Protecting Foreign Investments

Kolkey, D. M., Chernick, R., & Neal, B. R. (2012). Practitioners handbook on international arbitration and mediation (3rd ed.). Huntington: JurisNet.

Foreign investment is an important part of our economy. There are many benefits to foreign investment in any country. It would be very difficult or impossible today to close the doors to foreign investment. The fact is foreign investment is responsible for providing a great deal of needed capital in this country. This capital is an asset in the continuous modernization and expansion of our manufacturing and other productive facilities. Without investment in our factories and processes we would fall behind in the world market. These investments lead to increased competitiveness within the international community.

Business is continually growing on a global level leading to international business partnerships, agreements, and trades. During these types of business relationships disputes are common (University of Phoenix, n.d.). If a dispute occurs one party may chooses to take legal action against the other party. Making the decision to take legal action businesses must make considerations prior to proceeding. Making the right decisions can build a strong relationship between parties. Considerations to take include contracts, local law, and local customs and culture. Steps may be taken to minimize risks in international business agreements as well.

After carefully considering the situation in both plaintiff (Eunice) and defendant (RFYL), arbitration should be an effective Alternative Dispute Resolution in

International trade is important and beneficial to business. However, international trade guides a safeguard of interests, specific business contract, defined law, forum of dispute settlement, and understanding of contract clauses. “A working knowledge of international law helps business owners and managers with global interests reduce risk and increase profits” (Melvin, 2011, P. 631). This enlightenment will address the international legal and ethical issues involved in international business transactions and compare such to domestic business operations.

Over the year’s organizations from, all parts of the world have experienced growth in the areas of business. Much of this growth is in part due to multinational companies, many of them enjoying significant benefits. One such area is investment, however it creates benefits for foreign MNCs, and it brings about concern. Perhaps the greatest fear. Fear concerning state owned corporations and the lack of effectiveness of legislation / regulatory enforcement.

Alternative dispute resolution is by no means a recently adopted form of dispute resolution. Courts now yield a vast number alternative dispute resolution alternatives, with even some courts requiring that cases be taken to mediation before the court will allow the litigation process to begin. In many facets of industry, alternative dispute resolutions are much preferred alternatives to the litigation process. For example, the construction industry

International projects present multinational corporations with many complexities in organizing a profitable transaction structure.Foreign exchange risk is an underlying problem. Credit risk presents another challenge. Payment terms and the certainty of realizing them can be difficult points. Negotiations with foreign corporations and governments, and with agents and intermediaries, present additional challenges. An example of the demanding environment for global financial activities is presented in the case of "Avicular Controls and Pakistan Airlines". It is found in Cases in International Finance on page 40.

Nevertheless, certain categories of ADR have been named and understood to involve the use of particular means and methods to produce the desired end result. These procedures include: negotiation, mediation, arbitration, med-arb, early neutral evaluation, settlement conference and conciliation to name a few. However this essay will concentrate on mediation as a form of alternative dispute resolution.

With increased regularity, businesses have chosen alternative dispute resolution (ADR) procedures of mediation and arbitration instead of the traditional litigation system for resolving legal disputes. Businesses have brought in qualified mediators in the dispute resolution process, to help them come up with preferable resolutions instead of spending excessive resources on pre-trial court litigation processes. In case businesses anticipate disputes that might not be resolved through mediation, they agree at the time of contract signing, to present future disputes to private arbitration.

An “Investor –state dispute settlement” (ISDS) is method of public international law which gives legal right for those who invested in a foreign country a chance to challenge a regulation, judicial or administrative ruling or and government decision of a hosted country. Investors are those who purchase properties or businesses in another country.

The World Trade Organization (“WTO”) Dispute Settlement System and the International Centre for the Settlement of Investment Disputes (“ICSID”) are two of the most widely used methods of international dispute settlement.

The basic provisions of BITs are all answers to fundamental problem that faces developing nations attempting to attract more FDI. The problem of dynamic inconsistency emerges from the fact that even though the host nations have an incentive to promise fair and equitable treatment beforehand to attract more foreign investments, once the establishment of the investment is done and the investors have sunk significant costs, the host nation’s incentive is mainly to exploit or even expropriate the assets of foreign investors. Many developing nations have adopted domestic legal changes over the last decade, with perspective to encourage a greater FDI inflow.

International commercial arbitration is one of the most important legal institutions in international private law. This conclusion follows from the fact that the nature of arbitration depends largely on autonomy of the parties, who choose arbitration procedure as the procedure in which the dispute will be settled; place where the arbitration is to be held; arbitral tribunal etc. Probably the most important and considerable expression of the autonomy is the right to choose the law, which is to be applied to merits of the dispute. The chosen applicable law guarantees in large measure predictability of the outcome of the case and allows parties to control the scope of interpretation and application of the international commercial

ADR is useful in resolving virtually all genres of disputes by providing speedier, enforceable decisions through Arbitration, Mediation, Early Neutral Evaluation and other hybrid mechanisms. The presence of cost-effective and predictable ADR mechanisms capable of resolving complex disputes help to bolster the confidence of litigants within the country and therefore stimulates trade and investment both internationally and locally.