Investor-State Arbitration

The chapter provides a thorough overview of investor-state arbitration, used to resolve disputes between foreign investors and host States. It traces the system&s;s evolution from diplomatic protection to modern investor-state dispute settlement, particularly through bilateral investment treaties and international institutions like the International Centre for Settlement of Investment Disputes (ICSID), which administers the majority of cases. The chapter examines the entire process, from initiating proceedings via a request for arbitration to applying procedural rules, forming arbitral tribunals, selecting and setting ethical standards for arbitrators, and enforcing and reviewing arbitral awards. Typically, tribunals consist of three arbitrators, each party appointing one, with the presiding arbitrator chosen jointly. The chapter also addresses the applicable law in investor-state arbitration, encompassing international legal norms, investment treaties, and domestic law. It outlines review and enforcement mechanisms, such as ICSID annulment proceedings and set-aside actions in domestic courts. Finally, the chapter explores criticisms of investor-state arbitration, including concerns about inconsistency in decisions, high costs, lack of transparency, and potential threats to national sovereignty. The chapter underscores the rising significance of investor-state arbitration and the debate surrounding its advantages and drawbacks.