Foreign Investment And The Settlement Of Investment Disputes

1119 words - 5 pages

Table of Contents

Introduction 2

1. The definition of foreign investment 3

2. Dispute settlement mechanisms of investment agreements 6

3. International Centre for Settlement of Investment Disputes 9

3.1. General provisions 9

3.2. Procedural rules under the Washington Convention 11

Jurisdiction 12

The procedure 14

The advantages of ICSID procedure 17

3.3. Important cases of ICSID arbitration 19

Occidental Petroleum Corporation v the Republic of Ecuador case 19

Phoenix Action Ltd. v. Czech Republic case 21

Vigotop Limited v Hungary case 23

3.4. The Role of Precedent in ICSID Arbitration 25

4. Multilateral Investment ...view middle of the document...

My thesis seeks to identify major features of international law on foreign investment and the relating dispute settlement methods.

The definition of foreign investment

Foreign investment is comprised of many bilateral investment agreements, regional agreements to promote economic integration and a number of free trade agreements and another source is the domestic law itself. The primary source of law that governs foreign investment is usually the domestic law of the state where the investment is made. The second source governing foreign investment is international investment contracts, which are direct contracts between a foreign investor and the host country’s government. The third source of law are the investment treaties between states governing promotion and protection of foreign investment. Investment treaties form in several way including, most commonly, bilateral investment treaties (hereinafter: BITs). There is a growing number of free trade agreements as well, which have similar provisions to BITs. These sources primarily aim at protecting the foreign investor in the host state. Thus foreign investors have certain protections against discrimination and the right to minimum guarantees amongst other things: fair and equitable treatment, fair and prompt compensation upon expropriation.
Foreign investment involves the transfer of tangible or intangible assets from one country to another for the purpose of their use in that country to generate wealth under the total or partial control of the owner of the assets.[1] Investment treaties adopt different techniques for defining an investment. Some contain exhaustive lists. Others contain illustrative lists. Investments are usually defined as broadly as possible. But, tribunals have not been guided to any significant extent by these lists as the problems that have arisen cannot be fitted neatly into categories mentioned in the treaties. Tribunals have, however, been able to identify some characteristics which could be considered in identifying the types of activity that would qualify as investments.[2] There is a continuum of international transactions starting with the international sales transaction, which obviously does not qualify as an investment,[3] and ending with the foreign investment transaction, which does. Even though on this spectrum there are many types of transactions. It is quite difficult to identify those characteristics which consider an investment transaction. Several arbitration awards have been concerned with the issue as to whether the transactions that gave rise to the disputes could be characterized as investments. All of them include definitions of foreign...

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