ARBITRATION IN THE FIELD OF INVESTMENTS AND THE ROLE OF LAW
By Srijita Chattopadhyay & Abhishek Arul
Investments can be defined as a process where people and companies tend to invest their current savings/ profits with a hope of yearning higher returns i.e., increasing their future savings. It is the law governing such exchanges and investments known as Investment Law. The law makes the investors secured against unfair trade practices and high risks. This law is made keeping in mind the benefit and security of the investors; so that they can invest in menacing-volatile areas of the market.
It is quite common that such trading shall often lead to disputes. These disputes need to be settled in a very efficient and quick manner owing to the nature of fast changing value of capital. The investors prefer a method where they can be a part of the process and also have enough control over the same. Arbitration provides such a method where the parties can appoint an arbitrator of their own choice; choose the place and seat of arbitration and also the laws that govern such agreements i.e., Lex Arbitari.
The countries for their development have tried to make their grievance redressal system flexible and user-friendly in order to encourage Foreign Direct Investments, but this has led to an increased number of litigations between states and private investors. These disputes according to the Foreign Bilateral Investment Treaties shall be resolved by the arbitration mechanism purely in order to avoid supremacy of area-specific laws, for eg. NAFTA. This has increased the burden of states whose duty is to protect the interest of citizens as a welfare state and this can be clearly made out from judgments of the Indian Judiciary like in the case of K.K. Modi v. K.N. Modi. There are some inherent differences between arbitration of International Investment Law Disputes and International Commercial Arbitration. In the first instance, it has to be mandatory conducted on foreign soil and should deal with “complex” financial matters, whereas, in the second instance, one party to the arbitration should be a foreign national and it can be held anywhere according to the choice of the parties.
Arbitration, Investment law, trading, ADR, FDI.
|Information||Lex Humanitariae: Journal for a Change, Volume III Issue I, Pages 173-183|
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