Investor – State Dispute Under International Investment Law

International Investment policy-making forth attempts to draw in Foreign Direct Investment and benefit from it continue to escalate and International Investment Agreements (IIA) continue to proliferate at the bilateral, sub-regional, global and interregional rates. The IIAs universe consists of more than 2,400 Bilateral Investment treaties (BITs), more than 2,600 treaties on double taxation (DTTs), various Preferential free trade and investment agreements (PTIAs), regional economic integration agreements, and other multilateral agreements involving foreign investment.

Within IIAs, explicit techniques have been set up for the settlement of disputes between private parties and the host nation emerging from the venture. Many BITs, s well as some regional agreements and other instruments, including provisions for dispute resolution between investor and state. In IIAs, the standard solution to investor-state disputes is to clarify that the parties to a dispute will pursue an amicable resolution agreed. In cases where friendly negotiations do not resolve a dispute, international arbitration is usually the next step- either as hoc or an institutional basis. The existence of effective dispute resolution procedures adds to the making of a positive venture atmosphere in the host nation. International investors wish to guarantee that, in case of a dispute with the host nation, they will have the means to settle the legal aspects of the dispute expeditiously.[1]

Investor-state Dispute Settlement

It is a framework through which financial specialists can sue nations for biased practices. It is a public foreign law instrument which comprises a variety of bilateral investment arrangements in some international trade agreements. ISDS is likewise found in global venture understandings, for example, Energy Charter Treaty. On the off chance that a financial specialist from one nation (the “home state”) puts resources into another nation (the “have stated”), the two of which have consented to ISDS, and the host state abuses the rights allowed to the speculator under the bargain, at that point that financial specialist may bring the issue before an arbitral court.

Investment disputes can be initiated by partnerships and common people and in practically all cases, investment tribunals are made out of three judges. As in most of the arbitrations, one is designated by the financial specialist, one by the state, and the third is normally picked by an understanding between the parties or their delegated referees or chose by selecting authority, contingent upon the procedural guideline appropriate to the dispute. In the event that the parties don’t concur who to choose, this force is doled out to official authorities generally at the World Bank, the International Bureau of the Permanent Court of Arbitration, or a private office of trade. Under an investment treaty, certain persons cannot lodge a claim against a State. Additionally, under an investment treaty, no person or state can launch a claim against a foreign investor. This has led to criticism that it favours the “haves” over the “have not” by giving access to a special tribute to foreign investors, especially major companies, access to a unique council outside any court. While the assertion procedure itself doesn’t give unequivocally advantaged access to bigger financial specialists over people or SMEs, the expenses of ISDS, as in any court or intervention framework, will, in general, be off-putting for smaller claimants.

Going at last to contest settlement, speculation arrangement intervention fills in as a system to actualize the standard of legal norms set down in speculation bargains. Besides, speculation arrangement intervention can be comprehended as a type of access to equity, as a nonpartisan, autonomous and unbiased question settlement instrument that has the capacity to control government activity. In that regard, venture settlement assertion accepts the job that is generally satisfied by courts practising legal audit at the local level. To be sure this privilege is regularly sponsored by an established right to legal audit to government leaders, which itself is a part of the standard of law.  [2]


S.D. Myers v. Canada

Somewhere in the range of 1995 and 1997, the Canadian government prohibited the fare of harmful PCB squander, so as to follow its commitments under the Basel Convention, of which the United States isn’t a party. Squander treatment organization S.D. Myers at that point sued the Canadian Government under NAFTA Chapter 11 for $20 million in damages. The case was maintained by a NAFTA tribunal in the year 2000.[3]

Philip Morris v. Uruguay

Started on 19th February 2010, when multinational tobacco organization Philip Morris International documented an objection against Uruguay looking for $25 million in damages. The organization griped that Uruguay’s enemy of smoking enactment degraded its cigarette trademarks and interests in the nation and put together its claim with respect to the two-sided speculation settlement among Switzerland and Uruguay. The International Center for Settlement of Investment Disputes (ICSID), a piece of the World Bank chose it to locale on 2nd July 2013, and after three years decided for Uruguay, requesting Philip Morris to pay Uruguay $7 million, in addition to all court costs.[4]






This article is authored by Vanshika Rana, First-Year, BBA. LL.B student at Symbiosis Law School, NOIDA

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