Trends in recent developments in international investment arbitration: substantive issues

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Author: Iliya Rachkov

DOI: 10.21128/2226-2059-2019-1-93-117

Keywords: foreign investments; foreign investors; host states; international investment law; recognition and enforcement of awards rendered by international investment arbitration tribunals and setting them aside; standards of treatment of foreign investors

Abstract

The particularity of international investment law is that it does not consist of uniform rules: there are neither substantive, nor procedural rules. Nor is there a single body for resolving investment disputes. The result is unpredictability in the application and interpretation of IIL provisions. Some clarity is created by the practice of international investment arbitration tribunals. This article analyses specific examples of such practice on the following ten aspects which arise in the course of considering international investment disputes on the merits: international minimum standard of treatment; denial of justice; standard of fair and equitable treatment; expropriation; full protection and security; umbrella clause; most favored nation treatment; setting aside arbitral awards rendered under ICSID Rules; and review of arbitral awards by national courts. Of course, this list is not exhaustive. In turn, some of these ten aspects are being considered from different angles. For instance, the standard of fair and equitable treatment comprises the concept of legitimate expectations of foreign investors. However, these legitimate expectations often collide with the public interest because the state bears the duty to maintain the welfare of the general public. This can be demonstrated by the following example: the state adopts certain healthcare measures, and as a result, the foreign investor may actually lose his investment. That is why it is important for the host state to know to what extent it can change its laws in order to avoid creating a basis for claims which foreign investors may bring against that state. Non-performance of contractual obligations by the state can also be qualified as violation of the fair and equitable treatment standard. As to expropriation, nowadays direct expropriation is a rather rare event. That is why the article deals with indirect expropriation. The latter has various aspects, for instance: interrelation with the right of the state to regulate (state powers doctrine); indirect expropriation of a discrete right or asset; the state’s failure to offer any compensation; and the state’s failure to follow due process principles as a criterion of unlawful expropriation.

About the author: Rachkov Ilia – Candidate of Sciences (Ph.D.) in Law, Associate Professor, Moscow State Institute (University) of International Relations, Moscow, Russia.

Citation: Rachkov I. (2019) Tendentsii razvitiya mezhdunarodnogo investitsionnogo arbitrazha: voprosy po sushchestvu sporov [Trends in recent developments in international investment arbitration: substantive issues]. Mezhdunarodnoe pravosudie, vol.9, no.1, pp.93–117. (In Russian).

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