Introduction of the study.
Since Foreign Direct Investment (hereinafter FDI) has a great potential for economic development, it’s taken as one of the primary instruments to achieve the overall development goal of both national and global community. Specifically developing countries, emerging economies and countries in transition have come increasingly to see FDI as a source of economic development, modernization, and income growth and decrease unemployment rate. The potential of FDI is revealed by technological advancement, skill acquisition, and innovative capability of the society.
Thus, global community gives wide emphasis for International Investment Laws (hereinafter IIL) with the primary objective of enlarging and breeding the exuberance of FDI through creating a favorable condition, protecting the investment and its investor from the unnecessary action taken by the Host State (hereinafter HS). This shows that the core objective of IIL is protection of foreign investment under the course of International Investment Protection Standards (hereinafter IIPS). On this regard; from the investor perspective the protection of dispute settlement is the most important protection. From the perspective of dispute settlement protection an Investor state dispute settlement protection (hereinafter ISDS) is the most vital one. This is because of the nature of FDI which is highly exposed to different types of disputes, with a different parties including the host state, then the protection afforded to foreign investor on dispute settlement; particularly ISDS protection.
Even though, IIL and IIPS’ gives a wide emphasis both at global and national level; conversely, the process of Drafting, Promulgating and Approving as law faces a cumbersome challenge both at international and national level. This challenge emanates from the nature of FDI, the dynamics of globalization and global governance. The global governance system of FDI were plentiful of various economic reforms resulting from investment disputes, which makes the process for the settlement of international investment disputes highly burdensome both at national and international level.
Statement of the problem.
FDI has a great potential to realize the host states vision of economic developments. Especially, developing countries; like Ethiopia, adopts policies and setting laws for the legal protection of foreign investment and procedures on the protection of Dispute settlement, with the objective of creating a favorable investment environment. However, still there are dozens of factors; like, legal gaps on dispute settlement mechanism and lack of independent and capable courts to entertain disputes on FDI. This have an adverse effect for create inspiring circumstances to FDI. Thus, a number of foreign investors do not seek to resolve disputes before courts of developing country like Ethiopia.
Bilateral investment treaties (hereinafter BIT’s) are taken as primary legal sources of IIL & IIPS. Though, BIT’s are considered as a primary source: HS Domestic Legislations, contractual agreement between the HS and foreign investor, Regional and global Multilateral treaties (hereinafter MIT’s,) Customary international law and other sources are playing a vital role on resolving FDI Disputes. Accordingly, now days either developed or developing nations are interwoven on standardizing IIPS’s particularly the standard of dispute settlement protection both at domestic and international level. On this regard; developing countries like Egypt, El-Salvador, Kenya, make great efforts on harmonizing their domestic laws of ISDS through adopting and ratifying the ICSID Convention, New-York convention, UNCITRAL Model of Law, PCA convention & its rules of arbitration (particularly the 1907 PCA). Indeed, those developing countries were faces a number of challenges on harmonizing process of ISDS scheme. Upon this, unlike Ethiopia developing countries, like El-Salvador, Egypt, Albania, Kenya were enacted harmonized Alternative Dispute Resolution (hereinafter ADR) laws & investment legislations particularly after they adopt and ratify the 1958 New-York Convention. For instance; El-Salvador Foreign Investment Law which provides for the parties at the dispute “may resort” the ISDS to the corresponding courts of justice, reads as follows:-
..Should Disputes & differences arise among local and foreign investors and the state, regarding the investment made by them in El-Salvador, the parties may resort to the corresponding courts of justice, in accordance with existing legal legislation…”
Whereas the Albanian law on foreign investment has the same idea on providing that the investor “may submit” a dispute to arbitration constitute binding offers, which reads as follows;-
“… the foreign investor may submit the dispute for resolution and the Republic Of Albania hereby consent to the submission thereof, to the International Center for settlement of Investment Dispute…” (emphasis added)
Therefore, what I notice according to most BITS’ of Ethiopia signed, the first chosen mechanism for the settlement of investment dispute is ADR at the domestic level of the host state. ADR mechanism for dispute settlement of foreign investment by developing country like Ethiopia and for the foreign investors who invest in the country have a number of advantages in relation to cost, time and genuinely for the settlement. This indicates us developing country especially Ethiopia needs to have modern legislation on ADR law specifically for ISDS, and needs to establish independent, transparent, fair, and competent institutions, which have a potential to ensure foreign investments protection on dispute settlement. Literatures indicate that being a member of the 1958 New York convention on recognition and enforcement of arbitral award playing a vital role on modernizing the ADR system which Ethiopia is not a member state yet. On the other hand the Ethiopian ADR system were governed by the 1960s Civil Code (hereinafter CC) & Civil Procedure Code (hereinafter CPC). On this regard a number of literatures indicate that the national laws of Ethiopia on ADR which were provided in art 3325-3346 CC and art 215-319, art 350-357 and art 461 of CPC were scared & out dated which is not especial laws to entertain dispute with regard to FDI. Therefore, those laws fail to cope with the emerging modern laws and practices towards the dispute settlement guarantee of the international investment protection standards.
Objective of the study.
General objective of the study.
The general objective of the thesis is to investigate and examine the motive of Ethiopian FDI protection laws towards the guarantee on dispute settlement in light of international investment protection standards.
Upon the general objective of the thesis; the specific objectives will be:-
To examine the motive of International Investment protection standards towards the protection of dispute settlement.
To compare & determine the motive, attitude & adroitness of IIPS with the Ethiopian legislations towards the FDI dispute settlement protection.
To appraise the impact of ratifying contemporary international documents like ICSID, New-York Convention on harmonizing the Ethiopian domestic laws of IIPS’s, specifically on dispute settlement protection.
To examine and review the obstacles which developing nations like Ethiopia faces on nurturing the scheme of FDI dispute settlement protection.