International investment law & arbitration

Arbitration means private case law outside the ordinary court. The parties can arbitrate the existing and future disputes between them by arbitration. They must then submit relevant disputes to private judges (arbitrators), who will issue a binding decision for the parties concerned.

International investment law

Arbitration can play an important role in foreign investment dispute resolution. Foreign investors' rights are often protected under a BIT: a framework trade treaty for foreign direct investment by a person or entity from one Contracting State to another Contracting State. BIT usually includes arbitration as a special dispute resolution scheme. The purpose of this is to protect corporate activities and investments of companies against the actions of a state.

ISDS

The Netherlands has currently concluded a BIT with more than 100 countries. If an investor believes that one of these Contracting States has neglected its rights, it may initiate international arbitration. The investor can therefore submit the dispute to independent arbitrators and does not have to go to the foreign judiciary. This system is also known as an "investor-state dispute settlement mechanism" or ISDS.