Recourse to the ‘Futility Exception' within the ICSID System: Reflections on Recent Developments of the Local Remedies Rule

This article addresses the controversial issue of investors’ non-compliance with the eighteen- month litigation prerequisite often included in investment treaties. In particular, it focuses on two recent decisions which inaugurated a different approach to the domestic remedies rule. It primarily analyzes the traditional method used by ICSID tribunals to tackle the domestic reme- dies rule, by making reference to the applicability of the MFN clause to dispute resolution provi- sions. It therefore focuses on the different reasoning followed by the Abaclat and the Ambiente Ufficio tribunals, underlining the shortcomings connected to that reasoning. Specifically, it dem- onstrates that the analogy with diplomatic protection made by the latter tribunal is questionable. Finally, it analyzes the policy rationale common to both the traditional approach and the one used in the Abaclat and Ambiente Ufficio cases, which seems to be aimed at extending the jurisdic- tion of the Centre.