Foreign Investment Disputes Settlement under ICSID and the Protection of FDI

Foreign Direct Investment if of interest to both Investors and States. For individuals, it is an opportunity to enter new markets, expand their business portfolio and exploit favourable working conditions. For countries, FDI is a unique opportunity for economic development. FDI brings with it job creation, wealth redistribution, and advancement in technology among others. It is little wonder therefore that developing countries especially are keen on attracting foreign direct investment. Before FDI can be considered, there are number of factors that need examination especially from the investor point of view. Protection of their investment, specifically legal protection, is very important. Are the legal processes in the host country transparent and fair? Do they provide adequate dispute settlement mechanisms? These are some questions that investors will seek to answer before deciding to invest in developing countries. It is therefore favourable for such countries to work towards achieving an improvement in these very processes. Such improvement can be achieved locally; however, if the legal framework is backed by an international organisation that can act as an alternative dispute resolution mechanism, it serves to provide advantages for both the host country and the investor. Here we look at one such mechanism, International Centre for the Settlement of Investment Disputes (ICSID). The protection through this organization, we argue, is unique and yet flexible in many ways. The article focuses on the important aspects of the ICSID, and the ICSID Convention and critically analyses the sort of protection and the advantages that this mechanism brings to the investor and the host country.