How dispute settlement is treated vis a vis investment in international rule making has been a subject matter of great debate over the years. Should foreign investment be protected through a investor state dispute mechanism or should it be restricted to state to state fora? Should local courts be preferred or arbitral tribunals have a say? Should investment facilitation be the remit of investment treaties or chapters rather than full fledged investment protection?
Approaches to these questions have been varied from merely co-operation and facilitation agreements to full fledged protection agreements with strong investor state dispute settlement mechanisms in place.
A recent piece titled "The India-EFTA Deal: A New Model for Developing Countries" by South Centre commenting on India's approach in the India-EFTA Trade and Economic Partnership Agreement outlines the approach of not going in for ISDS as being a refreshing approach in investment law rule making. This is a contract to an earlier piece which views investment protection as a necessary ingredient of investment chapters.
Investment rule making in the international sphere has seen divergent approaches to investor protection. While ISDS has been a dominant theme across, international arbitral claims have raised the issue of alternate paths. Strong upholders of the investment protection regime have moved away from it, or are selectively using it. Some countries like Brazil have chalked out a totally divergent path of state to state resolution.
With foreign investments becoming a critical path to a country's economic growth model, the need for protecting foreign investments also becomes a focus. Investment facilitation is another aspect that has gained currency now with the Investment Facilitation initiative at the multilateral level.
The questions and debates around investment protection will continue to engage policy makers. Does investment protection really encourage foreign investment? What is the evidence to this effect? What is the ideal model for investment protection and facilitation? Is it more of sound domestic regulatory policies or strong international rules? Is it redress in local courts or international arbitral tribunals? Is it private arbitral claims or other dispute resolution strategies like Joint Committees of States? Does it benefit foreign investors unfairly or is required against arbitrary state action?
How should we tread this path?
