The Doctrinal Paradox & International Investment Law

A guest post by Adam Chilton

When multi-member courts have to decide cases that involve multiple connected issues, the outcome of the case can change based on how the court counts the votes. This well documented phenomenon is known as the Doctrinal Paradox. Although it’s possible to explain the paradox more formally, it can easily be explained with a simple example borrowed from the philosopher Philip Pettit.

Imagine that a three-judge panel has to decide liability in a torts case. To determine whether there is liability, imagine that the judges first have to decide whether the defendant caused the harm, and that they then have to decide whether the defendant had a duty of care. The judges’ votes on these two issues will then determine whether they think there is liability. Now imagine that the judges vote in the following way:

Issue 1:

Cause of Harm?

Issue 2:

Duty of Care?

Outcome:

Liable?

Judge A

Yes

Yes

Yes

Judge B

Yes

No

No

Judge C

No

Yes

No

Outcome

2-1

2-1

1-2

In this case, there are two votes in favor of each sub-issue, but only one judge that thinks the defendant should be found liable. If the court counts the votes issue by issue, the defendant would be liable (this is known as “issue-based voting”). If the court instead goes with the overall votes of the judges, the defendant would not be liable (this is known as “outcome-based voting”). In these scenarios, how the case is resolved is entirely dependent on which aggregation method the court uses to count the votes.

A few years ago, Dustin Tingley and I wrote a paper explaining that the conditions for the doctrinal paradox are increasingly present in international adjudication generally, and that this problem is likely to arise during international investment arbitration specifically. Although we were pretty confident that this was an issue that investment arbitrators would eventually have to resolve, we weren’t sure which aggregation rule would prevail.

Dustin and I were just notified that a doctrinal paradox has recently occurred in an international investment arbitration, and that our analysis was brought up in the proceedings. In Alapli Elektrik B.V. v. Republic of Turkey, the arbitrators had to decide whether they had jurisdiction to hear the case. The facts of the dispute are complicated, but essentially there were multiple arguments made by the defendant for why the panel did not have jurisdiction to resolve the case. One of the arbitrators disagreed with every one of the defendant’s jurisdiction arguments, and thus thought that the panel had jurisdiction. The other two arbitrators concluded that the panel did not have jurisdiction to hear the case, but they reached that conclusion for different reasons. Given this distribution of votes, issue-based voting would result in a finding that the panel had jurisdiction, but outcome-based voting would result in a finding against jurisdiction.

Alapli Elektrik B.V. v. Republic of Turkey demonstrates that the choice of aggregation rule can change the outcome of international adjudications.  Ultimately, the panel elected to go with outcome-based voting (a decision that was affirmed during an annulment proceeding), but this isn’t binding on all future international courts or even investment arbitrations. There are principled reasons for selecting either aggregation rule, and it might be worth the time of scholars to debate which method is most appropriate for international adjudications. If you want to learn more, our paper is on SSRN and the annulment decision is publicly available here.