This chapter addresses the application of the host state’s domestic laws and international norms to the determination of the merits and remedy of counterclaims, as well as the consequences of such an application. It starts by examining certain controversies over the application of domestic law in investment arbitration to conclude that none of them constitutes an obstacle to its application for the determination of counterclaims. It proceeds to examine counterclaims based on the investor’s international responsibility. After concluding that the difficulty of identifying ‘secondary rules’ that determine the consequences of the investors’ asserted breach of international law can be an obstacle to such counterclaims, it examines the potential of the domestic law as a provider of a remedy for corporations’ breach of international obligations. The chapter then examines the potential role of CSR commitments as a ground for counterclaims by discussing the possibility that the investor’s breach of the former may give rise to legal responsibility under domestic law (e.g. civil tort law), thereby providing grounds for a counterclaim.