Originally from Dispute Resolution Journal

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Investors, to the extent possible, should always require that the international contracts
they execute contain adequate arbitration provisions. If the sovereign state
refuses to, or allegedly cannot, enter into an arbitration agreement, the investor
should then scrutinize the bilateral investment treaties entered into by that state. The
scope of the dispute resolution provisions contained in the BITs should be considered.
The authors explain why this is so important and examine the scope of arbitration in
BITs between several countries.

Multinational companies (“investor(s)”) desire a neutral, efficient and binding mechanism
to resolve disputes arising out of their international transactions. This is
particularly the case when contracting with sovereign states with respect to
investments made in the territory of the states (“state contracts”). It is therefore
not surprising that arbitration provisions are often prerequisites to
investors entering into state contracts. Situations remain, however, where state
contracts do not provide for international arbitration. This may be because
the state refused or under its internal law was prohibited from entering into
an arbitration agreement.