Constitutionalism and local remedies rule as limitations on investor-state arbitration: perspectives from Ghana

Abstract

ABSTRACT The question of the legal and normative limitations on the competence of states to agree to a mechanism that enables foreign investors to bypass the jurisdiction of municipal courts, using legal rules that do not apply in municipal law, and thereby enabling arbitral tribunals to override municipal courts (the jurisdiction of which is original, appellate and final) has not been explored in the literature. I address this question with particular reference to Ghana. I dispute the conventional supposition that municipal courts are incapable of resolving investor-state disputes and question the justification for direct access to investor-state arbitration in customary international law. I argue that the local remedies rule and fundamental principles of Ghana’s legal system—in which the courts have jurisdiction over all legal disputes and persons, and in which separation of powers, rule of law, transparency and accountability are constitutionally entrenched—limit the state’s competence to agree to investor-arbitration.