Dispute Settlement in Bilateral Investment Treaties

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DISPUTE SETTLEMENT IN BILATERAL INVESTMENT TREATIES PUBLIC INTERNATIONAL LAW   Dispute Settlement In Bilateral Investment Treaties Introduction Foreign Investment plays an important role in economic development. Mostly developing countries want to encourage foreign investment. When foreign investor invests in a host country, he faces many risks some of which include: Unlawful expropriation of investment, currency transfer restrictions in host country, host nation treating national investor more favourably than the international investor. Such problems could affect the international investment relations. To resolve such conflicts there needs to be an international investment law. Since such a law is still in its development, Bilateral Investment Treaties serve as a source of International Investment Law. The Bilateral Investment Treaty (BIT) is a useful tool in creating a friendly environment for companies seeking to invest or do business in foreign countries. Since the late 1980s, BITs have come to be universally accepted instruments for the promotion and legal protection of foreign investments. The treaties, which aim to encourage foreign investment, provide investors with rights against states and state authorities that damage investment projects by, for example, breaking agreements, applying discriminatory regulations, revoking essential licenses or confiscating property. A BIT exists between two states and establishes a legal framework for the treatment of investment flows between the two nations. The parties to a claim under such a treaty are an investor of one state party (known as the investor's home state) and the state where the particular investment was made. In the present article I will make an attempt to identify and interpret the aim and impact of BIT on international investment law, the procedural issues arising in such disputes and specifically focusing on dispute settlement in Indian BITs Origin and Aim of BIT As a major source of international investment law, bilateral investment provides a safe and neutral foreign investment.[1] other words, they address the security risks mentioned earlier. Most bilateral There is a standard mode, contains definitions for the terms of investors, investment, expropriation clause, and investment promotion and protection of investments and investment settlement disputes.[2] treatment are mutually transferred. Bits can be regarded as the Friendship Commerce and Navigation (FCN) Treaty successor. In particular, the United States signed FCNs and many European countries, such as France, Italy and Latin American countries to protect and promote legal trade relations and security of international legal standards for each other.[3] under those treaties. However, they did not include the issue of investment. Therefore, the European countries began to enter into bilateral and developing countries. The first modern BIT is signed between Germany and Pakistan in 1959.[4] Bilateral longer just export of capital and capital input reached between the country; a growing number of bilateral agreement between developing countries themselves. Bilateral investment treaties of international investment relations play an increasingly important role in all over the world, including South-South cooperation. Rapid increase in the 1990s saw the number of bits, and at the end of the decade, the universe of these treaties seem markedly different. Number of treaties quadrupled, rising from 385 in the late 1980s to 1857, in the late 1990s. The end of 1999, out of the total 1,857 bits, 40 percent is developed and developing countries (and at the end of 1989 was 68%) among developing countries (compared with 10% in the end of 1989) 26 %, and the Central Eastern European countries between developing countries and developed countries in Central and Eastern European countries (compared to 13% at the end of 1989) of 15% and 6% (at the end of 1989 to 6%) 14 % Eastern European countries (no at the end of 1989)[5] currently only a few (11) developed bilateral investment relations between developed countries under the auspices of the reasons by some word processing by the OECD, which is all countries belong.[6] The basic elements of bilateral investment treaties, including its objectives, format and broad basic principles have not changed much over the years. Its main provisions typically deal with the scope and definition of foreign investment (in most cases, including tangible and intangible assets, direct and portfolio investments, and existing and new investments); admission of investments; national and most-favored-nation treatment; fair and equitable treatment; guarantees and compensation for expropriation and compensation related to war and civil strife; guarantee funds, free transfer of capital and profit repatriation; subrogation of insurance claims; provisions and dispute settlement mechanisms, both national and State and investors in the country. In addition, some bilateral including transparency of relevant national laws and regulations; performance requirements; entry and residence of foreigners; general exceptions; people entering and establishing and extending national and MFN investments. Within these broad themes, on the specific content of BIT provisions vary widely, even By signing bilateral same country, reflecting the different approaches, as well as between the bargaining position. Over the years, with the development of the practice in some of the provisions of bilateral already tend to be more detailed. Modern bilateral retain a broad uniformity requirement. Almost all of the bilateral investment treaty covers four substantive areas: admission, treatment, collection and resolve disputes. The relevant provisions of the dispute between the parties, one of the investors and have treated other nationalities, most bits provide investment-related dispute between the United States and other countries nationals (ICSID Convention) settlement of international arbitration provisions of the Convention entered into force in 1966 Effect of bilateral international investment law The subject matter of improving bilateral international investment law and the protection of international law in two ways- shareholders.[7] International law does not recognize private corporate entities and international themes, but bit to change that. Through bilateral private companies and investors can sue the host country. Therefore, these bits as an important investor-State dispute settlement provisions. Bit has played an important role in regional and multilateral negotiations source treaty. For example, the impact of the World Bank Group's bilateral guidelines for the treatment of foreign direct investment, by September 1992 by the World Bank Development Committee and the Joint Ministerial IMF.[8] additional embodiments, the North American Free Trade Agreement (Chapter 11) provides Similar provisions line with most bilateral Conflicts of jurisdiction As investors worried about the dispute settlement mechanism of the potential risks of international investment agreements lead to an international dispute settlement mechanism, under the instigation of investors, despite the possibility of the existence of an investment contract between the investor and the host country's "internal forum" clause. Such a clause may be specified for breach of contract dispute investment, the two sides should be based on domestic dispute settlement mechanism to resolve. Among them, the breach of such a contract is the problem, some recent ICSID tribunal held its requirements - based on "internal forum" clause - the pursuit of liquidated damages domestic dispute settlement procedures, does not preclude the use of a -State investors IIA dispute settlement mechanism. This is so, even if the alleged breach of contract is the central part of the host defense to establish a violation of investment protection obligations treaty.[9] Reasons behind these cases is that the "national forum" clause relates to breach of contract only and investors with claims related to the violation of the treaty country itself as an independent international legal obligations. Therefore, such a provision should not stand in violation of international obligations of legal claims in the international arena. This can be seen as a potential drawback to the host country, because it might be removed from the right that seems to be the domestic forum, its first pure contract disputes. On the other hand, the same specious to argue that the purpose of protecting effect if the "national forum" clause prohibiting any action to host international challenges, IIA will be in and, to a considerable disadvantage of investors. It is this possibility has prompted the recent ICSID tribunal to assume the position of the actual scope of the above such provisions. An important issue in this case relates to a so-called umbrella clause. IIA obligation to respect the terms of the contract or any other form of investment, investment agreements and commitments or obligations between the host country. The effect of this provision is a violation of applicable investment contract constitutes a breach of the IIA. However, in the case of these provisions, the law is not uniform, has caused some uncertainty, the exact scope of these provisions. On the other hand, the umbrella terms arise out of some historical precedent for people to define their goals and purpose is to protect itself extends to disputes in the determination of the alleged breach of the IIA Host investment contracts (Sinclair, 2004). Thus, by the International Court of Arbitration of this explanation seems umbrella clause with its main goal is the same. In a recent decision, the Court has generally followed widespread impact umbrella treaty approach. However, in April 2005 decision (company Impregilo SpA v. Islamic Republic of Pakistan),[10] the court to limit its treaty jurisdiction involving the State itself, rather than the state-owned entity debt contract claim. In a recent case, the Union Groupement LESI - DIPENTA V Algeria,[11] the court emphasized that the former treaty-based court, the contract must also constitute a violation of the treaty claims standard itself. In the absence of clear rules, umbrellas, breach of the host country can be used as the basis of another investor claims. Such claims are usually not directly processed by the investor - state arbitration. On the contrary, one for a potential breach of the facts and the result has been met in terms of research and in BIT "standard" obligations. Accordingly, breach of contract issue has been raised as part of the background of the general levy, national treatment and fair and equitable treatment claims. Also involved in the so-called fork in the road use regulations may occur in international investment agreements. These "select the forum" clause requiring foreign investors to choose whether it is time to resolve a dispute forum domestic or international disputes. These provisions are specifically designed to prevent a set of facts multiple forums. However, the fork in the road driving requirement may not rule out the risk of shareholder initiated BIT arbitration to protect its rights, and investment (ie subsidiaries) launched a family dispute, in order to protect its contractual or other legal rights, including those arising from the IIA . In the face of such facts, several arbitration award has explained, "fork in the road with" provisions will result in loss of access to international arbitration only in domestic courts or administrative tribunals of the dispute, the parties are the same international disputes and litigation parties. In reaching this conclusion the ICSID tribunal may be a little to the fact that foreign investors may not be able to avoid being involved in a local program on investment. The host country may need to take defensive approach investors domestic law, such as the proposed regulatory administrative appeal against the ruling, or legal action to challenge the decision in a very short time where to start. In this case, it may be difficult for investors act as a "free" select the forum is denied the possibility of violations of international level on the part of the host country in the IIA are obliged to take any action. In doing so much to protect the value of the relevant agreement. In fact, the results of domestic processes themselves may cause under IIA may further claims. By way of a literal and absolute investors obviously select the forum may be unfair. Therefore, the "fork" only under the terms of the international program at issue domestic proceedings, the parties agree that the situation fully, it seems to exclude the objectives of protection consistent with international investment agreements. Bilateral dispute settlement in India India has signed a 26-bit with the developed and developing countries in the world. These treaties in India's economic growth has been very helpful. India has not yet signed the Convention ICSID, thus still holding the discretion of the dispute settlement provisions of the forum in its treaties. However, due to the ICSID Convention, a treaty was signed on the other hand, referring to ICSID arbitration are also given in many alternative treaty. However, at this point, it should be clear that India did not accept the advantages of ICSID arbitration treaty to overcome their debt provides more weight to an impromptu court. Most treaties famed similar manner requires a small change, as required by the terms of a party, but the basic feature of all the treaties consistent definition and content in respect of treaties. Also in accordance with the dispute resolution provisions of all treaties common mode. Dispute settlement has been divided into two items, namely:
  • settlement of disputes between investors and the State party.
  • dispute between the Parties.
Initial efforts friendly consultations and negotiations, the first assertion failures, which can be hard to take up more than one program. Provisions to give some alternatives to resolve the dispute. Controversy (a) between investors and States Parties Investors are given an option to close the local court of the Parties, which may be Indian or foreign court, or investors may be close to the mediation of the United Nations Commission on International Trade Law Mediation Rules (UNCITRAL). In addition, if the parties do not agree to any of the conciliation procedure, or in the case they fail, the parties may continue the proceedings. These programs can be started only in the ICSID ICSID Convention, as in one of the countries, and they all agreed. This provision seems to be of no use because India is not a party, the Convention ICSID, so this option can not be exercised. In addition, the two sides can to comply with the UNCITRAL Arbitration Rules of the ad hoc tribunals. In addition, the structure and process of the court such articles are also described. Finally, the provisions of this decision have been considered final, unless the case is rejected, or one of the parties in the area, but failed to fulfill its obligations, to reject any form of appeal procedures. (B) the dispute between the Parties It refers to the possible interpretation of these treaties controversy. The explicit reference to the provisions of the dispute to the arbitration tribunal 3. Each member nominated by the parties and third nominate two members from third countries. He will be chairman of this arbitral tribunal. In this case the formation is impossible ICJ help find provisions. This court's decision, binding on both parties stand. Therefore, India's bilateral do not give a complicated process, but given the alternatives to resolve the dispute, it is for the parties to choose a single meaningful conclusions. Conclusion Bilateral and multilateral investment treaties have changed the way the global economy. Economic development of the border, resulting in a more or less removed to give members more areas to develop their potential. These treaties careful handling and investor protection are also concentrated in the amicable settlement of disputes. The developed countries of the world has gone through a common judicial proceedings under the ICSID Convention, due to disputes regarding these documents, to provide customers with the development of equal treatment. It helps a lot to protect investors and reduce the overall burden of dispute resolution at the same time. India is also moving in this development step, and has a good number of other countries in the treaty. One can argue that not signing ICSID Convention is a disadvantage in India, because most countries do not support a non-signatory, but at the same time, it is necessary to bear in mind that India is a developing country, a common dispute resolution Forum may not maintain the perspective of the same thing, and the case decision. Thus, according to me is better, India retains its discretion in the choice of forum for dispute resolution.
[1] Vandevelde J. Kenneth, Investment Liberalisation and Economic Development: The role of Bilateral Investment Treaties, Colombia Journal of Transnational Law, 1998, 507-514 [2] S. Jose Luis, Bilateral Treaties on the Reciprocal Protection of Foreign Investment, California Western International Law Journal, Spring 1994, p. 257 [3] Vandevelde J. Kenneth, The BIT Program: A Fifteen Year Appraisal, the Development, and Expansion of Bilateral Investment Treaties. American Society of International Law, 1992, p. 533 [4] Lauterpacht Elihu, International Law and Private Foreign Investment, Indiana Journal of Global Legal Studies, Spring 1997, p. 266 [5] United Nations Conference on Trade and Development, World Investment Report 2000 [6] United Nations Conference on Trade and Development, Bilateral Investment Treaties 1959-1999 at iii, U.N. Doc. UNCTAD/1TE/IIA/2 [7] Kishoiyian Bernard, The Utility of Bilateral Investment Treaties in the Formulation of Customary International Law, Northwestern Journal of International Law and Business, Winter 1994, p. 350 [8] Ibid [9] Alex Genin, Eastern Credit Limited v. Republic of Estonia, ICSID Case No. ARB/99/2, Award, 25 June 2001 (United States/Estonia BIT);; Compañiá de Aguas del Aconquija & Compagnie Générale des Eaux v. Argentine Republic, ICSID Case No. ARB/97/3, Award, 21 November 2000 (France/Argentina BIT); Annulment Tribunal: Compañiá de Aguas del Aconquija & Vivendi Universal (formerly Compagnie Générale des Eaux) v. Argentine Republic, ICSID Case No. ARB/97/3, Decision on Annulment, 3 July 2002 (France/Argentina BIT); Salini Construtorri S.p.A. and Italstrade S.p.A. v. Morocco, ICSID Case No. ARB/00/4, Decision on Jurisdiction, 23 July 2001 (Italy/Morocco BIT) [10] Decision in the jurisdiction, April 22, 2005 (ICSID Case No.: ARB / 02/2). [11] Decision on jurisdiction, August 10, 2005 (ICSID Case No.: ARB / 03/8)
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