A COMMENT ON THE CLEAN HANDS DOCTRINE IN INTERNATIONAL LAW

Rahim Moloo1
I.

INTRODUCTION
Equitable principles are a part of international law. The International Court of Justice

(ICJ) has confirmed that the legal concept of equity is a general principle directly applicable
as law.2 Among those equitable principles that international tribunals have applied is the
concept that a claimants claims may be barred due to its illegal conduct in relation to the claims
he brings. This concept is known as the clean hands doctrine.3 As Sir Gerald Fitzmaurice has
summarized:
He who comes to equity for relief must come with clean hands.
Thus a State which is guilty of illegal conduct may be deprived of
the necessary locus standi in judicio for complaining of
corresponding illegalities on the part of other States, especially if
these were consequential on or were embarked upon in order to
counter its own illegalityin short were provoked by it.4
There is some debate about the scope of application of the clean hands doctrine in
international law, and in what context it should apply. For example the International Law
Commission (ILC) decided that the clean hands doctrine should not apply in the diplomatic
protection context.5 Though the use of the clean hands doctrine in international law has been
1

General Counsel, University of Central Asia and Senior Research Fellow, Vale Columbia Center for Sustainable
International Investment, a joint center between the Earth Institute and Columbia Law School. The author would
like to thank Andrea Menaker for helpful comments on an earlier draft of this article. The views expressed in this
article are those of the author's alone. The author can be contacted at rahim.moloo@nyu.edu.
2

Case Concerning Continental Shelf (Tunisia/Libyan Arab Jamahiriya), Judgment of 24 February 1982, I.C.J.
Reports 1982, 60 71.
3

See Bin Cheng, General Principles of Law as Applied by International Courts and Tribunals (Cambridge
University Press, 1953) 155 (A Party who asks for redress must present himself with clean hands.); Ian Brownlie,
Principles of Public International Law (7th ed. Oxford University Press, 2008) 503 (The clean hands doctrine under
international law is a principle according to which a claimants involvement in activity illegal under either
municipal or international law may bar the claim.); Hersch Lauterpacht, Recognition in International Law (1947)
420-421 (The principle ex injuria jus non oritur is one of the fundamental maxims of jurisprudence. An illegality
cannot, as a rule, become a source of legal right to the wrongdoer.). See generally Stephen M. Schwebel, Clean
Hands, Principle, Max Planck Encyclopedia of Public International Law Online (2009), available at
www.mpepil.com.
4

Sir Gerald Fitzmaurice, 92 Recueil des Cours (1957-II) 119 (citations omitted).

Report of the International Law Commission, 57th Session, UN Doc. A/60/10.

Electronic copy available at: http://ssrn.com/abstract=2358229

debated, many notable developments have recently been made in relation to the application of
the doctrine. In particular, the principle behind the clean hands doctrine is manifest in provisions
contained in various modern bilateral investment treaties (BITs) and discussed by the tribunals
that interpret them. This article will briefly summarize the evolution of the clean hands doctrine
before explaining how the doctrine has been further entrenched in international law through
recent developments in the investment treaty context.
II.

A BRIEF HISTORY OF THE DOCTRINE

A.

The Decisions of International Courts and Tribunals

International courts and tribunals have historically considered, and at times applied, the
clean hands doctrine. For example, several arbitral tribunals applied the doctrine in the late 19th
and early 20th century.6 These tribunals generally found inadmissible claims of claimants that
had engaged in wrongful conduct in relation to their claims.

The World Court has also

considered the clean hands doctrine. Two inter-State cases decided by the World Court are
particularly notable and worth mentioningthe decision of the Permanent Court of International
Justice in the Case Concerning the Diversion of Water from the River Meuse,7 and the dissenting
opinion of Judge Schwebel in the ICJ Case Concerning Military and Paramilitary Activities in
and Against Nicaragua.8
In the Case Concerning the Diversion of Water from the River Meuse, the Court was
asked to interpret an 1863 treaty relating to the regime of diversions from the River Meuse.
Belgium claimed that because The Netherlands had constructed certain works contrary to the
terms of the treaty, The Netherlands should not be permitted to invoke the treaty against
Belgium. Referring to The Netherlands previous wrongful conduct, the Court concluded [i]n
these circumstances, the Court finds it difficult to admit that The Netherlands are now warranted
6

See, e.g., Medea and The Good Return cases, Ecuadorian-United States Commission (8 Aug. 1865) in John Bassett
Moore, History and Digest of the International Arbitrations to which the United States has been a Party (1995),
2738-2739; Brig Lawrence v. United Kingdom (United States v. United Kingdom), Mixed Commission, Convention
of 8 Feb. 1853 in V. Coussirat-Coustre & P.M. Eisemann (eds.), Repertory of International Arbitral Jurisprudence,
Vol. 1 (1794-1918); Clark Claim of 1862, cited in Cheng, supra note 3 at 155.
7

Case Concerning the Diversion of Water from the River Meuse (Netherlands v. Belgium), Judgment of 28 June
1937, PCIJ Series A/B, No. 70.
8

Case Concerning Military and Paramilitary Activities in and Against Nicaragua (Nicaragua v. United States of
America), Judgment of 27 June 1986, Dissenting Opinion of Judge Schwebel, I.C.J. Reports 1986.

Electronic copy available at: http://ssrn.com/abstract=2358229

in complaining of the construction and operation of a lock of which they themselves set an
example in the past.9 Judge Hudson concurred in the Courts decision but clarified his position
in a separate opinion, confirming the basic principle that [h]e who seeks equity must do equity
and that a court of equity refuses relief to a plaintiff whose conduct in regard to the subjectmatter of the litigation has been improper.10 In referring to this principle, Judge Hudson
concluded that . . . in a proper case, and with scrupulous regard for the limitations which are
necessary, a tribunal bound by international law ought not to shrink from applying a principle of
such obvious fairness.11
In the Case Concerning Military and Paramilitary Activities in and Against Nicaragua,
Judge Schwebel commented on the clean hands doctrine in his seminal dissent. In that case,
Nicaragua had brought claims against the United States for various military and paramilitary acts
conducted in and against Nicaragua. The United States acts were in response to what Judge
Schwebel considered to be tantamount to an armed attack by Nicaragua against El Salvador. 12 In
relation to these claims Judge Schwebel concluded:
Nicaragua has not come to the Court with clean hands. On the
contrary, as the aggressor, indirectly responsiblebut ultimately
responsiblefor large number of deaths and widespread
destruction in El Salvador apparently much exceeding that which
Nicaragua had sustained, Nicaraguas hands are odiously unclean.
Nicaragua has compounded its sins by misrepresenting them to the
Court. Thus both on the grounds of its unlawful armed
intervention in El Salvador, and its deliberately seeking to mislead
the Court about the facts of that intervention through false
testimony of its Ministers, Nicaraguas claims against the United
States should fail.13

Case Concerning the Diversion of Water from the River Meuse, supra note 7 at 25.

10

Case Concerning the Diversion of Water from the River Meuse, Separate Opinion of Judge Hudson, supra note 7
at 77 (citations omitted).
11

Id.

12

Case Concerning Military and Paramilitary Activities in and Against Nicaragua, supra note 8 at 331-341, 154161. Of particular relevance, and perhaps a reason for why the Court did not apply the clean hands doctrine, the
Court did not find that Nicaraguas aid to insurgents in El Salvador was tantamount to an armed attack against El
Salvador.
13

Id. at 392, 268.

In addition, there are other cases where respondents have raised the clean hands doctrine
as a defense, and the ICJ has decided not to apply it.14 As such, though the Court has rarely if
ever explicitly endorsed the clean hands doctrine, it has not denied its existence as a general
principle of international law, despite many opportunities to do so.
B.

The Draft Articles on Diplomatic Protection

In its discussions on the Draft Articles on Diplomatic Protection (Draft Articles), the
ILC debated whether to include an article pertaining to the clean hands doctrine. The Special
Rapporteur on Diplomatic Protection at the time, John Dugard, wrote a report on the subject
noting that the . . . cases make it difficult to sustain the argument that the clean hands doctrine
does not apply to disputes involving direct inter-State relations.15 He noted that States have
frequently raised the clean hands doctrine in direct inter-State claims and in no case has the
Court stated that the doctrine is irrelevant to inter-State claims.16
Professor Dugard, however, recommended that the Draft Articles not contain a provision
on the clean hands doctrine17a position which was ultimately adopted by the ILC.18 Although
the clean hands doctrine may apply in the inter-State context, Professor Dugard aptly explains
why the clean hands doctrine should not apply in the diplomatic protection context:
[T]he State of nationality [of an alien] may exercise diplomatic
protection on behalf of the individual because of [an]
internationally wrongful act. The clean hands doctrine cannot be
applied in [this] case to the injured individual for a violation of
international law, firstly, because the claim has now assumed the
character of an international, State v. State claim and secondly,
because the individual has no international legal personality and
14

See, e.g., Legal Consequences of the Construction of a Wall in the Occupied Palestinian Territory, Advisory
Opinion of 9 July 2004, I.C.J. Reports 2004, p. 136, 63-64 (finding that the Israels argument that Palestines
unclean hands prevented it from seeking a remedy was not pertinent because it was the General Assembly which
requested the advisory opinion, and the opinion is to the General Assembly, and not to a specific State.); see also
Case Concerning the Oil Platforms (Islamic Republic of Iran v. United States of America), Judgment of 6 Nov.
2003, I.C.J. Reports 2003, p. 161, 29-30 (deciding that the Court did not need to address the question of Irans
unclean hands on a preliminary basis as the United States had raised the issue of Irans wrongful conduct in asking
the Court to dismiss its claims, not to render them inadmissible).
15

John Dugard, Sixth Report on Diplomatic Protection, UN Doc. A/CN.4/546 (11 Aug. 2004) 6.

16

Id.

17

Id.

18

Report of the International Law Commission, supra note 5.

thus cannot (outside the field of international criminal law) be held

responsible for the violation of international law. In short, as a
consequence of the fiction that an injury to a national is an injury
to the State itself, the claim on behalf of a national subjected to an
internationally wrongful act becomes an international claim and
the clean hands doctrine can be raised against the protecting State
only for its conduct and not against the injured individual for
misconduct that may have preceded the internationally wrongful
act.19
As Professor Dugard suggests, there are important differences between disputes in the
inter-State context and in the diplomatic protection context relevant to the question of whether
the clean hands doctrine applies. Unlike the inter-State context, where the wrongful act of one
State directly affects another State, in the diplomatic protection context the State brings a claim
for internationally wrongful acts committed against its national(s). In the inter-State context it is
the wrongdoing of the claimant State itself that would be relevant to assessing the clean hands
defense. In the diplomatic protection context, it is not the wrongdoing of the claimant State that
is often raised in asserting the clean hands defense, but that of its national. This fundamental
difference between the way in which the clean hands doctrine arises in the inter-State and
diplomatic protection contexts justifies why the doctrine should apply in the former but not the
latter instance. As such, though some arbitral tribunals in the late 19th and early 20th centuries
applied the clean hands doctrine in denying claims made by States as a result of the wrongful
acts of the national on whose behalf they were bringing claims, the wrongful conduct of the
national should not be relevant to assessing the admissibility of a States diplomatic protection
claims.20
It is clear from the above discussion that the decision of the ILC not to include an article
on the clean hands doctrine in the Draft Articles is not to say that the principle is not a part of
international law; rather, this decision clarifies that the only conduct relevant to assessing the
admissibility of claims under international law is that of the claimant itself. Indeed, Professor
Dugard noted in his closing remarks on the subject: the clean hands doctrine [i]s an important
principle of international law that ha[s] to be taken into account whenever there [i]s evidence that
19
20

Id. 8 (emphasis added).

Id. 16. If however an alien is guilty of wrongful conduct in a foreign State and as a result is deprived of his
rights, in accordance with due process, there is no internationally unlawful act and the State of the aliens nationality
would not intervene to protect him. Id. 8.

an applicant State ha[s] not acted in good faith and that it ha[s] come to court with unclean
hands.21
III.

THE INVESTMENT TREATY CONTEXT

Where an investment treaty applies, a foreign investor can seek redress directly for

certain wrongs committed by the host-State. The substantive rights asserted by the investor are
most often based on international law as articulated by the applicable investment treaty itself.
Certain investment treaties require that only investments made in accordance with the
host-States law are covered by the treaty.22

This requirement, though narrower, is a

manifestation of the clean hands doctrine. Requiring an investment to be made in accordance

with the law of the host-State in order to receive the protection of the treaty is to preclude claims
made by an investor with unclean hands in relation to that investment.
In one ICSID case, Inceysa v. El Salvador, the tribunal found that, based on the language
of the BIT and its travaux prparatoires, the will of the parties to the BIT [between El Salvador
and Spain] was to exclude from the scope of application and protection of the Agreement
disputes originating from investments which were not made in accordance with the laws of the
host State.23 The tribunal expressly noted that the inclusion of the clause in accordance with
law in some investment treaties follows international public policies designed to sanction illegal
acts and their resulting effects.24

This suggests that the in accordance with the law

requirement contained in some investment treaties is merely an iteration of the clean hands
principle. In that case, the tribunal found that the claimant had fraudulently misrepresented itself
in a bidding process for government contracts. As a result, the tribunal found that it had no
jurisdiction because Inceysas investment did not meet the BITs requirement of legality. 25

21

Report of the International Law Commission, supra note 5 236.

22

See, e.g., the Germany-Philippines BIT, the Italy-Morocco BIT and the Canada-Argentina BIT. For a detailed
discussion on the requirement to accord with the law in the investment treaty context see Rahim Moloo and Alex
Khachaturian, The Compliance with the Law Requirement in International Investment Law, 34 Fordham J. Intl L.
(forthcoming, 2011).
23

Inceysa Vallisoletana, S.I. v. Republic of El Salvador, ICSID Case No. ARB/03/26, Award (2 Aug. 2006), 195
(English Translation).
24
25

Id. 247.

Inceysa, supra note 23 335. See also Fraport AG Frankfurt Airport Services Worldwide v. Philippines, ICSID
Case No. ARB/03/25, Award (16 Aug. 2007), where the tribunal found that it did not have jurisdiction because the

Separately, the Inceysa tribunal relied on the legal maxim nemo auditur propriam
turpitudinem allegans (no one is heard when alleging ones own wrong) in deciding the
claimants investment could not receive the protection of the BIT. The tribunal reasoned as
follows: No legal system based on rational grounds allows the party that committed a chain of
clearly illegal acts to benefit from them.26 This conclusion appears to be based on general
principles of international law, irrespective of the BITs requirement that an investment be made
in accordance with the law as a jurisdictional prerequisite.
What is more interesting is the decision of the tribunal in Plama v. Bulgaria, decided
under the Energy Charter Treaty (ECT).27 In that case, even though the ECT does not contain
an in accordance with the law clause, the claimants claims were deemed inadmissible because
they were not made in accordance with host-State and international law. The tribunal made the
factual finding that the claimant had misrepresented itself in obtaining the necessary approvals
from the Bulgarian Privatization Agency when purchasing shares in Nova Plama, a Bulgarian
entity.28 In determining the effect of the misrepresentation, the tribunal stated the following:
Unlike a number of Bilateral Investment Treaties, the ECT does
not contain a provision requiring the conformity of the Investment
with a particular law. This does not mean, however, that the
protections provided for by the ECT cover all kinds of
investments, including those contrary to domestic or international
law. . . .
In accordance with the introductory note to the ECT [t]he
fundamental aim of the Energy Charter Treaty is to strengthen the
rule of law on energy issues [. . .]. Consequently, the ECT should
be interpreted in a manner consistent with the aim of encouraging
respect for the rule of law. The Arbitral Tribunal concludes that
the substantive protections of the ECT cannot apply to investments
that are made contrary to law.29

claimants investment had not been made in accordance with Philippine law, as required by the German-Philippine
BIT.
26

Id. 244.

27

Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Award (27 Aug. 2008).

28

Id. 133.

29

Id. 138-139 (citations omitted).

The tribunal relied on the Inceysa decision, among others, in concluding that there exists a
general principle of law where nobody can benefit from his own wrong (nemo auditor
propriam turpitudinem allegans).30
Although the Plama tribunal did not refer to the clean hands doctrine in explicit terms, it
relied on the general principle contained in international law that a tribunal will not assist a
claimant who has engaged in unlawful conduct.31 The tribunals reliance on this principle, even
though the terms of the ECT did not explicitly incorporate it, suggests that the clean hands
doctrine is very much alive.32
Similarly, the tribunal in Phoenix Action, Ltd. v. The Czech Republic, referencing the
Plama award, confirmed that this conditionthe conformity of the establishment of the
investment with the national lawsis implicit even when not expressly stated in the relevant
BIT.33 In Phoenix Action however, the applicable BIT, between Israel and the Czech Republic,
expressly limited covered investments to those assets invested in accordance with the laws and
regulations of the host-State. In any event, in that case there was no question of the investments
compliance with host-State law.

The tribunal merely made its remarks on this subject in

determining the various elements that must be met in order for an investment to benefit from the
international protection of an ICSID tribunal.
In assessing the legal effect of a determination that an investment does not comply with
the laws of the host-State, the Phoenix Action tribunal stated as follows:
The core lesson is that the purpose of the international protection
through ICSID arbitration cannot be granted to investments that
are made contrary to law. The fact that an investment is in
30

Id. 141, 143. The tribunal also refered to the decision in World Duty Free v. Kenya. That case, however, arose
in a slightly different context as it was not based on an investment treaty, but on an investment contract. Though
transnational public policy would still apply, the applicable law governing the contract itself was English law, and
not international law.
31

Id. 142, 145.

32

See also Gustav F W Hamester GmbH & Co KG v. Republic of Ghana, ICSID Case No. ARB/07/24, Award (June
18, 2010) 123-24 (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; [] if its creation itself
constitutes a misuse of the system of international investment protection under the ICSID Convention[;] or if it is
made in violation of the host States law. . . . These are general principles that exist independently of specific
language to this effect in the Treaty.). For a detailed discussion of similar cases, see Moloo & Khachaturian, supra
note 22.
33

Phoenix Action, Ltd. v. The Czech Republic, ICSID Case No. ARB/06/5, Award (15 Apr. 2009).

violation of the laws of the host State can be manifest and will
therefore allow the tribunal to deny its jurisdiction. Or, the fact that
the investment is in violation of the laws of the host State can only
appear when dealing with the merits, whether it was not known
before that stage or whether the tribunal considered it best to be
analyzed a[t] the merits stage, like in the case of Plama. . . .
There is no doubt that the requirement of the conformity with law
is important in respect of the access to the substantive provisions
on the protection of the investor under the BIT. This access can be
denied through a decision on the merits. However, if it is manifest
that the investment has been performed in violation of the law, it is
in line with judicial economy not to assert jurisdiction.34
This reasoning overlooks a key difference between cases where the applicable BIT
explicitly requires that only investments made in accordance with the host-State law are covered,
and those where it does not. In the former case, the tribunal must assess, whether manifest or
not, whether the investment in question is legal as a jurisdictional prerequisite. This may require
an in-depth analysis of the alleged violations of host-State law during the jurisdictional phase.35
In cases such as this, it may be necessary for the tribunal to join the jurisdiction and liability
phases of the dispute so as to fully hear the evidence in making its jurisdictional determination;36
however, it does not allow the tribunal to find that it has jurisdiction without making a final
determination on whether the claimants investment is covered by the relevant investment treaty.
Tellingly, the tribunal in Inceysa, where the applicable BIT contained an in accordance
with the law clause, made its decision on jurisdictional grounds based on the scope of consent
expressed by the parties to the BIT, stating: because Inceysas investment was made in a
manner that was clearly illegal, it is not included within the scope of consent expressed by Spain
and the Republic of El Salvador in the BIT and, consequently, the disputes arising from it are not
subject to the jurisdiction of the Centre.37 This contrasts with the tribunal in Plama, which
found that it did have jurisdiction,38 but that claimants claims were nonetheless inadmissible
34

Id. 102, 104 (citations omitted).

35

See, e.g., Fraport, supra note 25 where the tribunal made a detailed assessment of the investments compliance
with host-State law in deciding to decline jurisdiction.
36

The Fraport tribunal heard the jurisdiction and liability issues together.

37

Inceysa, supra note 23 257.

38

Plama Consortium Ltd. v. Republic of Bulgaria, ICSID Case No. ARB/03/24, Decision on Jurisdiction (8 Feb.
2005).

under international law. According to Plama, where there is no jurisdictional requirement

contained in the applicable treaty that an investment be made in accordance with the law, the
consequence of bringing forth a claim that is premised on the claimants illegality is to render the
claim inadmissible. In that instance, the claimants illegality did not affect the scope of consent
contained in the ECT,39 but was an equitable defense to the claimants ability to bring claims
before the tribunal.
The Plama tribunals decision to render claimants claims inadmissible as a consequence
of claimants illegal acts, i.e. unclean hands, answers a question posited by Professor Dugard.
He asks, albeit in the inter-State context, whether the unclean hands doctrine may be raised as a
plea to inadmissibility.40 The Plama decision would suggest that the unclean hands of the
claimant (whether a State before the ICJ or an investor before an arbitral tribunal) may indeed
result in the inadmissibility of its claims.
IV.

CONCLUDING THOUGHTS
With the volume of investment treaty cases brought in the last decade, it is of no surprise

that the decisions of the tribunals in these cases are making important contributions to
international law.

Though the historical application of the clean hands doctrine has been

inconsistent, and as such, inconclusive, recent decisions in the investment arbitration context
suggest that the doctrine has a place in international law. Based on these recent decisions, where
a claimant has (itself) acted illegally in relation to the subject-matter of its claims, those claims
will be deemed inadmissible before an international tribunal.

39

See id. 229 (As the Arbitral Tribunal has already stated . . . the Respondent's allegation of misrepresentation by
the Claimant does not deprive the Tribunal of jurisdiction in this case. Nevertheless, these assertions by the
Respondent are serious charges which, the Tribunal will have to examine on the merits.).
40

Dugard, supra note 17 16.