Top 4 Advantages of Investment Dispute Resolution

As many of us know, global flows of FDI investment have seen massive growth in the last few years. Due to this many multinational companies and overseas investment activities have become an essential part of the world’s economy and globalisation. 

In order to ensure an uninterrupted growth in this trend, a large network of investment treaties and customary international law obligations have come to the light. Some investment treaties and customary international law obligations provide extra protection to bring investment claims against a host state in the light of international law. 

investment dispute resolution

A foreign investor can leverage investment dispute resolution procedures to register a case against a host state in the case of a dispute. According to the ICSID, investors preferred the arbitration mechanism provided by the ICSID Arbitration Rules. The institute registered a total number of 66 cases in 2021 and 58 in 2020. This method is helpful for foreign investors to stay compliant with international treaties. Generally, the host state needs to agree to the investment dispute resolution procedures. 

Investment Dispute Resolution -Steps 

As we have told you about how the procedural request takes place for arbitration by an investor. Now, we will tell you what happens next in this form of international dispute resolution.

The next step is to nominate an arbitrator or arbitral tribunal. Typically, each party appoints one arbitrator and president of the arbitral tribunal.  In many cases, there will be different jurisdictional phases along with bifurcated proceedings. During the proceedings, the parties will exchange memorials, and make legal and factual representations of their cases. They will also exchange or disclose documents during a document disclosure phase. 

International commercial arbitration law

Afterwards, the tribunal will hold a hearing and close arguments at the evidential hearing. Furthermore, the tribunal will take everything into consideration at the stage of deliberation and issue its award. On average, ICSID proceedings typically take around 3.5 years to close the request of arbitration and pass the final award to the parties. Essentially, the tribunal takes around 14 months after the final hearing on the merits to issue their award.

Benefits of Investment Dispute Resolution 

1. Confidentiality - Investor-state arbitration is one of the preferred techniques of dispute resolution because they provide great transparency and confidentiality. Some of the major arbitral rules in investment treaties are laid to provide greater transparency in investor-state arbitration. Parties can anytime seek confidentiality with the help of an agreement between the host state and foreign state. Generally, the arbitration process takes place in private and an award is given in private too. Each party is free to choose whether they want to make the decision public or not.

2. Cost - Tribunals are free to decide how and who should pay the arbitrator's fees. Arbitration is the cost-friendly process of dispute resolution. However, according to ICSID, anyone can bear the cost of the arbitration. Some tribunals even say that the party that loses, should pay costs. In short, it is a fast process. It saves money because you do not need to pay the court fees.

3. Binding - Investment awards are binding, which means these cannot be appealed once given. However, there are some ways by which these awards are reviewed with the help of a special tribunal. 

4. Peaceful - When a case goes to court unlike arbitration, there will likely be fights and the process generates some amount of hostility. This sort of environment is not appreciated from the business point of view. Arbitration is the easy way to facilitate a cooperative environment without damaging the reputation of the parties.

Conclusion

When we compare commercial arbitration and investment arbitration, we will find that the difference lies in the legal framework in which different types of arbitrations work. International commercial arbitration law plays a vital role in investment arbitrations. Plus national laws also play an essential role in investment arbitrations. 

For the right representation under the different arbitration institutes, you need a bespoke arbitration firm. So, get in touch with the best services now!

Location: Sweden

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