- Diplomatic protection — Investor — Host state law — Law of treaties — Arbitration — Negotiations and consultation
This chapter focuses on investment treaty dispute settlement, examining the nature of conflicts between investors and states and the various means provided by treaties to resolve them. In general, investor–state disputes governed by treaties occur because a host state has taken a ‘measure’ that allegedly violates that state's treaty commitments on the treatment it has promised to accord to investments protected by that treaty. Before the advent of investment treaties, investors basically had three methods to seek resolution of their disputes with host states: (a) direct negotiation with host state governments; (b) domestic courts in the host country; and (c) diplomatic protection by their home states. In order to establish a stable, rule-based system for international investment, treaties provide means to resolve disputes about the interpretation and application of treaty provisions. Most investment treaties provide four separate dispute settlement methods: (1) consultations and negotiations between contracting states; (2) arbitration between contracting states; (3) consultations and negotiations between covered investors and host governments; and (4) investor–state arbitration.
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