Investor-State Arbitration: Exploring Conteporary Issues and Remedy

Ali Qtaishat



In recent years there has been rapid expansion of investments by foreign investors in countries around the world. For addressing the investment-related disputes, the Investor-State Arbitration (ISA) has been frequently resorted to by the parties.  Arbitration is thus the preferred and widely used ADR mechanism in the sphere of commercial disputes between foreign investor and host state. However, of late there has been increasing criticism of ISA coming from the disputants (parties) and various stakeholders. These criticisms have mainly to do with the over delays, costs, unsatisfactory results, loss of harmony-which many a time follow with arbitration. Arbitration in this sense has become comparable with litigation. Foreign investors may find it hard to continue with their business in the host state if the dispute resolution remains slow, tardy, costly and foremost unsatisfactory. Further, host state also risks losing key investments to the detriment of its national economy.

Not to speak of delays, costs and other attendant problems, the major challenge to ISA remains the political issues which many times  rights-based arbitral  process might generate. That is to say, if the arbitral award is against the host state’s national interest, the same might create contentious issues, thus challenging the entire mechanism of ISA.

In the light of the above, the present paper will first discuss the current global trend of ISA and will highlight the problems associated with it. It will then explore the ways and means of strengthening the ISA mechanism in addressing the investor-state disputes. Thus it will primarily offer analysis of the critical aspects of ISA. To this end it will discuss the ‘other’ consensual forms of dispute resolution like mediation, conciliation and negotiation and how they can effectively help in dispute prevention and management. In this way, it is supposed, the present paper will analyse critically the growing discussion surrounding the utility of Investor-State Arbitration as currently happening at the global level.

Keywords: Arbitration, Investment, Investor-State Arbitration, Alternative Dispute Resolution

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ISSN (Paper)2224-3240 ISSN (Online)2224-3259

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