Originally from the Leading Arbitrators' Guide to International Arbitration - Fourth Edition

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INTRODUCTION

Even though arbitrations between States and commercial enterprises are a relatively new phenomenon in the history of international arbitration, such arbitrations have taken place for a long time. Generally speaking, arbitrations between States and companies started to become pro¬minent after the Second World War. Since then, all aspects of modern life have gone through a remarkable globalization, including the areas of trade, finance and invest¬ment. The practical importance of such arbitrations  is beyond any doubt today. In many former socialist countries, foreign trade was a State monopoly, thus by definition engaging the State and/or State enterprises in commercial activities. In other countries, developing and developed, the State and State enterprises have to varying degrees been engaged in international trade and finance. Such participation has occasionally led to disputes which are often settled through arbitration.

During the last five to eight years there has been a dramatic increase in the number of State arbit¬rations. No official statistics are available to confirm this statement, but this is certainly the general perception of arbitration lawyers in most parts of the world. As I see it, this is the result of two overlapping and interdependent developments, viz., the transformation of the political and economic systems in Eastern Europe, including the former Soviet Union, and the significant increase in so-called investment arbitrations.