INVESTOR-STATE ARBITRATION UNDER ETHIOPIAN BILATERAL INVESTMENT TREATIES

Abstract

Investor-state arbitration is quasi-judicial means of settling investment disputes which was considered as neutral, flexible, cost effective and specialized form of dispute settlement. Currently, however, the overall system of investor-state arbitration is criticized for it gives protection to investors while undermining host state’s interests. Almost all Ethiopian BITs contain investor- state arbitration. It is not known, however, if investor-state arbitration under these BITs balances the interests of investors and host states. Hence, the objective of this study is to examine whether investor-state arbitration provisions of Ethiopian BITs balance the interests of the country and investors. In doing so, text analysis of 28 Ethiopian BITs is made. A semi-structured interview with purposively selected individuals, who are academicians, practitioners and government officials, is also employed. Literatures and reports are also used. Consequently, it has been found that most investor-state arbitration provisions are framed broadly and leave many procedural issues to external rules of arbitration thereby give unfettered discretion to tribunals. They are inconsistent and open to abuse of MFN. Host states are not guaranteed to submit claims or counter claims and the types of relief that the tribunal may render is not addressed within the BITs. These findings take us to the conclusion that investor-state arbitration under Ethiopian BITs guarantee the rights of investor, and not the host state. These provisions can have a devastating effect on the host country once a case arises. An analysis on the compatibility of the recent global developments of rectifying the problems have been conducted that revealed that abandoning investor-state arbitration is not a good choice for Ethiopia. The study finally recommended that investor-state arbitration must continue to exist in the Ethiopian BITs but with major reform.