Most people are familiar with the idea of arbitration in the context of contract disputes. However, investors are increasingly turning to arbitration as a way to resolve investment-related disputes using international arbitration laws. Investor-state dispute settlement (ISDS) mechanisms to receive compensation when governments fail to uphold their side of the deal. This guide will introduce you to the basics of international investment arbitration and its relation to ISDS. So you can make an informed decision on whether or not this legal mechanism could be helpful in your own investment ventures.
What is Investment Arbitration?
Investment arbitration is a form of dispute resolution in which private individuals or companies resolve their disputes with the help of an arbitrator. There are two types of investment arbitration, Investor-State, and Arbitration Dispute Resolution. The former is when one country's investor accuses another government of breaching the provisions of a bilateral investment treaty. The latter is when investors from different countries agree to have their dispute resolved by an arbitrator instead of through court proceedings.
Why is it Important?
Investment arbitration is a means of resolving disputes between two parties where one of the two parties has invested in a project, and the other party has failed to live up to their side of the bargain. Arbitration dispute resolution may be needed if contractual disputes or disagreements over an agreement occur. Investors who feel that they have been mistreated will want to explore what options exist for them. The first step would be to try and resolve the issue privately with the company before taking legal action. If this is not possible, then investors should consider going through international investment arbitration as it offers impartiality and due process which can result in quick decisions that are enforceable across all jurisdictions.
How Does it Work?
Investment arbitration, also known as international arbitration, is a dispute resolution process in international disputes involving foreign investments. Before making a decision, the arbitrator hears both sides of the argument.
Arbitration dispute resolution occurs when one party files a complaint against another for an alleged violation of the arbitration clause in their contract. This type of arbitration typically takes place between companies with an established business relationship who can negotiate the terms of their contract together before it is signed.
Who Can Bring an Investment Arbitration Case?
Investors or their representatives can only bring investment arbitration cases. Investors may be individuals or companies, including those involved in a joint venture. Representatives must have the authority to represent the investor and must show that they have power of attorney from the investor to bring an investment dispute resolution case on their behalf of them. For example, suppose the investor is a company, and its directors give one person power of attorney over investment disputes. In that case, that person could bring investment dispute resolution proceedings on behalf of the company. Alternatively, if two people are appointed as directors with such power, and then one resigns, then they would still both be able to bring investment disputes.
What are the Benefits of Investment Arbitration?
Investment arbitration is a form of dispute resolution that serves as an alternative to traditional litigation. Investors or international traders can use it to resolve disputes. Investment arbitrators are independent and impartial third-party experts who take on the role of mediator or judge. Here are five benefits of this type of dispute resolution:
1) It is fast
2) It is flexible
3) It offers anonymity
4) It reduces transaction costs, and
5) It has built-in safeguards against corruption.
Conclusion
If you're a business owner and you've found yourself in an investment dispute, the best thing to do is to take your time and research different investment dispute resolution methods. You'll be glad that you did when it comes time to make the decision.
