By Davy Karkason
Founding Attorney

Contracting with a government can be a lucrative business opportunity, but it comes with a lot of challenges. One such challenge is the potential investor-state dispute settlement. The investor-state dispute settlement (ISDS) is a mechanism through which investors can sue governments for perceived discriminatory practices. This mechanism is intended to protect foreign investments, but it may have unexpected negative implications for investors in certain circumstances. This blog post will provide a comprehensive guide on ISDS and what investors should consider before contracting with a government.

What is ISDS?

Firstly, it is important to understand what investor-state dispute settlement is. Essentially, it is a mechanism that allows foreign investors to sue a government if a perceived discriminatory policy affects that investor’s business or investment. This mechanism, often included in international agreements, seeks to protect investors from unfair treatment or expropriation by host governments. However, not all ISDS mechanisms are the same, and investors should consider carefully the type of ISDS included in the agreement. For example, ISDS can be included in bilateral investment treaties (BITs), free trade agreements (FTAs), and in some cases, domestic laws. See About ICSID | ICSID (

Draw Backs of ISDS?

Secondly, it is important to understand the potential drawbacks of ISDS mechanisms. While ISDS can offer a channel through which investors can seek compensation for government actions that harm their business, it can also predetermine a certain level of risk for investors. Such mechanisms can lead to the investor purchasing costly insurance to mitigate the risks associated with this mechanism. Moreover, the different standards of treatment under the ISDS mechanisms can be ambiguous and thus lead to varying interpretations regarding potential claims. Awareness of these potential drawbacks can help investors make informed decisions when contracting with a government.

Language of ISDS

Thirdly, language is another important factor that investors should consider carefully. ISDS language should be clear and concise. Additionally, it should cover all relevant issues. It’s not uncommon for some investors to use vague or inadequate language when drafting ISDS provisions, thus jeopardizing their rights under the settlement mechanism. It is important for investors to ensure that their ISDS contract is tailored to their specific needs, outlining specific rules for arbitration, admissibility of evidence, and criteria to determine the type and amount of damage to be awarded.

Political Environment: An Issue?

Fourthly, investors should be aware of the country’s political environment in which they are contracting. This is because ISDS disputes often emerge in countries where the political climate is volatile. For example, if a socialist party, which is traditionally hostile to foreign investors, comes to power, it can cause an adverse shift in policy that may harm an investor’s business. In such a case, investors should have a strong understanding of the legal and political systems in the countries that the investor operates in so to be able to identify the risks and take appropriate steps to mitigate them.

Judicial System of the Host Country

Additionally, investors should ensure that the host country has a robust legal system and an impartial judiciary. This is important as many disputes between foreign investors and host governments occur in national courts. If there is a perception of corruption in the national legal system, the investor may lack confidence in the court’s ability to provide a fair and impartial decision. If a host country has a robust judicial system, relying on it to settle commercial disputes may be preferable rather than going through an ISDS mechanism.

The Following outline the steps to engage with a Government.

  1. Identify the Relevant Sector: Understand the sector you’re interested in, whether it’s telecommunications, mining, transportation, energy, or another sector.
  2. Research the Appropriate Agency/Department:
    • In many countries, there’s a specific government ministry or agency responsible for each sector. For example:
      • Mining: Ministry of Mines or Mineral Resources
      • Energy: Ministry of Energy or Power
      • Telecommunications: Telecommunications Regulatory Authority or Ministry of Telecommunications
      • Transport: Ministry of Transport
    • Some countries also have Investment Promotion Agencies (IPA), which are geared towards attracting foreign investments. They can provide information, guidance, and sometimes even assist in facilitating meetings with relevant departments.
  3. Make Initial Contact:
    • Start by reaching out to the relevant department or agency through their official channels. This could be through their official website, phone number, or listed email address.
    • It’s often helpful to begin with a formal letter or email expressing interest.
  4. Crafting the Letter/Email:
    • Introduction: Introduce yourself and your organization, and express your interest in obtaining a concession.
    • Objective: Clearly mention the objective of your request and the nature of the concession you’re seeking.
    • Project Details: Provide a brief outline of your proposed project, including potential benefits to the country/region (like employment, technology transfer, and infrastructure development).
    • Request for Meeting: request a formal meeting or a chance to discuss your proposal further.
    • Provide Contact Details: Ensure you provide your complete contact details, including phone number, email, and physical address.
  5. Follow-up and Professionalism:
    • After sending your initial communication, follow up if you don’t receive a response within a reasonable time frame.
    • Always maintain professionalism and respect in all communications, even if you encounter bureaucratic hurdles or delays.
  6. Engage Local Experts: Consider hiring local consultants or legal experts familiar with the country’s regulations and bureaucratic processes. They can provide invaluable insights and potentially expedite the process.
  7. Understand Local Laws and Regulations: Make sure you’re aware of the country’s laws, regulations, and any potential requirements around foreign investments and concessions.
  8. Be Prepared for Negotiations: Governments may want to negotiate terms to ensure that the concession benefits the local economy and its citizens.

Template For The Initial Letter to Send to The Government

[Your Name]
[Your Position/Title]
[Your Company/Organization Name]
[Company/Organization Address]
[City, Postal Code]
[Email Address]
[Phone Number]

[Recipient Name, if known]
[Position/Title of Recipient, if known]
[Relevant Government Department/Agency Name]
[Address of the Department/Agency]
[City, Postal Code]

Subject: Expression of Interest for [Specific Concession, e.g., “Mining Concession in XYZ Region”]

Dear [Recipient Name/ “Sir/Madam” if name is unknown],

I am writing on behalf of [Your Company/Organization Name], a [description of your company, e.g., “leading international mining company with operations in multiple countries”]. We are keenly interested in exploring opportunities related to [specific type of concession, e.g., “mining concessions”] in [specific country/region, e.g., “XYZ region of CountryName”].

Our proposed project aims to [brief outline of what the project entails, e.g., “establish a state-of-the-art mining facility that incorporates environmentally friendly practices and technology”]. We firmly believe that this venture can provide significant benefits to [CountryName], including [potential benefits, e.g., “job creation, infrastructure development, and economic growth”].

Understanding the importance of aligning our objectives with the interests and regulations of [CountryName], we kindly request an opportunity to discuss our proposal in detail with the relevant officials. Such a discussion would enable us to gain insights into the requirements and considerations essential for obtaining the desired concession.

Please find attached a preliminary proposal and feasibility report of our project for your review. [Attach relevant documents or provide links, if sending an email.]

We eagerly await your response and are available at your convenience for any further discussions or clarifications. Kindly let us know a suitable time for a meeting, whether in-person or virtual, and we will make the necessary arrangements.

Thank you for considering our expression of interest. We are committed to adhering to all the guidelines and protocols of [CountryName] and are hopeful of fostering a mutually beneficial collaboration.

Warm regards,

[Your Name]
[Your Position/Title]
[Your Company/Organization Name]


This blog post has provided an in-depth guide to contracting with a government and what investors should consider with regard to investor-state dispute settlement. The inclusion of such mechanisms in international agreements has significant implications for foreign investors. It is, therefore, important for investors to fully understand the nature and potential risks associated with the ISDS mechanisms and the legal environment in which they are operating before entering into any such contracts. Once all the risks have been fully tracked and documented, foreign investors can then make informed decisions regarding the selection of ISDS mechanisms and how best to structure their investments to mitigate these risks and create a stable business environment. Our firm is well-versed into the realm of Foreign Direct Investment. Contact Our Office – Transnational Matters

About the Author
As a lawyer and the founder of Transnational Matters, Davy Aaron Karkason represents numerous international companies and a wide variety of industries in Florida, the U.S., and abroad. He is dedicated to fighting against unjust expropriation and unfair treatment of any individual or entity involved in an international matter. Mr. Karason received his B.A. in Political Science & International Relations with a Minor in Criminal Justice from Nova Southeastern University. If you have any questions about this article you can contact Davy Karkason through our contact page.