An analysis of the challenges posed by the lack of binding precedent in international Investment arbitration

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Shula, Lwisha
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International investment arbitration lacks a de jure doctrine of precedent, thus creating problems for the disputants and the entire dispute resolution mechanism. This research paper is an analysis of the challenges posed on the arbitral users due to the erratic issuance of awards, without arbitrators having due regard to the growing jurisprudence in the international investment domain. The use of precedent, as evidenced by the common law legal system, creates an atmosphere that is certain, predictable and quint-essentially, consistent. The afore-mentioned attributes are vital to the success of any dispute resolution system. This research paper is based predominantly on 'black letter' law. Therefore, the information contained herein was collected through the perusal of documents, which includes books, articles, legal papers and dissertations in the domain of international investment arbitration. The researcher further administered interviews to experts in arbitration and investment law. This paper has established that the lack of binding precedent, primarily and most decisively, accounts for the numerous conflicting decisions in international investment arbitration. An analysis of various decisions of the International Centre for the Settlement of Investment Disputes (ICSID) tribunals, such as that of CMS Gas v. Argentina and LG&E Energy Corporation v. Argentine Republic showed the various issues that arise from the issuance of contradictory awards. Second, the paper has established that the lack of precedent entails that subsequent tribunals re-enforce errors of law and fact in their decision making process. Third, the entire arbitral system is susceptible to challenges from third parties, to a greater degree than other dispute resolution bodies that have binding precedent. Finally, the role of ICSID is arguably skewed, as ICSID places itself as a guarantor of justice for investors, thereby leaving the States parties wary of its role in the administering of just awards. The principal recommendation in this paper is the introduction of binding precedent in international investment arbitration, that is, the use of arbitral precedent properly so-called. Other recommendations include; the creation of customary international law and the creation of an appellate system. Finally, it is essential to establish a multilateral system in contrast to the bilateral manner in which investment treaties are structured, such as that obtaining in the WTO/GATT system. The above recommendations will essentially give the system credence and save it from becoming defunct.
Forms(Law)---Zambia , Legal Correspondence , Precedents(Law)