When a dispute arises between Foreign investors and host States (also called Investor-State Dispute Settlement or ISDS), then the possibility is high for a Foreign Investor to sue a host State.

To resolve the dispute between the foreign investors and host states, it is preferable to choose the international Arbitration. It is a guarantee for the foreign investor that, in the case of a dispute, it will have access to independent and qualified arbitrators who will solve the dispute and render an enforceable award.

There are no appeals of investment arbitration awards, although the arbitral rules under which they are brought do provide limited grounds for the annulment or setting aside of an arbitral award.

This allows the foreign investor to bypass national jurisdictions that might be perceived to be biased or to lack independence, and to resolve the dispute in accordance with different protections afforded under international treaties.

Most investment arbitration agreements provide for a cooling-off period, frequently of 6 months, where the investor and the host State are invited to engage in negotiations in order to find an amicable solution.

The starting point of the cooling-off period is typically a Notice of Intent to initiate the arbitration proceeding against the host State. In case of a failure to settle the dispute over the cooling-off period, as is common (many States prefer to wait and see whether a foreign investor is truly willing to pay the high costs that are required to pursue an investment arbitration), the foreign investor must file a Request for Arbitration in accordance with the applicable rules of arbitration.

The vast majority of disputes do not settle at this stage. In some cases, the investor may be obliged by the arbitration agreement upon which its claim is based to exhaust all effective domestic legal remedies prior to initiating a claim in arbitration.

For more information about arbitration, feel free to visit https://www.acerislaw.com/