The Utility of Futility: Local Remedies Rules in International Investment Law

By Zachary Mollengarden

The local remedies rule is a customary rule of international law that requires foreign petitioners to exhaust domestic remedies before seeking international dispute resolution. Futility is an equitable exception that excuses noncompliance on the grounds that adherence to local remedies rules would be “futile.” As an exception, futility is presumably applicable to a smaller share of disputes than enforcement of local remedies rules. In international investment law, this presumption is debatable, with investment tribunals frequently excusing noncompliance. This Note recovers futility’s first principles in order to argue that public and private international law have gone astray, and, that going forward, investment tribunals should favor a more stringent “obvious futility” standard. Empirically, “obvious futility” better aligns with the historical and logical foundations of the futility exception. Pragmatically, “obvious futility” responds to systemic critiques of international investment law by vindicating the ability of states to define their obligations to foreign investors. It underscores that futility is an exception, and state sovereignty remains the rule.

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