Effectiveness of Investment Treaty Arbitration in Resolving Disputes - Dissertation Example

Download file to see previous pages Investment treaty arbitration is significantly different from other types of arbitration. In investment arbitration, the arbitrator is empowered to make decisions that are final. This type of arbitration brings to the fore a number of issues relating to impartiality and independence. In the other types of arbitration, the final decision is taken by the court.

As is well known, the courts enjoy independence from private and state power. Such independence is promoted by providing judges with secure tenure, precluding outside remuneration, and adopting an objective procedure for assigning cases. These factors are conspicuous by their absence in investment arbitration. As a consequence, it is not uncommon for these arbitral awards to be influenced by inappropriate factors.

These safeguards do not find a place in investment treaty arbitration. A class of inappropriate influences is related to the career and financial interests of arbitrators. These arbitrators do not have secure tenure and engage in remunerative activities that are external to their role as adjudicators.

The independence and impartiality of the investment arbitral process are crucially dependent on the existence of openness. In the absence of transparency, it becomes difficult if not impossible to confirm the integrity and fairness of the decision-making process.

Arbitrations related to investment treaties emerge from bilateral and multilateral treaties formed between countries to promote foreign investment. In general, such treaties incorporate provisions for settling disputes between a private foreign investor and the host nation by arbitration, under public international law.

Contemporary international arbitration is widely believed to have commenced with the Jay Treaty of 1974. This treaty was entered into by the US and Great Britain. Private international arbitration had not developed during that epoch and there was a predominance of international arbitral commissions.

Subsequently, there was an increase in instances of private international commercial arbitration. However, this system of arbitration has not yet developed to any significant extent. Wider acceptance of this method of dispute resolution could render it more transparent. Such arbitration views confidentiality as a significant feature of dispute resolution. Accordingly, if the parties are in favor of keeping their dispute resolution confidential, then they have to incorporate relevant clauses in their arbitration contract.
Another method of ensuring confidentiality is to make a reference in the arbitration contract to arbitration rules that necessitate confidentiality. In case, there is no specification or reference to confidentiality, then the deduction will be that the parties have no agreement that prevents the disclosure of arbitration proceedings.

The procedural issues related to international commercial arbitration have been significantly influenced by investment treaty arbitration. The principal rules that govern the procedure of treaty arbitrations are those of the World Bank’s International Centre for Settlement of Investment Disputes (ICSID) or the United Nations Commission on International Trade Law Arbitration Rules (UNCITRAL). The latter rules are utilized in commercial arbitrations to a major extent. ...Download file to see next pages Read More