Originally from Arbitration Law of Turkey: Practice and Procedure

CHAPTER 21

INVESTMENT ARBITRATION IN TURKEY

21.1 GENERAL

Laws concerning investment treaties have been rapidly growing and developing since the 1980s, and particularly in the past ten years. Also the number of bilateral (BIT) and multilateral (MIT) investment treaties has increased within the last fifteen years.

Bilateral investment treaties, or “BITs,” are created between two countries to establish terms, conditions, and protections for private investments made by the citizens of one state in the territory of another. Investment treaties ensure foreign investors certain minimum protections against foreign State action that could adversely affect their investments in the foreign State. In addition investment treaties also establish dispute resolution mechanisms for resolution of disputes between foreign investors and host countries concerning investments. The main purpose of a BIT formed between a developed state and a developing state is to encourage investments in the developing state.

The first BIT was entered into in 1959 between Germany and Pakistan and came into force in 1962. Turkey’s first BIT was with Germany In 1962. This was an interesting development in Turkey signifying its modern openness to foreign investment and encouragement to Turkish investors to invest abroad.

Most BITs allow investors to bring their disputes before one of several arbitration institutions. Some of the more popular institutions are the International Centre for Settlement of Investment Disputes, International Court of Arbitration, Stockholm Chamber of Commerce, and London Court of International Arbitration. Each of these institutions has its own set of governing rules. Many BITs allow parties to choose from among a number of institutions.