middle Ages and is apparently attested as early as in the 6th century while flourishing around and after the 13th century. Several treaties concluded between the 15th and the 18th centuries provided that the Contracting States would not confer a right to reprisal on their subjects if they had not asked the local sovereign for reparation (Reparations) and this latter had been denied or unreasonably delayed. It is commonly believed that by the 19th century all these treaties confirmed an existing customary international rule.
5 Denial of justice was thus specifically discussed by the first medieval writers who devoted themselves to the conditions to be met before reprisals could justifiably be undertaken, such as Cino da Pistoia, Bartolo da Sassoferrato, Giovanni da Legnano, and others. Amongst the so-called ‘fathers’ of international law, Gentili divided denial of justice into refusal to do justice and neglect in doing justice, both capable of justifying war and a fortiori reprisals (De iure belli ac pacis Book I Chapter XXI, at 101). Grotius spoke of a denial of justice, first, ‘in case a judgement cannot be obtained against a criminal or a debtor within a reasonable time’ and, second, ‘if in a very clear case…judgement has been rendered in a way manifestly contrary to law’ (De iure belli ac pacis Book III, Chapter II, at 627). De Vattel reiterated that denial of justice was the sole condition justifying reprisals and distinguished three forms thereof. In his opinion justice could be refused, first, by an outright denial of justice or by a refusal to hear the complaints of a State or of its subjects, or to allow the subjects to assert their rights before the ordinary tribunals; second, by pretending delays, for which no good reason could be given; and, third, by a decision manifestly unjust and one-sided (de Vattel at 230).
6 Thereafter, denial of justice began to denote, very broadly indeed, any internationally unlawful act against which diplomatic protection could be exercised, ie the direct action by a sovereign towards another in order to obtain reparation. It was then often used, especially in the 19th century, by great powers against weaker States as an excuse for military interventions abroad acting on behalf of their citizens (see also Abuse of Rights). Consequently, Latin American States began to introduce into agreements with foreign companies the Calvo clause (Calvo Doctrine/Calvo Clause) conferring on local courts the exclusive competence on disputes arising out of the agreement. The Calvo clause implied that the State’s only obligation was to make its courts accessible to foreigners, regardless of any other subsequent judicial failure. The Drago-Porter Convention (1907) eventually limited the use of military force in the enforcement of contractual debts, setting off a major change in international law which gradually led to the prohibition of the threat and the use of force contained in Art. 2 (4) United Nations Charter (Use of Force, Prohibition of; Use of Force, Prohibition of Threat). In fact, towards the end of the 19th century and in the pre-war period in the 20th century diplomatic protection by military means was gradually replaced by recourse to treaty-based international arbitration (see also Arbitration and Conciliation Treaties).
7 In the inter-war period denial of justice, in particular the question of its breadth, was extensively discussed both in arbitral practice and in legal doctrine. In 1927 the Institut de Droit international (‘IDI’) adopted the resolution ‘Responsabilité internationale des États à raison des dommages causés sur leur territoire à la personne et aux biens des étrangers’ (International Responsibility of States for Injuries on their Territory to the Person or Property of Foreigners; ‘IDI Resolution’). Though not legally binding, this resolution shows a certain convergence on the notion and forms of denial of justice. Art. 5 IDI Resolution envisaged denial of justice, first, when the tribunals necessary to assure protection to foreigners did not exist or did not function; second, when the tribunals were not accessible to foreigners; and, third, when the tribunals did not offer the guarantees which were indispensable to the proper administration of justice. Art. 6 IDI Resolution added that State responsibility also arose when the proceedings or the judgment constituted a manifest failure of justice.
8 In 1929 the Harvard Law School drafted a private codification entitled Responsibility of States for Damage Done in Their Territory to the Person or Property of Foreigners. Art. 9 regarded as a denial of justice, first, the denial, unwarranted delay, or obstruction of access to courts; second, gross deficiency in the administration of judicial or remedial process; third, failure to provide those guarantees which are generally considered indispensable in the proper administration of justice; and, fourth, a manifestly unjust judgment, especially if it has been inspired by ill-will towards foreigners as such or as citizens of a particular State. It was expressly specified that an error of a national court which did not produce manifest injustice was not a denial of justice. This draft was resumed and detailed by the Harvard Law School in the Draft Convention on the International Responsibility of States for Injuries to Aliens (‘Draft Convention’) of 1961, especially in Art. 6 Draft Convention on Denial of Access to a Tribunal or an Administrative Authority and Art. 7 Draft Convention on Denial of a Fair Hearing.
9 In 1930 denial of justice was also discussed at the Hague Conference for the Codification of International Law which, inter alia, dealt with the law of State responsibility and treatment of aliens, but, as is well known, failed. The Basis of Discussion No 5 on State responsibility articulated denial of justice in a series of hypotheses, namely (i) when a foreigner was entirely denied the resort to courts in the protection of his or her rights, (ii) when a legally binding judicial decision was made which was irreconcilable with the duties of the State under a treaty or some other international obligation, (iii) when a court misused its procedures to cause delay, and (iv) when the content of a judicial decision was manifestly influenced by malice against foreigners as such or as nationals of a particular State.
10 In the period between World War II and the 1990s denial of justice occasioned little interest, at least as far as investor-State arbitrations were concerned, apart from the important statement made by the International Court of Justice (ICJ) in the Barcelona Traction Case whereby ‘human rights…also include protection against denial of justice’ (at para. 91). Thereafter, investment arbitration has enormously expanded under the great number of existing BITs and the grievance of denial of justice has been increasingly and successfully raised. In the meantime, human rights monitoring bodies have applied and developed the right to a fair trial embodied in most human rights treaties. A major novelty is that while in the past denial of justice gave rise to unilateral action by the victim’s State under customary international law (Unilateral Acts of States in International Law), today any private complainant, whether plaintiff or defendant in local courts, may directly raise grievances, under applicable international treaty law, based on the violation of the right to a fair trial before human rights monitoring bodies or on the violation of investment treaties before international tribunals. Disputes are thus depoliticized, forcible action is banned, and the consequences of a denial of justice are increasingly specified in treaties or determined by impartial international bodies.
C. Forms of Denial of Justice in the International Jurisprudence
11 While undisputedly States have a customary international obligation to grant judicial protection to foreigners, it is commonly emphasized in both arbitral practice and legal doctrine that any attempt accurately and exhaustively to define the forms of denial of justice is bound to fail. The term ‘justice’ itself is nebulous and definitely not any kind of injustice amounts to denial of justice. As stated in the Salem Case (Egypt v United States) arbitral decision of 1932: ‘As a rule, a foreigner must acknowledge as applicable to himself the kind of justice instituted in the country in which he did choose his residence including all deficiencies of such jurisdiction, imperfect as it is like every other human work’ (at 1202), thereby implying that ‘errors in judgment cannot be regarded as a denial or a warping of justice in the sense of international law’ (at 1202). Also according to the Permanent Court of International Justice (PCIJ) in The Lotus (France v Turkey) (Lotus, The) judgment of 1927, ‘[t]he fact that the judicial authorities may have committed an error in their choice of the legal provision applicable to the particular case and compatible with international law only concerns municipal law and can only affect international law in so far as a treaty provision enters into account, or the possibility of a denial of justice arises’ (at 24; International Law and Domestic [Municipal] Law). In other words, the simple misinterpretation or misapplication of municipal law is not per se denial of justice, nor can—as constantly pointed out in arbitral practice—international bodies empowered to decide on claims of denial of justice sit as ‘courts of appeal’ reviewing the decisions of domestic courts.
12 Only gross or manifest instances of injustice are considered denials of justice. The Salem Case (Egypt v United States) decision, for example, observed that denial of justice included ‘only exorbitant cases of judicial injustice’, namely ‘[a]bsolute denial of justice; inexcusable delay of proceedings; obvious discrimination of foreigners against natives; palpable and malicious iniquity of a judgment’ (at 1202). In the BE Chattin Case (United States v Mexico) arbitral decision of 1927 it was similarly held that ‘[a]cts of the judiciary, either entailing direct responsibility or indirect liability (the latter called denial of justice, proper), are not considered insufficient unless the wrong committed amounts to an outrage, bad faith, wilful neglect of duty, or insufficiency of action apparent to any unbiased man’ (at para. 10). More recently, in the Mondev International Ltd v United States of America (Award of 11 October 2002) an arbitral tribunal constituted under NAFTA quoted the description of arbitrariness in administrative conduct by the ICJ’s chamber in the Elettronica Sicula Case as ‘a wilful disregard of due process of law, …which shocks, or at least surprises, a sense of judicial propriety’ (para. 127), stating that in the context of denial of justice ‘[t]he test is not whether a particular result is surprising, but whether the shock or surprise occasioned to an impartial tribunal leads, on reflection, to justified concerns as to the judicial propriety of the outcome’ (para. 127). The tribunal remarked that ‘[i]n the end the question is whether, at an international level and having regard to generally accepted standards of the administration of justice, a tribunal can conclude in the light of all the available facts that the impugned decision was clearly improper and discreditable, with the result that the investment has been subjected to unfair and inequitable treatment’ (para. 127). This standard was subsequently adopted in other important cases brought under NAFTA, including the Loewen Group Inc v United States of America (Award of 26 June 2003) (paras 132–33) and the Waste Management Inc v Mexico No 2 (Award of 30 April 2004) (para. 98) (North American Free Trade Agreement, Dispute Settlement).
13 However, how gross or manifest injustice must be for denial of justice to arise remains unclear. As a result, the discourse on denial of justice centres on a number of recurrent instances in international case law. A succinct analysis of these hypotheses and of some of the most relevant passages is therefore necessary to clarify the underlying basic principles.
1. Refusal of Access to Justice and Refusal of Courts to Decide
14 The refusal of access to justice and the refusal of courts to decide are perhaps the most uncontroversial forms of denial of justice. In the Fabiani (No 1) (France v Venezuela) arbitral decision of 1896 Fabiani was refused by a Venezuelan court the enforcement of a private arbitral award he had obtained in France. The President of the Swiss Confederation, acting as arbitrator between the French Government and the Venezuelan Government, stated that ‘denial of justice includes…the refusal of a judicial authority to exercise his functions and, in particular, to give a decision on the request submitted to him’ (at 4895; translation by the author). In the Ambatielos Claim (Greece v United Kingdom) (Ambatielos Case) arbitral decision of 1956 it was held that ‘the foreigner shall enjoy full freedom to appear before the courts for the protection or defence of his rights, whether as plaintiff or defendant’ (at 111). More recently, in the context of foreign investments, the Azinian v Mexico (Award of 1 November 1999) stated that courts’ refusal to entertain a suit could be pleaded as a denial of justice (paras 102–3) and in Duke Energy v Ecuador (Award of 18 August 2008) the Tribunal held that the BIT provision applicable in the instant case, whereby ‘[e]ach Party shall provide effective means of asserting claims and enforcing rights with respect to investment, investment agreements, and investment authorizations’, guarantees the access to the courts and the existence of institutional mechanisms for the protection of investments, hence ‘it seeks to implement and form part of the more general guarantee against denial of justice’ (paras 390–91).
15 Turning to human rights law, in the Golder v United Kingdom judgment of 1975 the European Court of Human Rights (ECtHR) held that the right of access to a court, though not expressly set forth in the ECHR, is necessarily implied in the procedural rights laid down in Art. 6 (1) ECHR (at para. 35). In this context, the right of access to justice is admitted provided that the very essence of the substantive right at issue is not impaired and is subject to reasonable limitations proportionally pursuing a legitimate aim, as is the case, inter alia, of jurisdictional immunities which international law accords to foreign States and State officials. In the Fogarty v United Kingdom judgment of 2001 the ECtHR’s Grand Chamber ruled that both removal from courts’ jurisdiction of a whole range of civil claims and conferral of immunities from civil liability on large groups or categories of persons amount to a denial of access to a judge contrary to Art. 6 ECHR, but concluded that jurisdictional immunity in that case pursued a legitimate aim, namely compliance with international law to promote comity and good relations between States, in a reasonably proportional manner (at paras 34 and 36) (Grand Chamber: European Court of Human Rights [ECtHR]). A similar view was taken by the ECtHR’s Grand Chamber in the McElhinney v Ireland judgment of 2001 (paras 35 and 37). In its more recent case law (see Cudak v Lithuania, Sabeh El Leil v France, Wallishauser v Austria, Oleynikov v Russia) the ECtHR has found the defendant State in breach of Art. 6 ECHR for recognizing jurisdictional immunity to foreign States in labour disputes as a disproportionate measure to the legitimate aim of abiding by the international law rule on sovereign immunity. In the Al-Adsani v The United Kingdom judgment of 2001 the ECtHR’s Grand Chamber found that even the alleged violation of ius cogens could not justify the removal of State immunity (paras 54, 56, and 61; Al-Adsani Case), a view affirmed by the ICJ in the Jurisdictional Immunities of the State case decided in 2012. This latter view was challenged in 2014 by the Constitutional Court of Italy (La Corte Costituzionale Della Repubblica Italiana) in SF et al Judgment No 238/2014, whereby the right of access to a court found in Art. 24 Constitution of the Italian Republic (adopted 22 December 1947) amounts to a ‘supreme constitutional principle’ having the effect of preventing the above ICJ judgment (which found Italy in violation of the foreign States’ jurisdictional immunity rule) from being applied domestically (National Implementation of International Court Decisions). Interestingly, no breach of the right of access to the courts occurs when jurisdictional immunity is given effect but an ‘equivalent protection’ by other alternative means of securing redress is available, as was stated by the ECtHR with regard to international organizations in the Waite and Kennedy v Germany (paras 68 and 72–73) and Beer and Regan v Germany judgments of 1999 (paras 58 and 62–63). It is worth noting that in the La Cantuta v Peru (Judgment) of 2006 the Inter-American Court of Human Rights (IACtHR) held that ‘[a]ccess to justice constitutes a peremptory norm of International Law and, as such, it gives rise to the States’ erga omnes obligation to adopt all such measures as are necessary to prevent such violations from going unpunished’ (para. 160; see also Obligations erga omnes); a similar view was previously stated in the Goiburú et al v Paraguay judgment of 22 September 2006 (para. 131) and was recently reiterated in Advisory Opinion OC-23/17 (para. 233). The view that the right of access to justice, albeit not absolute, is guaranteed by ius cogens was also taken by the European Court of First Instance in the Kadi v Council (para. 288) and Yusuf v Council (para. 343) decisions of 2005 (see also European Union, Court of Justice and General Court). Both decisions were set aside in 2008 by the European Court of Justice (‘ECJ’) in Kadi v Council and Commission (Kadi Case) affirming that the rights of defence and to an effective legal remedy are fundamental rights forming an integral part of the general principles of European Community law but abstaining from examining the ius cogens ground of appeal (at para. 329). In El Sayed (Order Assigning Matter to Pre-Trial Judge) the President of the Special Tribunal for Lebanon (STL) endorsed the view that the rule on the right of access to a court is of general application (paras 20–36) and, presumably, that, although subject to restrictions, it belongs to ius cogens on grounds that ius cogens does not necessarily need full support of State practice (paras 29–30 and 35). However, the ECtHR’s Grand Chamber ruled in the 2016 Al-Dulimi and Montana Management Inc v Switzerland judgment that ‘despite their importance, the Court does not consider these guarantees [the guarantees of a fair hearing and in particular the right of access to a court] to be among the norms of jus cogens in the current state of international law’ (para. 136).
2. Unreasonable Delay
16 Equally uncontroversial is that unreasonably delayed proceedings amount to denial of justice. In the aforementioned Fabiani (No 1) (France v Venezuela) decision the arbitrator affirmed that ‘[u]pon examining the general principles of international law with regard to denial of justice, that is to say, the rules common to most bodies of law or laid down by doctrine, one finds that denial of justice includes not only the refusal of a judicial authority to exercise his functions … but also wrongful delays on his part in giving judgement’ (at 4895, translation by the author). The Salem Case (Egypt v United States) decision mentioned inexcusable delay of proceedings as a traditional form of denial of justice (at 1202). That a court’s undue delay could be pleaded as a denial of justice was reiterated in more recent foreign investment disputes, such as in the Azinian v Mexico (Award of 1 November 1999) (at para. 102). In Chevron Corporation and Texaco Petroleum Company v Ecuador (Partial Award on the Merits of 30 March 2010), the Tribunal held, in this context, that the applicable BIT clause containing obligations to provide effective means of asserting claims and enforcing rights ‘overlap[s] significantly with the prohibition of denial of justice under customary international law’ and ‘appears to be directed at many of the same potential wrongs as denial of justice’, although it ‘appears in the BIT as an independent, specific treaty obligation and does not make any explicit reference to denial of justice or customary international law’ and hence ‘constitutes a lex specialis and not a mere restatement of the law on denial of justice’ (at para. 242) (Lex specialis).
17 However, the length of the delay required in order for a denial of justice to arise is unclear. The court’s workload is generally considered irrelevant. In the El Oro Mining and Railway Company Ltd (Great Britain v Mexico) decision of 1931 it was held that ‘the amount of work incumbent upon the Court, and the multitude of lawsuits with which they are confronted, may explain, but not excuse the delay’ (at 198) and ‘[i]f this number is so enormous as to occasion an arrear of nine years, the conclusion can be no other than that the judicial machinery is defective, and that the organization of its jurisdiction is not in proper proportion to the task it has to fulfil’ (at 198), thereby giving rise to a denial of justice ‘in effect equivalent to…undue delay of justice’ (at 198).
18 An extensive case law has been produced in this regard by the ECtHR in applying Art. 6 (1) ECHR sanctioning violations of the right to a fair trial in civil and criminal cases. In these cases, the ECtHR has routinely considered a number of elements, including the complexity of the case, the conduct of the applicant and the relevant authorities and what is at stake for the applicant in the dispute.
3. Courts’ Subservience to Legislative or Executive Interference or to Excessive Public Pressure
19 National courts are supposed to be independent from the legislature and the executive branch of their State. In the Robert E Brown Case (United States v Great Britain) of 1923 the arbitral tribunal found that a definite denial of justice took place against the complainant, given that ‘[a]ll three branches of the Government conspired to ruin his enterprise…[t]he Executive Department issued proclamations for which no warrant could be found in the Constitution and laws of the country’ (at 129), the local legislature ‘enacted legislation which, on its face, does violence to fundamental principles of justice recognized in every enlightened community’ (at 129) and ‘[t]he judiciary, at first recalcitrant, was at length reduced to submission and brought into line with a determined policy of the Executive to reach the desired result regardless of Constitutional guarantees and inhibitions’ (at 129). In the Jacob Idler v Venezuela decision the Umpire stated that by taking the case out of the hands of the courts the Venezuelan government decided to proceed in a non-judicial manner, thus producing the effect of denial of justice (at 3516–17). In this same decision it was also held, as regards manipulation of the composition of courts, that ‘Venezuela could, of course, constitute her courts as she desired, but having established them, it was Idler’s right, if his affairs were drawn in litigation there, to have them adjudicated by the courts constituted under the forms of law’ (at 3508). In recent times, in the Petrobart v Kyrgyz Republic (Arbitral Award) of 2005, the Arbitration Institute of the Stockholm Chamber of Commerce held that the collusion between the executive and the court constituted ‘a clear breach of the prohibition of denial of justice under international law’ (at 28).
20 Legislation aimed to void the authority of an arbitral award unfavourable to the government may amount to a denial of justice. In the Stran Greek Refineries and Stratis Andreadis v Greece judgment of 1994 the ECtHR held that Greece had violated Art. 6 (1) ECHR ‘by intervening in a manner which was decisive to ensure that the imminent outcome of proceedings in which it was a party was favourable to it’ (para. 50).
21 Excessive public pressure on the courts may also give rise to denial of justice. In the Solomon Case (United States v Panama) arbitral decision of 1933 it was held that the claimant’s conviction constituted ‘a palpable injustice’ which ‘was unconsciously influenced by strong popular feeling’ (at 372–73).
4. Failure to Execute Final Judgments or Arbitral Awards
22 In the Montano Case (Peru v United States of America) decision of 1855 the Umpire found the USA guilty of a palpable denial of justice since a sentence ‘was not made effective through the fault of the public officer who was under obligation to execute it’ (at 1635). In the Fabiani (No 1) (France v Venezuela) decision of 1896 the arbitrator held that Venezuela was responsible for denial of justice insofar as a Venezuelan court had refused to execute an arbitral award handed down in France between two private companies, stating expressly that failure to execute final judgments amounts to denial of justice (at 4895).
23 In the Timofeyev v Russia judgment of 2003, the ECtHR ruled that it ‘would be illusory if a Contracting State’s domestic legal system allowed a final, binding judicial decision to remain inoperative to the detriment of one party’, pointing out that ‘execution of a judgment given by any court must…be regarded as an integral part of the “trial” for the purposes of Article 6’ (para. 40).
5. Breach of Due Process
24 A typical denial of justice consists of a denial of fair trial guarantees. In the Bullis Case (United States v Venezuela) arbitral decision a number of procedural guarantees were listed whose breach, which at any rate was not found, would have amounted to a denial of justice. It was held that the complainant was arrested, tried, and convicted in strict accordance with the laws of Venezuela, to which he was at the time subject, and in conformity with the usual procedure of its courts; that his trial was not unnecessarily delayed; that he was provided with counsel; that he was allowed to communicate with the representative of his Government; that there was no undue discrimination against him as a citizen of the United States, nor was there, in his trial, any violation of those rules for the maintenance of justice in judicial inquiries which are sanctioned by international law (at 232). The BE Chattin Case (United States v Mexico) arbitral decision of 1927 found that irregularity of court proceedings was proven ‘with reference to absence of proper investigations, insufficiency of confrontations, withholding from the accused the opportunity to know all of the charges brought against him, undue delay of the proceedings, making the hearings in open court a mere formality, and a continued absence of seriousness on the part of the Court’ (at para. 30).
25 In recent foreign investment disputes, the Azinian v Mexico (Award of 1 November 1999) stated a denial of justice could be pleaded if courts ‘administer justice in a seriously inadequate way’, including ‘the clear and malicious misapplication of the law’ (paras 102–3). In the Loewen Group Inc v United States of America (Award of 26 June 2003) a ‘[m]anifest injustice in the sense of a lack of due process leading to an outcome which offends a sense of judicial propriety’ (para. 132) was found, holding that in the particular case ‘the whole trial and its resultant verdict were clearly improper and discreditable and cannot be squared with minimum standards of international law and fair and equitable treatment’ (para. 137; Minimum Standards). However, bad faith or malicious intention was not believed to be an essential element of denial of justice (at para. 132). In the Thunderbird v Mexico (Arbitral Award) of 2006 it was not found that the proceedings ‘were arbitrary or unfair, let alone so manifestly arbitrary or unfair as to violate the minimum standard of treatment’ (para. 197), specifying that the claimant had been given full opportunity to be heard and to present evidence, and the proceedings were subject to judicial review (at paras 198 and 201). Interestingly, in finding on the record no administrative irregularities that were grave enough to shock a sense of judicial propriety, the arbitral tribunal added that ‘[t]he administrative due process requirement is lower than that of a judicial process’ (at para. 200). In Tokios Tokelės v Ukraine (Award of 26 July 2007) the Tribunal found that ‘a manifest and gross failure to comply with the elementary principles of justice in the conduct of criminal proceedings, when directed towards an investor in the operation of his investment, may be a breach, or an element in a breach, of an investment treaty’, although it concluded that in the instant case the State’s repeated openings and closings of the case did not transgress that standard (at para. 133).
6. Corruption, Discrimination, and Prejudice
26 In Coles and Croswell (Great Britain v Haiti), involving two British citizens convicted of theft in Haiti, a special commissioner appointed by Britain complained that the decision had been reached despite the public prosecutor and five of the jurymen having been convicted for corruption (at 1328). In the Loewen Group Inc v United States of America (Award of 26 June 2003) it was held that ‘a decision which is in breach of municipal law and is discriminatory against the foreign litigant amounts to manifest injustice according to international law’ (para. 135).
7. Retroactive Application of Laws
27 In the Mondev International Ltd v United States of America (Award of 11 October 2002) the claimant complained about the retroactive application of an allegedly new judge-made rule applied to government contracts. The arbitral tribunal stated that ‘it is normally a matter for local courts to determine whether and in what circumstances to apply new decisional law retrospectively’ (para. 137).
28 A relatively frequent review of retroactive application of criminal law is made by the ECtHR in relation to Art. 7 ECHR. However, the Mondev International Ltd v United States of America (Award of 11 October 2002) emphasized that, while ‘the European Court of Human Rights has given some guidance on this question…if there is any analogy at all, it is much fainter in civil cases’ and that ‘assuming, for the sake of argument, that standards of this kind might be applicable under Article 1105(1), in the Tribunal’s view there was no contravention of any such standards in the present case’ (para. 138).
D. Denial of Justice and Exhaustion of Local Remedies
29 Under customary international law, when a State commits a wrong against an alien and the latter believes that such a wrong constitutes a breach of international law, the alien’s national State may espouse his claim and exercise diplomatic protection only after all locally available and effective remedies have been exhausted (Local Remedies, Exhaustion of). Denial of justice requires, as a rule, the exhaustion of local remedies, given that when local remedies are still effectively available the judicial ill-treatment may still be corrected by higher courts. As a systemic miscarriage of justice, denial of justice implies that the whole judicial system is given a chance to correct itself.
30 The exhaustion rule is today generally provided for in human rights treaties as an admissibility condition. However, many BITs explicitly waive the exhaustion requirement and arbitration may be resorted to immediately without seeking to exhaust local remedies (Previous Exhaustion of Local Remedies: Investment Arbitration). In the abstract this might be understood to the effect that denial of justice may arise even before, or regardless of, exhausting local remedies. However, the better view is that the two rules, though interconnected, are independent: arbitration may be immediately resorted to for any complaint other than denial of justice, while this latter does not occur and cannot therefore be invoked before the exhaustion of local effective remedies. In the Loewen Group Inc v United States of America (Award of 26 June 2003) the tribunal significantly held that if exhaustion of local remedies were required for the purposes of denial of justice claims, it ‘would have the effect of making a State potentially liable for NAFTA violations when domestic appeal or review, if pursued, might have avoided any liability on the part of the State’ (para. 162).