Environmental Engineering Reference
In-Depth Information
2.1.2 Differences Between Commercial and Investment
Arbitration
International commercial and investment arbitration have some general features in
common. Both are forms of international arbitration.
International arbitration is a private form of dispute resolution with numerous goals,
namely to protect investors
rights in a neutral forum, to quicken the time of litigation
and lower expenses, and to offer procedural flexibility allowing businesses to continue
operation.
13
'
s distrust concerning judicial independence the above men-
tioned corruption is frequently an issue for investors. Two cases in Pakistan, where
Pakistan among other things objected to
lis pendens
within an ICSID proceeding,
also illustrate the misuse of judicial power, as courts purposely interfered with
international arbitration for the benefit of Pakistan.
14
However, in most cases
involving PPPs, the host state wants to use its own judicial system for the settlement
of conflicts.
15
International investment and commercial arbitration have a similar historical
background. The most important similarity relates to the general acceptance of
international arbitration.
16
As a result of the US-UK Jay Treaty of 1794, numerous
mixed commissions were set up to deal with
Besides investor
'
.
17
The
Jay Treaty stipulated the establishment of mixed commissions to resolve economic
disputes related to the American independence.
18
This was the starting point for
both forms of arbitration to be an accepted tool of legal dispute resolution. Never-
theless, international commercial arbitration has developed differently than inter-
national investment arbitration. Arbitration between two private or judicial parties
is an old and long established method of dispute resolution. On the other hand, the
possibility to sue the state in front of an arbitration court is a right which has only
emerged recently.
Consequently, there is a need to distinguish between international commercial
arbitration and international investment arbitration. Investment arbitration almost
exclusively deals with investor-state dispute settlement (ISDS). Most international
commercial arbitration institutions were not capable of dealing with the question of a
state
problems of injury to aliens
'
'
s exercise of public authority concerning foreign nationals in the ISDS.
19
The
main idea of international
'
investment arbitration was to close this gap, by
“transforming”
features of
international
commercial
arbitration into the
13
Shookmann (
2010
), 361 (361); cf Kouris (
2005
), 127 (127).
14
Sattar (
2010
), 51 (60-61); E.g. Pakistan, in: Shookmann (
2010
), 361 (368).
15
Hunter (
2007
), 165 (166).
16
Tietje (
2010
), 5 (6).
17
Shaw (
2008
), 823; Tietje (
2005
), 47 (47); cf Tietje (
2010
), 5 (6).
18
Tietje (
2005
), 47 (47); Tietje (
2010
), 5 (6).
19
Harten and Loughlin (
2006
), 121 (126).
