Investor Presentaiton
82
INVESTOR-STATE DISPUTE SETTLEMENT: A SEQUEL
claims have been grounded in international law. Some possible
reasons for that are highlighted in the discussion of "fork-in-the-
road" and "no-U-turn" clauses below.
2. Mandatory recourse to domestic courts and administrative
tribunals
Customary international law requires an injured foreign person
to exhaust all effective domestic legal remedies before his claim
becomes admissible at the international level. 74 Most investment
treaties waive the exhaustion of local remedies rule, and permit the
investor to have direct recourse to international arbitration.
However, a number of IIAs require investors to pursue local
remedies (judicial or administrative) in the host State for a certain
period of time, or in rare circumstances even to exhaust local
remedies. Under such treaties, an investor can refer the dispute to
arbitration only after complying with these conditions.
The relevant provisions typically impose a time limit for the
domestic proceedings. The BIT between Belgium/Luxembourg and
Botswana (2003) provides an example:
74
"Article 12. Settlement of Investment Disputes
[...]
2. In the absence of an amicable settlement by direct
agreement between the parties to the dispute or by
conciliation through diplomatic channels within six months
from the notification, the dispute shall be submitted, at the
first instance to a court of competent jurisdiction of the
latter Contracting Party for a decision. Either party may, six
months after the submission of the dispute to a court of
competent jurisdiction, refer the dispute to international
arbitration." (Emphasis added).
See Dugan et al, 2011, pp. 347-348.
UNCTAD Series on International Investment Agreements IIView entire presentation