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Navigating the Intersection of International Investment Arbitration and Public International Law

Navigating the Intersection of International Investment Arbitration and Public International Law

Investment arbitration combines tactics from American-style litigation with the cool, collected approach often seen before international courts, creating what can be viewed as a clash of cultures. Private business arbitration is frequently layered with public international law, and all arbitration is consent-based. A state may agree to arbitrate an investment dispute if a foreign investor signs a contract with the state, if the state passes investment laws, or if the state and the investor's home state sign an investment treaty. Under the Convention for Settlement of Investment Disputes framework between States and Nationals of Other States (ICSID Convention), investment arbitrations take place, whether based on contracts or treaties. While an agreement to arbitrate a specific case must be obtained elsewhere, the Convention provides a neutral venue for resolving investment disputes. The UNCITRAL Arbitration Rules, the Stockholm Chamber of Commerce Rules, and the London Court of International Arbitration Rules are among the arbitral rules that are commonly used in investment disputes. Even contract-based investment disputes gain a public international law component when arbitrated under the ICSID Convention. The commercial arbitration practice serves as the foundation for all procedural norms, and arbitrators are chosen on an as-needed basis to resolve specific disputes.

There haven't always been happy endings when public international law and international business arbitration are combined. In investment treaty disputes, states frequently raise jurisdictional concerns, which prolongs and complicates the arbitration process. This frequently entails developing norms of public international law about the nationality of the claimant and an investment arbitration-specific procedural framework. Commercial arbitration has contested the secrecy requirements of the procedures under which investment disputes are often heard. Since the World Bank launched the ICID-Convention in 1965 and the first bilateral investment treaties (BITs) were signed in 1959, investment arbitration has grown to be a popular method of resolving disputes internationally. Many arbitrators now practice both investment and commercial arbitration, which has an impact on the field of arbitration. Because disputes frequently include contracts between firms formed by foreign investors and state enterprises, it can be challenging or misleading to distinguish between commercial and investment arbitration. The political system, the national and international environments, and the professional backgrounds of the parties engaged all have an impact on the legal framework and administration of international arbitration.

The common law and continental European civil law systems are the main arbitration practices used today. Counsel and arbitral tribunals uphold the historic elements of both systems at the national level. Nonetheless, common law and civil law are becoming more similar on a global scale, with investment arbitration being more impacted by these distinctions. Disparities in legal culture are especially important in commercial arbitration since most institutional arbitration rules require tribunals to take pertinent trade usages into account. The various responsibilities that state institutions and governments play in various states account for a large portion of the legal culture variations in investment arbitration. Predictions are speculative because of the fast expansion of investment and commercial arbitration in recent years. Many nations still have opportunities for improvement in their domestic arbitration systems, particularly those that have grown to be significant actors in world commerce. It is more challenging to adapt national judicial systems to handle contemporary arbitration and the New York Convention. The expansion of global investments is predicted to drive development in investment arbitration, which might result in a wider range of arbitration organizations and rules. As investment arbitration develops and changes, there will be a lot of activity in both areas for law firms and arbitrators.

  • Investment arbitration merges elements of American-style litigation with international court practices, creating a cultural clash.
  • States often contest jurisdictional issues in investment treaty disputes, complicating and prolonging the arbitration process.
  • Legal culture disparities, evolving arbitration practices, and increasing global investments shape the landscape of investment arbitration.

BY : Vaishnavi Rastogi

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