Lawyer
Expert in international corporate, IT, and crypto law. Has extensive experience in business setup and support in the USA, EU, LATAM, and the Middle East. Specializes in corporate structuring, compliance, KYC/AML, IP, GDPR, as well as regulation of crypto and fintech projects.
International investment arbitration
International investment arbitration is a special mechanism for protecting a foreign investor against violations by the host state of the investment. Prikhodko & Partners analyze investment treaties, international agreements, and actions of state bodies to determine whether arbitration jurisdiction and a realistic claim exist. Within the international investment arbitration service, we support the investor from treaty analysis and notice of dispute to evidence gathering and representation.
Investment arbitration is not an ordinary dispute between two companies. Its basis may be a bilateral investment treaty (BIT), an international agreement, a law, or a contract with a state. Without the state’s consent to arbitration, the appropriate investor status, and a protected investment, the case will not pass the jurisdictional stage, regardless of the size of the damages.
Key points
- The respondent in investment arbitration is a state or its organ, not an ordinary counterparty.
- The right to a claim depends on a specific investment treaty and the state’s consent.
- It is necessary to confirm the status of the investor, the investment, the date, and the territorial connection.
- Agreements can protect against expropriation, discrimination, and violation of fair and equitable treatment.
- Before a claim, there is often a notice, cooling-off period, or a requirement for preliminary procedures.
- Early legal assessment helps preserve evidence, jurisdiction, and control over costs.
How investment arbitration differs from commercial arbitration
Commercial arbitration arises from a contract between private parties. An investment dispute arises between a foreign investor and a state and is usually based on an international investment protection treaty.
In a commercial dispute, the main issue is a breach of contract. In investment arbitration, it is necessary to prove a violation of an international standard of protection, such as unlawful expropriation, discrimination, or unfair and inequitable treatment.
What conditions of jurisdiction are checked
- the existence of valid state consent to arbitration;
- the nationality or place of incorporation of the investor;
- compliance of the asset with the definition of an investment;
- making the investment in the territory of the respondent state;
- compliance with time limits and treaty coverage;
- fulfillment of notice and cooling-off requirements;
- absence of obstacles due to fork-in-the-road or waiver clauses.
What violations can be the basis for a claim
Typical investment treaties contain standards of fair and equitable treatment, full protection and security, national treatment, most-favoured-nation treatment, and protection against expropriation without compensation. The specific content depends on the text of the relevant agreement and tribunal practice.
Not every adverse decision by a state is a violation. The investor must show that the state’s actions went beyond lawful regulation or violated a specific international obligation.
Table: commercial and investment arbitration
| Criterion | Commercial arbitration | Investment arbitration |
|---|---|---|
| Parties | Companies or private individuals | Foreign investor and state |
| Basis | Arbitration agreement in a contract | BIT, other treaty, law, or contract |
| Main claim | Breach of contract | Violation of an international standard |
| Rules | ICC, LCIA, ICAC, UNCITRAL, etc. | ICSID, UNCITRAL, or other treaty rules |
| Enforcement | New York Convention and national law | ICSID Convention or other regime |
Preparation of evidence and calculation of damages
The investor needs to keep corporate documents, proof of financing, permits, correspondence with state bodies, court decisions, regulatory acts, financial statements, and evidence of a causal link between the violation and damages.
The size of the claim is often calculated with the involvement of valuation experts. The asset value, lost cash flows, sunk costs, interest, and the impact of the state measure on the business may be analyzed. An inflated claim without a methodology harms the credibility of the entire case.
How the work on an investment dispute is conducted
- Identification of the investor, investment, and potential treaty protection.
- Analysis of jurisdiction, admissibility, and deadlines.
- Recording violations, evidence, and preliminary assessment of damages.
- Preparation of a notice of dispute and conducting cooling-off negotiations.
- Selection of rules, team formation, submission of request, and conduct of proceedings.
Conclusion
International investment arbitration can be an effective tool when a state violates the protected rights of a foreign investor. However, the right to a claim does not arise automatically from the fact of investment or economic loss. It depends on an exact legal structure and compliance with procedural conditions.
The lawyers at Prikhodko & Partners conduct a preliminary assessment of a treaty claim, coordinate work with foreign counsel and experts, prepare documents, and support negotiations and arbitration. Early involvement allows you not to lose deadlines, evidence, and the opportunity to properly formulate a position. Get professional support for the reliable protection of your investments!
Calculate the cost of services
1 question
Are you planning to invest abroad and want to protect your money?
2 question
Have your assets or money in another country been seized or blocked?
3 question
Has your business abroad suffered from the actions of local authorities?
Who can apply to investment arbitration?
A foreign investor who meets the definition of a specific treaty or other source of consent to arbitration.
Is it possible to file a claim solely due to a breach of contract with a state-owned company?
Not always. It is necessary to establish consent to arbitration and a violation of an international standard or other protected norm.
Is it mandatory to apply to a national court first?
It depends on the treaty. Some agreements require local procedures, others allow direct arbitration or contain a fork-in-the-road clause.
How long does investment arbitration take?
Usually several years, depending on complexity, jurisdictional objections, evidence, and the procedural timetable.
How is an investment arbitration award enforced?
The regime depends on the rules. ICSID awards are enforced under the ICSID Convention mechanism; other awards may be recognized under the New York Convention and national law.
You may also need:
Assessment of corporate rights
Read more
Business protection: lawyer
Read more
Mediation of corporate disputes
Read more
Corporate disputes in Ukraine
Read more
Sue the buyer’s company in Ukraine
Read more
Sue the company
Read more
Corporate attorney in Ukraine
Read more
Corporate agreement between the members of the LLC
Read morecall back
during the day
Telegram
Viber
WhatsApp
Facebook
Instagram