Mrinal Aiyappa, Symbiosis Law School, Pune
INTRODUCTION: THE NATURE OF DIPLOMATIC PROTECTION OF INVESTORS
International investment contains specialised legal rules distinct from investments within a State. The reason is that international investment operates between States and in international practice, an individual or a corporation cannot bring an action against a State.1 The legal regime of international investments therefore, is centred around the protection of investors’ interests and the investor’s State of nationality’s relation with the host State. State practice recognises three routes for the protection of the investor’s interests:
(i) Remedy in private international law: By way of a contract between the investor and the host State stipulating the investor’s duties, liabilities and right to sue the host State;
(ii) Remedy in Treaty: By way of a Bilateral investment Treaty between the investor’s State of Nationality and host State, providing for a right to sue between the States; and
(iii) Remedy in Customary International law: By way of Diplomatic Protection in the absence of the above-mentioned recourses, where the State of Nationality represents its national’s interest against the host State.
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