The present dissertation is concerned with the settlement of investment disputes between States, on the one hand, and private parties, on the other. Generally speaking, this is an area of investment practice that has prompted a broad range of legal issues, and a substantial number of approaches to tackle them. While in theory this issue is of importance for both the host State and the foreign investor, in practice it has more significance for the foreign investor. When a foreign investor enters the territory of a host country, that investor is usually inclined to seek protection in the form of specified treatment standards – such as most-favored-nation treatment, national treatment and fair and equitable treatment – as well as guarantees on matters such as compensation for expropriation and the right to transfer capital, profits and income from the host State. These rights are often embodied in particular provisions of bilateral investment treaties, or in regional or multilateral instruments on particular aspects of investment. It is evident, however, that treatment standards and guarantees are of limited significance unless they are subject to a dispute settlement system and, ultimately, to enforcement. Accordingly, the importance of dispute-settlement mechanisms for issues between a host State and an investor is readily discernible. Indeed, this is a point often made by both foreign investors and host countries. For the former, the security of foreign investment will turn not only on specified safeguards, but also on the assurance that these safeguards are available on a non-discriminatory and timely basis to all foreign investors. Conversely, the host country wishes to ensure that, in the event of a dispute with foreign investors, it will have the means to resolve the legal aspects of that dispute expeditiously and taking into account the concerns of the State, as well as those of foreign investors. The dissertation traces the evolution and rapid development of this important field of international arbitration, resulting from the formation of the International Center for the Settlement of Investment Disputes (ICSID) and the more than 2,000 bilateral investment treaties, most of which have originated in the last twenty years. This development has led to far greater certainty for foreign investors in dealing with their host countries and has incentivized growth in international trade and commerce. Through arbitration, investors who have been negatively affected by the acts of a host country, such as, for example, the expropriation of property, now have a fair means of redress. It is analyzed the rights of private parties under these treaties to arbitrate disputes with countries, the arbitration rules most commonly employed in investor-state disputes, the important elements of substantive law and procedure, the enforcement of awards (including annulment proceedings under ICSID), current developments, including conflict and convergence of interests in capital-importing and capital-exporting countries, restrictions on state sovereignty, analysis of recent investor-state arbitral jurisprudence. The main ingredients of the international legal system on investments are examined in detail, beginning with the domestic-based system of institutional guarantees of investment exporting countries and progressing through recent foreign investment laws; the recent growth in bilateral and multilateral investment treaties and their current and future developments are shown.
