Another Improvement of Investment Climate.
How often have you heard this from a Ukrainian high-ranking official? Enough to feel this phrase becomes a mantra when the sounds are sacral but not the meaning. Such as the ‘Om Mani Padme Hum’ does not taken as a jewel in the lotus. However, an iteration of this investment improvement mantra cannot make the Ukrainian officials the enlightened ones and the hope for their protection still fades. And if the Ukrainian people are ready not to rely too much on what the officials say, the credulous foreigners may be caught into the ‘nets of illusions’. That is when their only way out of investment problems will be found somewhere out of Ukraine.
To solve the investment disputes, a special instrument, the investment arbitration, may be applied. The specifics of this instrument in comparison with the more ordinary commercial arbitration are the absence of the arbitration agreement as its basis. The role of the arbitration agreement with respect to the investment arbitration is performed by (a) international treaties on protection of investment, multilateral or bilateral ones; (b) local laws of the host country on protections of the foreign investments or (c) in some instances the investment agreements. Moreover, in the commercial arbitration, a tribunal has to deal with a contract between the parties (its execution, performance and termination), but the investment arbitration examines the behaviour of the host country towards the foreign investors.
As a matter of practice, the main governing documents for the investment arbitration are bilateral treaties on protection of investments (BIT). They are international treaties which envisage special rights and remedies for individuals or legal entities when they invest abroad.
As of 1 January 2013, Ukraine has 60 valid BITs.
In case the applicable BIT exists, investors are generally free to initiate arbitration proceedings in any institution envisaged by the treaty and the host country has to apply to the arbitration for the dispute resolution.
The majority of BITs in the world allows investors to submit the dispute to several arbitration institutions such as:
International Center for the Settlement of Investment Disputes (ICSID);
International Chamber of Commerce International Court of Arbitration (ICC);
Stockholm Chamber of Commerce (SCC Institute).