Paradigm Shift: Investor Due Diligence and Third-Party Illegality

Abstract Tribunals are holding investors accountable for third-party illegality through the evolving principle of investor due diligence. This development is evident in key cases such as Anderson v Costa Rica, Minotte v Poland, Churchill Mining v Indonesia, Bank Melli Iran v Bahrain, and Worley International Services v Ecuador. This article examines the evolution of investor responsibility by identifying deficiencies in due diligence, assessing liability for third-party illegality, and analyzing consequences based on the seriousness and connexity of the wrongdoing to investment claims. It proposes a structured framework within the broader shift toward a proportional, merits-based approach to illegality in international arbitration, carrying significant implications for stakeholders.