From Odious Debt to Odious Investment: Rethinking Investor Accountability in International Law

Abstract The odious debt doctrine holds that sovereign debts incurred for illegitimate purposes, such as human rights abuses or the personal enrichment of rulers, should not bind successor governments. Although its legal status remains contested, the doctrine has been invoked in various cases where prior regimes misused borrowed funds. This article considers whether similar principles can be applied to foreign investment, particularly when investors support oppressive regimes or engage in harmful activities. It examines how arbitration tribunals have addressed investor misconduct and argues that the reasoning in several arbitral awards points to an emerging doctrine of “odious investment,” justifying the repudiation or limitation of investment treaty obligations with odious investors. Recognizing such a doctrine would provide a legal basis for states to challenge investor claims while also offering a new interpretive and discursive framework for shaping legal arguments and policy. By bridging the fields of sovereign debt and international investment law, the article calls for a systematic approach to investor accountability and the legal consequences of odious financing.