When disputes arise between states and private entities, the parties turn to international arbitration to resolve their issues. International arbitration is a process in which a panel of experts reviews each party’s claims and makes a ruling that all parties must abide by. An investor must understand the different claims he can make against a state government.
What are the Different Types of Claims at ICSID?
The primary type of claim at ICSID is a “breach of contract” claim. This type of claim arises when one party fails to fulfill its contractual obligations under an investment treaty or similar agreement. For example, if an investor invests in a foreign country but then experiences unfair restrictions on their activities, they may file a breach of contract claim against the host State.
In addition to breach of contract claims, investors may file “fair and equitable treatment” claims. Fair and equitable treatment includes protection from discriminatory measures and unpredictable changes in laws and regulations that unfairly target foreign investors This claim also covers expropriation without compensation and other forms of political risk.
WHAT OTHER TYPE OF CLAIMS?
Other types of claims include “expropriation without compensation,” “full protection and security,” “free transferability,” “national treatment,” and “most favored nation clause” claims.
Expropriation without compensation occurs when one party takes control over the property or assets owned by another party without providing any compensation for the losses incurred.
Full protection and security claims protect foreign investors against sabotage or other malicious activities that harm investments made in another country.
Free transferability refers to the right to move money out of one country into another without restrictions or penalties imposed by local authorities.
National treatment means that foreign investors should not be treated less favorably than a domestic investor. In contrast the most favored nation clause ensures that no other country will receive more favorable terms than those granted to the investor making the claim.
For more information on type of claims under the proper investment treat, please visit International Investment Agreements Navigator | UNCTAD Investment Policy Hub
All these different types of claims are complex. Before taking action, it is essential for all parties involved—investors, attorneys, CEOs—to understand the type(s) of claims that are best suited for their situation. This is because they can make informed decisions about how best to proceed with their case at ICSID arbitration proceedings. Doing this research upfront will save all parties involved time and money in the long run! For more information about our Investor State Dispute Settlement, please visit our practice International Litigation Attorneys – Transnational Matters.