A comprehensive Critique on Preferential treatment of Foreign Investors under Investor-State Dispute settlement

Abstract

This thesis critically examines the preferential treatment granted to foreign investors under the Investor-State Dispute Settlement (ISDS) mechanism. It explores how ISDS, a framework established within International Investment Agreements (IIAs), offers foreign investors the right to bypass domestic courts and directly arbitrate disputes against host states, a privilege not extended to domestic investors or foreign nationals of non-contracting states. This unequal access raises concerns about fairness, equity, and justice in the international investment regime, as it creates an imbalanced landscape where foreign investors are afforded greater procedural rights than their domestic counterparts. By analyzing the evolution of ISDS, the thesis delves into its justification, particularly through the lens of the International Minimum Standard (IMS), which asserts that foreign investors should be treated fairly and without discrimination. The study highlights the implications of this preferential treatment, arguing that it not only undermines domestic judicial systems but also exacerbates competitive disadvantages faced by local investors. It further critiques ISDS mechanisms for fostering inequalities, reinforcing foreign privilege, and limiting the regulatory autonomy of states. Ultimately, the thesis calls for reforms to promote a more equitable balance between foreign and domestic investors, ensuring justice and fairness in international investment law.