The Viability and Potential of Corruption-Based Counterclaims in Treaty-Based ISDS Cases under ICSID Tribunals

In recent years, counterclaims by host States in investor-State dispute settlement (ISDS) are getting importance in the investment arbitration practice and academic literature. Many consider counterclaims as an effective tool in rebalancing the existing asymmetry in the ISDS system. This article examines the viability of a corruption-based counterclaim (CBC) in ISDS. It first explores how the concept and practice of counterclaim have been perceived in international law and adjudication so far. Subsequently, it analyses counterclaim-related investment arbitration cases to comprehend how counterclaim has been practised and interpreted in the treaty-based ISDS. Through critical analysis, it demonstrates the differences between a CBC and other types of counterclaims. The article finds that it would be difficult for the host States to resort and substantiate CBCs under the existing web of investment treaties and treaty-based ISDS practice. It concludes by suggesting ways to overcome the barriers for CBCs by the host States.