Fundamentals of Investor-State Arbitration in Islamic Countries under the OIC Agreement for Promotion, Protection and Guarantee of Investments

Abstract

Investment treaties are meant for promotion and regulation of foreign investments in a country that aspires to secure investment from a foreign governments or foreign private persons. Such treaties provide the necessary legal framework to ensure protection of investments and remedies for concerned parties in case of non-compliance by the investment recipient country.

At least 25 member countries to Organization of Islamic Cooperation (OIC) have also ratified a multilateral investment treaty, namely: The Agreement for Promotion, Protection and Guarantee of Investments among the OIC Member States (APPGI-OIC Agreement).

This article provides an overview of the fundamentals to investor-state arbitration under APPGI-OIC Agreement.

For convenient reading the body of this article has been arranged into six parts as below. The first part serves as an introduction to the built-in arbitration clause of APPGI-OIC Agreement, and the institutional arrangements in the form of the OIC Arbitration Center that has been set up in Istanbul, Turkey; the second part highlights the meanings as to “Investor”, “Investment” “Capital” and “Dispute” as used in APPGI-OIC Agreement.

The third part analyzes actions or inaction of the Host State that can lead to an arbitration/damages claim from an Investor, and also focuses on the jurisprudence as to most favored nation (MFN) clause in relation to APPGI-OIC Agreement; the fourth part notes the nature of guarantee breaches that can also result in an arbitration/damages claim under APPGI-OIC Agreement; the fifth part discusses the Defenses Available to Host State against monetary damages claims; and the final part six which serves as the conclusion to this article, identifies various advantages for the Host State in exploring settlement negotiations instead of contesting an arbitration claim.