Investor-State Arbitrations in ICSID
By Akin Alcitepe, Offit Kurman
Most foreign governments require disputes with parties with which they have agreements to be litigated in their courts using their domestic law. Under certain circumstances, however, a company doing business with a foreign government may be able to bring its claim to a neutral international arbitration forum through the use of a Bilateral Investment Treaty (BIT) or a Multilateral Investment Treaty (MIT).
BITs or MITs provide the investor with a right to “fair and equitable treatment”, meaning the host state will not engage in behaviour that discriminates against the investor. They also provide companies with protection from expropriation by the state without fair compensation. The rights granted in these treaties are district and separate from contractual rights. They are international law rights provided by the treaty. As such, the law that is applicable in these disputes is public international law, as opposed to the laws of any particular country. Treaty rights arise when there is some action or omission by the host state that adversely affects the rights of the private company. They cover acts not only of the central government but also local governments and state agencies.
The dispute clauses of the treaties often require a period of negotiation between the parties for amicable resolution of the dispute, after which the company can resort to arbitration. One effective mode of arbitration is the International Centre for Settlement of Investment Disputes (ICSID).
ICSID, is an arbitral institution that is part of, but also autonomous from the World Bank and located in Washington, DC. Over 150 countries have executed the ICSID Convention and its caseload has grown considerably in the last 25 years. And, due to its semi-public nature, the threat of ICSID arbitration can sometimes be used quite effectively against foreign governments as a tool for settlement. Once filed, an ICSID arbitration can be a lengthy process. That process, however, is generally well-run and often yields a fair outcome, given the expertise of most investment treaty arbitrators.
Akin AlcitepeOffit Kurman, Attorneys At Law, More than 10 offices throughout the USA
T: +1 410 209 6400
Offit Kurman, Attorneys At Law is a dynamic, full-service law firm. As trusted legal advisors, they help clients to maximise and protect their business value and individual wealth. They strive to maintain clients’ trust in every interaction, furthering their objectives and helping them to achieve their goals in an efficient manner.
Akin Alcitepe concentrates his practice on complex commercial, construction and treaty matters before international and domestic dispute-resolution tribunals such as the International Centre for Settlement of Investment Disputes (ICSID), ICC International Court of Arbitration and the American Arbitration Association, as well as US state and federal courts. He has had litigation successes on all three stages – local, national and international. Mr Alcitepe regularly handles high-profile, treaty, construction and commercial claims.
Published: Litigation & Dispute Resolution, No. 10, Spring 2019 l Photo: dizfoto1973 - stock.adobe.com