10 Good Faith as a Defence on the Merits

Subject(s):

Good faith — General principles of international law — Counterclaims

This chapter focuses on the use of the principle of good faith in defences on the merits of investment disputes. It first explains how the principle of good faith moderates the practice of international investment law before discussing its relationship with applicable defences in investment law. In particular, it examines the use of good faith to legitimise defences based on economic crises, human rights, and environmental concerns. It then considers the opening for state counterclaims and the defences to investment claims that are often derived from other areas of public international law. Examples of these defences are Clean Hands and estoppel. The chapter also analyses the application of abuse of right in international law as a means of a threshold for good faith and concludes with some reflections on the future relevance of good faith for states’ positions with respect to defences.