International Business Law - Essay Example

? International Business Law ICSID So as to eliminate unnecessary investment disputes and to promote industrial growth, the International Center for Settlement of Investment Disputes (ICSID), a Washington based institution was established in 1966 by the Convention on the Settlement of Investment Disputes between States and Nationals of Other States (ICSID, 2011). 157 countries signed the ICSID convention by May 2011. The ICSID has an administrative Council and a Secretariat; the Administrative Council is chaired by the World Bank’s President (World Bank, 2003). This institution mainly functions for the conciliation and arbitration relating to investment disputes between member nations and other individual investors. Over the last decade, the caseload of the ICSID notably increased mainly as a result of an increase in foreign investment practices. Among the 263 registered cases at ICSID as on 30th March 2007, the Argentine government involved in more than 30 cases as an effect of Argentina’s economic crisis (“Orinton Lawfirm”). ICSID provisions for Boris From the given case context, it is clear that Nonatian government does not give much emphasis on the protection of investor interests. However, Nonatia and Russia (home country of Boris) are signatories to the ICSID. Hence, Boris will be protected by the ICSID provisions even though the Nonatian government does not try to safeguard his financial interests. The ICSID mainly provides conciliation and arbitration facilities to contracting states and nationals of other contracting states in order to resolve investment disputes. Conciliation According to ICSID provisions, Boris may submit a request in writing to the Secretary-General to institute conciliation proceedings if he is not satisfied with the dealing of Nonatian government in future. While requesting for conciliation, Boris has to clearly address detailed information concerning the dispute. The Secretary-General (as cited in Davidson Ciambella) will register the request unless he finds the dispute is outside the jurisdiction of the Center (331-332). As per the provision of Article 29, a Conciliation Commission is constituted immediately after the registration of the conciliation request. The Commission may contain a conciliator or sometimes any uneven numbers of conciliators according to the mutual agreement of both the parties. During the course of conciliation proceedings, the Commission clarifies the causes of disputes between parties with intent to suggest mutually acceptable solutions immediately. At various phases of the proceedings (as cited in Rayfuse,), the Commission may recommend terms of settlement to the parties (ICSID Reports). Under this practice, both the parties will cooperate in good faith with intent to assist the Commission to carry out its functions smoothly and flawlessly (“Australian government”). Hence, Boris can ensure maximum cooperation of the Nonatian government on the strength of ICSID provisions because both of them (Nonatian government and Boris) need to give most serious considerations to the Commission’s recommendations. The effective intervention of the ICSID would probably force the Nonatian government to focus more on the needs of Boris; and in fact, this situation assists Boris to take maximum advantages of his investment in Nonatia. It would be an effective method for Boris on the ground of cost and time as it involves simple legal proceedings. However, it seems that conciliation proceedings of ICSID are not much effective for resolving complex disputes, and hence it is recommendable for Boris to seek the help of other ICSID provisions if the issue has multifarious effects. Arbitration The submission of arbitration request is similar to that of request for conciliation. Once the arbitration request is registered by the General-Secretary, an Arbitration Council is constituted as early as possible. The Arbitration Council consists of arbitrator(s) whereas conciliator(s) represents Conciliation Commission. It must be noted that the Tribunal has the authority to judge of its own competence. Generally, the Tribunal considers rules of laws which are acceptable to both the parties while deciding a dispute. In the absence of such agreement, the Tribunal may apply the prevailing laws of the contracting state or rules of international law for the settlement of disputes. The Tribunal will find a non liquet on the basis of silence or obscurity of law. In case of any fraudulent activity by Nonatia, Boris must submit a request, which describes the fraud in detail, before ICSID demanding legal proceedings. To commence the proceedings, Boris has to follow the procedures stated in the investment treaty, a document governing the investment. Boris has the right to decide whether the dispute must be resolved through ICSID arbitration or litigation. Article 43 clearly states that the Tribunal may “(a) call upon the parties to produce documents or other evidence, and (b) visit the scent connected with the dispute, and conduct such inquiries there as it may deem appropriate” at various stages of the arbitration proceedings (ISCID). This provision will certainly assist Boris to point out unfair practices of Nonatia before ICSID, if any. At the same time, Boris has to extremely cooperate with the Tribunal by producing all relevant details regarding the fraud. Article 45(2) tells that “if a party fails to appear or to present his case at any stage of the proceedings the other party may request the Tribunal to deal with the questions submitted to it and to render an award” (Peaslee and Xydis, 920). However, the Tribunal grand a grace period to the party failed to present his case before rendering an award, unless the Tribunal is convinced that the party did not intend to do so. According to Shubber, both the parties have the opportunity to request for the interpretation, revision, and annulment of the award once the award is rendered (229). Therefore, Boris may demand a revision of the award if he finds that the award does not preserve his interests. After the enforcement of the award, both the parties have the legal obligation to abide by and comply with the terms of the award (SICE). In the given case, if an award is issued in favor of Boris, courts of Russian Federation will treat the award as a final judgment of the court. Article 47 states that the Tribunal recommends provisional measures under certain circumstances in order to preserve the respective rights of either party. The World Bank factor, neutrality of the arbitration tribunal, administrative support, low fees, high value to ICSID awards, and protection against national courts are some of the key features of ICSID arbitration. From many experiences, it seems that the conciliation and arbitration facilities of ICSID assist nationals of other states to obtain adequate return from their investment. As a result of the fruitful provisions of ICSID, investors’ rights are protected by the courts of the country in which they (investors) have economic interests. Therefore, the ICSID provisions influence investors to enter any country without the fear of governmental non-cooperation of the host country. Hence, ICSID provisions play a notable role in resolving investment disputes and thereby promoting industrial development. Conciliation and arbitration are the main strategic tools provided by the ICSID to settle investment disputes between states and nationals of other states. The given case context clearly shows that investors to Nonatia are not well protected by the government and they have been victims of fraud. Normally, this condition is unfavorable to investors as every investor considers political background of the host country before making an investment. However, Nonatia is a signatory to the ICSID and therefore it is strongly recommendable for Boris to accept the investment invitation of Nonatian government without further investigations. If Boris’ financial rights in Nonatian investment are hurt by unfair practices of the country during the period of the business contract, he will get assistance from ICSID provisions. When either of the party fails to appear at any stage of the arbitration proceedings, the Arbitration Tribunal renders an award, by the terms of which both the parties are legally obliged to comply with. Such an award will save Boris to keep his interests in the Nonatian investment. Hence, evidently, Boris will get ICSID protection once the Nonatian government does not safeguard his investment rights. Mediation is an alternative to arbitration and it involves minimum time and least expenses. Although mediation is also applicable for the settlement of disputes between states and nationals of other states, it will not be much beneficial for Boris. The mediation process has not a comprehensive framework or higher award enforceability rates as in the case of arbitration. Moreover, since such disputes involve the interests of states, a well structured procedure is necessary to effectively resolve the disputes permanently. Hence, it is advisable for Boris to demand arbitration proceedings if he notices any fraudulent activity committed by the Nonatian government. The ICSID provisions will prohibit the Nonatia from providing diplomatic protection or bringing international claim during the course of legal proceedings. Since Boris has direct access to an international jurisdiction like ICSID, he will not face any trouble of operating in a foreign country. The arbitrator or conciliator will be a third party, who does not have any interest in Nonatia or Boris. It will assist Boris to obtain an unbiased award from ICSID. Diplomatic operations within Nonatian would be beneficial for Boris to avoid unnecessary disputes. Anyhow, ICSID provisions will guarantee the investment of Boris in Nonatia despite the conditions that the country gives less emphasis on the protection of investor interests. The fact that Boris’ home country Russia is also a signatory to ICSID adds value to his investment decision in Nonatia. Therefore, in situations of fraudulent activities from the part of Nonatia government, Boris may seek assistance from his home country. To conclude, Boris can doubtlessly proceed with his investment plan in Nonatia on the strength of ICSID provisions. Works Cited Australian Government: ComLaw. “ICSID implementation act 1990.” (1990). Web. 12 November 2011. ICSID: International Center for Settlement of Investment Disputes. (2011). Web. 12 November 2011. Davidson, Paul & Ciambella, Franca. Investment in South East Asia: Laws and Policy. Singapore: Butterworth- Heinemann Asia, 1995. Print. ICSID: International Center for Settlement of Investment Disputes. “ICSID convention, regulations and rules.” (April 2006):1-128. Web. 12 November 2011. Orinton Lawfirm. “The international center for settlement of investment disputes (ICSID).” (2010). Web. 12 November 2011. Peaslee, Amos Jenkins & Xydis, Dorothy Peaslee. International Organizations: Constitutional Documents. Netherlands: Brill Archive, 1974. Print. Rayfuse, R. ICSID Reports. England: Cambridge University Press, 1993. Print. Shubber, Sami. The Law of Investment in Iraq. Netherlands: Martinus Nijhoff Publishers, 2009. Print. SICE. “Commercial arbitration and other alternative dispute resolution methods.” (2011). Web. 12 November 2011. The World Bank. A Guide To The World bank. Washington, DC: World Bank Publications, 2003. Print. Read More