Adaptive strategies for investor-state arbitration: A framework for emerging economies to safeguard national interests and attract investment

Abstract

In the realm of international investment, Investor-State Arbitration (ISA) plays a crucial role in resolving disputes between investors and states. Emerging economies often face unique challenges in this context, balancing the need to attract foreign investment with the imperative to safeguard national interests. This review presents a framework for adaptive strategies designed to help emerging economies navigate the complexities of ISA while optimizing both investment attraction and national protection. The framework emphasizes a dual approach: enhancing the attractiveness of a country for foreign investors and fortifying mechanisms to protect national interests. Key components of the framework include the development of robust legal and regulatory environments that align with international standards while accommodating national priorities, and the adoption of transparent and equitable dispute resolution processes. The framework advocates for the integration of tailored dispute resolution clauses in investment treaties that consider the specific needs and vulnerabilities of emerging economies. Additionally, it recommends the establishment of dedicated institutions and expertise to manage ISA effectively, ensuring that states are well-prepared to address and resolve disputes. Emphasis is placed on proactive engagement in treaty negotiations, leveraging strategic partnerships, and fostering dialogue with investors to create a balanced and mutually beneficial investment climate. The review also highlights the importance of continuous review and adaptation of legal frameworks to respond to evolving global standards and investment trends. By implementing these adaptive strategies, emerging economies can enhance their attractiveness as investment destinations while safeguarding their sovereignty and national interests. The proposed framework provides a comprehensive approach to managing ISA, balancing the imperative of attracting investment with the need to protect national resources and regulatory autonomy.