Exhaustion of Local Remedies in International Investment Law

By Martin Dietrich Brauch, Published by IISD, January 2017

The customary international law rule of exhaustion of local remedies (ELR) aims at safeguarding state sovereignty by requiring individuals to seek redress for any harm allegedly caused by a state within its domestic legal system before pursuing international proceedings against that state. Investment tribunals—ruling on their own jurisdiction—have generally dispensed with the rule, allowing foreign investors initiate a claim without prior recourse to the host state’s administrative or judicial courts. In recent years, several states have reintroduced a mandatory requirement to pursue or exhaust local remedies in their investment treaties, and other states are considering a similar path. This advisory bulletin, part of IISD’s Best Practices Series, reviews state-of-the-art approaches and policy options for ELR in international investment law, based on lessons learned from customary international law, international human rights law, and investment treaty practice and jurisprudence. Available in English and French at http://www.iisd.org/library/iisd-best-practices-series-exhaustion-local-remedies-international-investment-law.